10-K

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

/x/	Annual
	For the fiscal year ended December 29, 2000
/ /	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                to                

Commission file number: 0-11634

STAAR SURGICAL COMPANY
(Exact name of registrant as specified in its charter)

Delaware	95-3797439
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1911 Walker Avenue Monrovia, California	91016
(Address of principal executive offices)	(Zip Code)

(Registrant's telephone number, including area code): (626) 303-7902

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:    

Common Stock, $.01 Par Value
(Title of Class)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES /x/  NO / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this Chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  / /

    The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 22, 2001 was approximately $51,235,000 based upon the closing price per share of the Common Stock of $4.22 on that date.

    The number of shares outstanding of the issuer's classes of Common Stock as of March 22, 2001:

Common Stock, $.01 Par Value—[[16,993,808]] shares

DOCUMENTS INCORPORATED BY REFERENCE

    Information required by Part III (Items 10, 11, 12 and 13) is incorporated by reference to the Company's definitive proxy statement for its 2001 Annual Meeting of Stockholders.

ADVISEMENT

This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our business and our industry. Words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may," and other similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the following:

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whether or not our newer products are accepted by the marketplace and the pace of any such acceptance,



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our ability to obtain regulatory approvals,



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changes in government regulation relating to reimbursement practices,



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pricing policies resulting from decisions made by health care organizations or policies set by various government agencies,



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improvements in the technologies of our competitors,



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changing economic conditions,



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fluctuations in foreign currency exchange rates,



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political unrest and changing economic conditions in our markets abroad,

and other factors, some of which will be outside our control. You are cautioned not to place undue reliance on these forward-looking statements, which relate only to events as of the date on which the statements are made. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.

PART I

ITEM 1.  BUSINESS

    STAAR Surgical Company (referred to in this discussion as "we" "us" or "the Company") (Nasdaq National Market symbol "STAA") was incorporated in California in 1982 as a successor to a partnership that was created for the purpose of developing, producing, and marketing Intraocular Lenses ("IOLs") and other products for minimally invasive ophthalmic surgery. We reincorporated in Delaware in April 1986. We have evolved to become a developer, manufacturer and global distributor of products used by ophthalmologists and other eye care professionals to improve or correct vision in patients suffering from refractive conditions, cataracts and glaucoma. Unless the context indicates otherwise, when this document refers to "we", "us" or "the Company", it is referring to STAAR Surgical Company and its consolidated subsidiaries.

    Initially, our primary products were those used in restoring vision that had been adversely affected by cataracts. Today, these products include not only our line of IOLs but the Sonic WAVE™ Phacoemuslification System. Currently, however, we are also developing and manufacturing products, including our Implantable Contact Lenses™ (ICL™) and Toric Intraocular Lens, for use in correcting refractive conditions such as myopia (near-sightedness), hyperopia (far-sightedness) and astigmatism. For patients whose vision is affected by glaucoma we have developed the AquaFlow™ glaucoma device, an alternative to current methods of treating glaucoma. We also sell other instruments, devices and

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equipment that we manufacture or that are manufactured by others in the ophthalmic products industry. Highlights of the general development of our business during the year 2000 are discussed below.

    During the year ending December 29, 2000, we underwent a significant change in management as the result of the termination of John R. Wolf as our President and Chief Executive Officer in May 2000, and the resignation of William C. Huddleston as a director in August 2000 and as our Chief Operating Officer and our interim President and Chief Executive Officer in October 2000. Andrew F. Pollet, the Company's Chairman of the Board, assumed the role of interim President and Chief Executive Officer in October 2000. In December 2000 David Bailey joined us as our President, Chief Executive Officer and a director. In January 2001, following the death of Andrew Pollet, Mr. Bailey was elected Chairman of the Board. In February 2001 John R. Gilbert was appointed as a director in place of Mr. Pollet.

    In April 2000 we received approval from the FDA for our single-piece Collamer^TM IOL for cataract surgery. This approval allows us to market the lens throughout the United States. This Collamer IOL was approved for use in Canada and the European Union during 1999. We believe that the Collamer material is superior to other materials used to manufacture IOLs in the marketplace because collagen is incorporated into it, currently making it the only IOL material that is a biomaterial. Clinical trials of the Collamer IOL showed a demonstrated absence of adverse reactions experienced by patients undergoing minimally invasive cataract surgery. In September 2000 we received permission from the FDA to begin manufacturing our single-piece Collamer IOL in our Monrovia, California headquarters.

    In May 2000 we announced our plan to strategically realign business, discard unprofitable lines, and reevaluate the realization of our investment in our Japanese joint venture. In June 2000, we finalized our total charge at approximately $24 million before tax benefit. In conjunction with the implementation of this plan, we recorded a pretax charge to earnings of $13.8 million in the second quarter of fiscal 2000. The charges included approximately $.9 million for restructuring certain subsidiaries, approximately $4.0 million to write-off patents that were determined to have no future value, approximately $1.9 million of costs incurred relating to activities that were abandoned, approximately $4.1 million relating to severance and other employee separation costs, approximately $1.9 million relating to the disposition of investments and assets related to our leaving the Lasik market and approximately $1.0 million relating to the closure a foreign subsidiary. In addition we wrote-off approximately $5.2 million in inventory that no longer has a place in our future operations. We also incurred a $4.7 million charge relating to the write-off of our Japanese joint venture. Our disputes with our Japanese joint venture partners are currently in arbitration. At December 29, 2000 we have approximately $2.2 million of accrued restructuring charges consisting of future payments to former employees, lease obligations and future professional expenses.

    In May 2000 the Health Care Financing Administration granted our application to have the Toric IOL designated as a "new technology". The "new technology" designation allows ambulatory surgery centers to receive an additional $50 per lens above the standard Medicare reimbursement rate for the next five years. Additionally, in August 2000 the Health Care Financing Administration granted our application for "pass-through" status for the Toric IOL. This designation allows hospitals to pay us our list price for the lenses. The cost is then passed through to the Health Care Financing Administration, while the hospital receives its standard reimbursement for the procedure. Pass-through status may last for a period of two to three years, although re-evaluation and adjustment is possible in January of each year.

    In July 2000 we made our initial filing to begin the process necessary to obtain approval to market our AquaFlow glaucoma device in the United States and Canada by submitting a Pre-Market Approval (PMA) application with the Food and Drug Administration (FDA) and an application for Medical Device License with Health Canada, Canada's primary healthcare regulatory agency. In

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November 2000, the Ophthalmic Device Panel of the FDA's Medical Advisory Committee formally recommended to the Food and Drug Administration to approve our PMA application, so long as we continue our two year study after approval and make minor modifications to the device's labeling. In January 2001, we received a Medical Device License from the Canadian government that allows us to market and distribute the AquaFlow glaucoma device throughout Canada. The FDA has already inspected some of the manufacturing facilities, and we expect that the remaining facilities will be inspected during 2001.

    In October 2000, at the American Academy of Ophthalmology, we introduced our three-piece Collamer IOL. We began shipment of the three-piece lens in November 2000 for limited field trials and have determined that the lens design can be improved. While we intend to continue to market the current product, we are beginning a second generation design that we believe will be more acceptable to physicians. We are seeking CE approval of the current three-piece lens and we anticipate an international launch in May 2001.

    The clinical trials of our ICL continued to progress during 2000. Enrollment for Phase III of the myopic study is complete, and we currently anticipate filing a Pre-Market Approval application in early 2002. We continue to enroll patients for the hyperopia study and expect to complete enrollment by the end of 2001. During 2000, we continued our feasibility studies on the Toric ICL, including doing the first implants in Canada in May 2000. We expect to submit an application to begin clinical trials in the United States during 2001.

    At the end of 2000, management finalized the design of the Sonic WAVE Phacoemulsification System. We believe this product will be a fundamental element of our strategy for growth, and for that reason we have established a direct sales force in the United States to market the machines. In December 2000, we accelerated our efforts to obtain CE Mark for the machine and in March 2001 we received CE Mark, allowing us to sell this product in each of the countries comprising the European Union.

    Revenues for 2000 were $54.4 million, a decrease of $4.8 million, or more than 8%, from 1999. Net loss for 2000 amounted to $18.9 million, or $1.23 per diluted share, compared to $2.2 million of net income, or $0.15 per diluted share, reported in 1999. Significant operational matters that affected net earnings for 2000 included charges totaling approximately $24 million before tax benefit taken during the second quarter of 2000. Excluding the impact of this charge, the net loss for 2000 was $780,000 or $0.05 per share, compared to $2.2 million of net income, or $0.15 per diluted share reported for 1999.

Financial Information About Industry Segments

    Beginning in 1998 we began expanding our marketing focus beyond the cataract market to include the refractive and glaucoma markets. However, during 2000 the cataract market remained the primary source of our revenues. See Note 17 to The Consolidated Financial Statements, for geographic segments. The Company operates as one business segment.

Narrative Description of Business

Background

    The human eye is a specialized sensory organ capable of light reception and able to receive visual images that are transmitted to the visual center in the brain. The main parts of the eye are the cornea, the iris, the lens, the retina, and the trabecular meshwork. The cornea is a spherically shaped window in the front of the eye through which light passes. The iris is a muscular curtain located behind the cornea which opens and closes to regulate the amount of light entering the eye through the pupil, an opening at the center of the iris. The lens is a clear structure located behind the iris that changes shape

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to better focus the light to the retina, located in the back of the eye. The retina is a layer of nerve tissue consisting of millions of light receptors called rods and cones, which receive the light image and transmit it to the brain via the optic nerve. The anterior chamber of the eye, located in front of the iris, is filled with a watery fluid called the aqueous humour, while the portion of the eye behind the iris is filled with a jelly-like material called the vitreous humour. The trabecular meshwork, a drainage channel located between the cornea and the surrounding white portion of the eye, maintains a low pressure in the anterior chamber of the eye by draining excess aqueous humour.

    The eye is affected by common visual refractive disorders such as myopia, hyperopia, astigmatism and presbyopia, and a number of ocular diseases, such as cataracts and glaucoma. Myopia and hyperopia are caused by an anatomical imbalance between the shape of the eye and the resulting distance between the cornea and the retina. Astigmatism is caused by irregularities in the smoothness and curvature of the cornea, causing improper focusing of the incoming light on the retina and consequential blurring of vision. Presbyopia is far-sightedness resulting from a loss of elasticity in the lens of the eye, usually as a result of aging. Cataracts are an irreversible and progressive ophthalmic condition wherein the eye's natural lens loses its usual transparency and becomes opaque. Glaucoma represents a condition that is manifest by a series of symptoms, including an increase in intraocular pressure, a decrease or loss of visual field, or damage to the optic nerve fiber layer or optical disc. The presence of some or all of these symptoms is generally accepted as indicative of glaucoma (although a patient may manifest one or all of the symptoms and not be diagnosed with glaucoma). If left untreated, glaucoma may result in a gradual loss of vision, and may ultimately lead to blindness.

Industry Segments

    According to industry analysts, the market for ophthalmic products is approximately $10 billion worldwide. The major factors influencing this market are:

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the introduction of new methods of correcting vision problems and significant medical technology advancements which have created cost effective treatments and therapies,



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an aging worldwide population,



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the evolution toward managed care,



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decisions related to reimbursement made by government and other third-party payors, and



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the growing importance of international markets.

Our products serve the following segments of the ophthalmic market:

    Refractive Vision Correction.  Data obtained from one industry analyst's report indicates that, in the United States, approximately 162 million people are in need of some type of vision correction. Of this group, approximately 73 million (45%) had some degree of myopia (near-sightedness), approximately 43 million (27%) had some degree of hyperopia (far-sightedness), and approximately 43 million (27%) had some degree of astigmatism. Most individuals over age 45 also have presbyopia. Approximately 24 million (35%) of those individuals with myopia had moderate to high myopia (which is defined as greater than 2.5 diopters) and 23 million (32%) of those individuals with hyperopia had moderate to high hyperopia (which is defined as greater than 2.0 diopters). We believe that our ICL will address the vision correction needs of patients with moderate to high myopia, moderate to high hyperopia and astigmatism. The market outside of the United States is larger than the United States market. It is estimated that approximately 50% of the world's population needs some form of vision correction.

    In the United States, people are seeking to correct their vision by means other than glasses and contact lenses. It is estimated that approximately 1.1 million laser procedures to correct vision problems were performed in 2000, up from an estimated 960,000 laser procedures performed during 1999. We

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believe that the laser market is creating awareness about alternatives to glasses and contact lenses. We anticipate that this growing awareness will make it easier for us to enter the refractive products market in the United States, if our ICLs are approved.

    Cataract Treatment.  Cataracts occur in varying degrees in approximately one-half of Americans age 65 or older. Cataract surgery involves removing the damaged lens from the eye and surgically inserting an IOL. Industry sources estimate that approximately 2.45 million IOLs were implanted in the United States in 2000, generating approximately $255 million in sales. We believe that approximately 2.5 million IOLs were implanted outside the United States during 2000 (not including China and Russia, for which no reliable data exists), generating an additional $250 million of sales. We believe that approximately 89% of the domestic market for IOLs in 2000 was held by foldable IOLs, compared to approximately 15% in 1992, and that approximately 60% of the international market share is presently held by foldable IOLs. We believe the share of the worldwide market held by foldable IOLs will continue to increase due to the benefits of foldable IOLs over hard IOLs.

    Glaucoma Treatment.  The treatment for glaucoma encompasses drug therapies as well as traditional and laser surgical procedures. There is no known cure for glaucoma. The most commonly prescribed glaucoma drugs either inhibit the build-up of intraocular fluid or promote increased drainage of intraocular fluid, in either case reducing intraocular pressure and the potential for optic nerve damage. Traditional surgical procedures for glaucoma (trabeculectomies and shunts) and laser surgical procedures for glaucoma (trabeculoplasties) remove a portion of the trabecular meshwork to create a channel for fluid to drain from the eye. The selection of drug treatment over a surgical or laser procedure is, in part, dependent upon the stage of the disease and the prevailing glaucoma treatment used in the country in which the treatment is prescribed.

    While we believe that glaucoma currently afflicts approximately 3 million persons in the United States, only about 50% of those persons have actually been diagnosed with the disease. Industry analysts estimate that approximately 67 million people worldwide suffer from glaucoma. The worldwide market for glaucoma drugs is approximately $2 billion. We estimate that 125,000 conventional surgical procedures and 250,000 laser surgeries were performed in the United States alone in 2000, which we believe represents total expenditures of approximately $750 million.

    Glaucoma drugs are prescribed for patients to control the build-up of intraocular fluid. In some cases, patients build up a tolerance to the medications and they must be changed or combined to improve response. Patients may experience side effects that range from burning and stinging eyes to allergies or more serious systemic problems. For many patients, the symptoms of glaucoma are not readily apparent, which may result in their failure to adhere to the drug regimen.

    Conventional surgical and laser surgical procedures for glaucoma create a channel for fluid to drain from the eye. According to one study, conventional and laser surgery for glaucoma has an estimated initial success rate within one to two years of only 70% to 80%, with the success rate decreasing to 46% within five years.

Products

    Our products are designed to:

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improve treatment results,



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minimize patient risk and discomfort, and



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where possible, simplify ophthalmic procedures for the surgeon and the patient.

    We sell our products worldwide, principally to ophthalmologists, surgical centers, hospitals, managed care providers, health maintenance organizations and group purchasing organizations.

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    Refractive Correction—Implantable Contact Lenses (ICLs).  ICLs are lenses implanted in the eye to permanently correct common refractive vision disorders including myopia, hyperopia and astigmatism. The ICL is targeted to persons afflicted with moderate to severe hyperopia and myopia and for patients with astigmatism and other visual disorders.

    The ICL is folded and implanted into the eye behind the iris and in front of the natural lens using minimally invasive surgical techniques similar to implanting an IOL during cataract surgery, except that the human lens is not removed. The five minute to 20 minute surgical procedure to implant the ICL is typically performed with topical anesthesia on an outpatient basis.

    We believe the use of an ICL will potentially afford a number of advantages over existing refractive surgical procedures, such as radial keratotomy (RK), photo-refractive keratectomy (PRK) and laser in-situs keratomileusis (Lasik), including being able to:

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correct all levels of myopia, hyperopia and astigmatism,



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provide superior predictability of results,



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enable faster recovery of vision and rehabilitation,



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produce superior refractive results, and



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correct or improve other vision problems, such as amblyopia (lazy eye) and keratoconus (a condition causing marked astigmatism).

    We commenced commercial sales of ICLs in late 1996 on a limited basis in South Africa, China, and selected countries in Europe and South America. In August 1997 we received CE Mark allowing us to sell the ICL in each of the countries comprising the European Union. The lenses are currently also sold in South Africa and Israel. In February 1997, the FDA granted us an investigational device exemption (IDE) to commence clinical studies consisting of three distinct phases within the United States. We have completed enrollment of Phase III of the IDE clinical trials for the correction of myopia and we are presently engaged in completing enrollment of Phase III of the IDE for the correction of hyperopia. We anticipate filing a Pre-Market Approval application for the ICL correcting myopia in early 2002. During the year 2001, we expect to submit an application to begin clinical trials for a Toric ICL.

    Intraocular Lenses (IOLs) And Related Cataract Treatment Products.  We produce and market a line of foldable IOLs for use in minimally invasive cataract surgical procedures. Our IOLs can be folded or otherwise deformed, and therefore can be implanted into the eye through an incision as small as 2.65 mm. Once inserted, the IOL unfolds naturally into the capsular bag that previously held the cataractous lens. The primary advantages of using minimally invasive surgical procedures are:

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Fewer surgical complications. A smaller incision minimizes eye trauma and the potential for infection. In addition, our foldable IOL can typically be implanted under topical anesthesia, thereby avoiding complications associated with the administration of local anesthesia.



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Reduced level of surgically induced astigmatism. The ability to eliminate sutures as a result of the smaller incision leads to a reduction in the incidence of surgically induced astigmatism caused by uneven healing of the surgical wound.



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Faster recovery of vision. Patients can typically recover their best vision the same day the procedure is performed, as opposed to 30 to 45 days following surgery in the case of hard IOLs.



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Enhanced benefits to surgeons. The use of foldable IOLs enables ophthalmologists to more quickly perform surgical procedures at lower cost, and with greater ease and consistently higher quality outcomes.

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    Our foldable IOLs are manufactured using both our proprietary Collamer material and silicone. Both materials are offered in two differently configured styles, the single-piece plate haptic design and the traditional three-piece design. The selection of one style over the other is primarily based on the preference of the ophthalmologist. Sales of foldable IOLs accounted for approximately 69% of total revenues for the 2000 fiscal year, 70% of total revenues for the 1999 fiscal year and approximately 71% of total revenues for the 1998 fiscal year.

    We have developed and currently market globally the Toric IOL, a toric version of our single-piece silicone IOL, which is specifically designed for patients with pre-existing astigmatism. The Toric IOL is the only IOL that has FDA approval to include in its labeling that it improves uncorrected visual acuity. The Toric IOL is the first refractive product we offered in the United States, and is a significant addition to our line of cataract products. In May 2000 the Health Care Financing Administration granted our application to have the Toric IOL designated as a "new technology". The "new technology" designation allows ambulatory surgical centers to receive an additional $50 per lens above the standard Medicare reimbursement rate for the next five years. Furthermore, the Health Care Financing Administration granted our application for "pass-through" status for our Toric IOL, which allows hospitals to pay us our list price for the lenses and pass through the total amount to the Health Care Financing Administration for reimbursement. Pass-through status may last for a period of two to three years, although re-evaluation and adjustment is possible in January of each year.

    In April 2000, we received approval from the FDA for our single-piece Collamer IOL for cataract surgery, allowing us to market the lens throughout the United States. This Collamer IOL was approved for use in Canada and the European Union during 1999. We believe that the Collamer material is superior to other materials used in the manufacture of IOLs in the marketplace because collagen is incorporated into it, currently making it the only IOL material that is a biomaterial. Clinical trials of the Collamer IOL showed a demonstrated absence of adverse reactions experienced by patients undergoing minimally invasive cataract surgery.

    Phacoemulsification (phaco) machines are used during cataract surgery to remove the patient's cataractous lens, usually through a small incision. The most desired equipment will improve surgical outcomes and make cataract surgery simpler for the physician and safer for the patient. In the $1.3 billion global cataract market, approximately 15% to 20% of the $200 million to $300 million of revenue generated is from the sale of phacoemulsification equipment. Prices for these machines range from $12,000 to $99,000. The market for disposable and reusable packs that are required to use the equipment make up approximately 35% of the global market, along with injectors and other surgical accessories. During 1998 we introduced the STAAR WAVE Phacoemulsification Machine and in 2000 we released the next generation, the Sonic WAVE Phacoemulsification System. The Sonic WAVE Phacoemulsification System combines proprietary sonic, low frequency pulses with ultra vacuum technology to create a non-thermal, safer method of cataract removal. Because we believe that the reduced energy technique will become the standard of care in the future, we have invested in a direct sales force to sell this product in the United States. The Sonic WAVE Phacoemulsification System has 510(k) approval, and we received CE Mark in March 2001.

    As part of our approach to providing a complete line of complementary products for use in minimally invasive cataract surgery, we also market several styles of lens injectors and sterile cartridges used to insert our IOLs and several styles of disposable and reusable surgical packs and ultrasonic cutting tips to be used with the Sonic WAVE Phacoemulsification System.

    AquaFlow Glaucoma Device.  In conjunction with a procedure referred to as a non-penetrating deep sclerectomy, our AquaFlow glaucoma device is surgically implanted in the outer tissues of the eye to maintain a space that allows increased drainage of intraocular fluid so as to reduce intraocular pressure. It is made of collagen, a porous material that is compatible with human tissue and facilitates drainage of excess eye fluid. The AquaFlow glaucoma device is specifically designed for patients

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suffering from open-angled glaucoma, which is the most prevalent type of glaucoma. In contrast to conventional and laser glaucoma surgeries, implantation of the AquaFlow glaucoma device does not require penetration of the anterior chamber of the eye. Instead, a small flap of the outer eye is folded back and a portion of the sclera and trabecular meshwork is removed. The AquaFlow device is placed above the remaining trabecular meshwork and Schlemm's canal and the outer flap is refolded into place. The device swells, creating a space as the body heals. It is absorbed into the surrounding tissue within six months to nine months after implantation, leaving the open space and possibly creating new fluid collector channels. The 15 to 45 minute surgical procedure to implant the AquaFlow device is performed under local or topical anesthesia, typically on an outpatient basis.

    We believe that the compatibility of the human eye with the material from which the AquaFlow glaucoma device is made and the minimally invasive nature of the surgery offer several advantages over existing surgical procedures, including:

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reduced risk of surgical complications compared to trabeculectomy,



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a longer-term solution than medications,



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predictable outcomes, making case management easier and less time consuming,



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less need for pressure-reducing medications,



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enabling the patient to have minimally invasive Nd:YAG laser surgery if further pressure reduction becomes necessary over the long term, and



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cost effectiveness compared to surgical and medication alternatives.

    We believe the AquaFlow device is an attractive product for:

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ophthalmic surgeons who have traditionally referred their patients to glaucoma specialists;



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managed care and health maintenance organizations and group purchasing organizations that desire to control their costs and at the same time provide their customers with a higher standard of health care; and



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less developed countries which lack the resources and infrastructure to provide the continuous treatments mandated by drug therapy.

While we believe this market is very conservative, there is a continuing interest in learning the surgical procedure to implant the AquaFlow device. Adoption by ophthalmic surgeons, however, will be dependent upon the rate at which they learn to perform the surgical procedure or at which instrumentation is developed to simplify the procedure. We are promoting this product by using training courses and our trained technical sales staff to educate surgeons.

    We introduced the AquaFlow glaucoma device in late 1995 for commercial sale on a limited basis in South Africa and selected countries in Europe and South America. In August 1997 we received CE Mark for the AquaFlow device, allowing us to sell it in each of the countries comprising the European Union. In November 2000 the Ophthalmic Device Panel of the FDA's Medical Advisory Committee made a formal recommendation to the Food and Drug Administration to approve our Pre-Market Approval application, so long as we continue our two year study after approval and make minor modifications to our labeling of the device. In January 2000, the Canadian government, through Health Canada Agency, issued a Medical Device License to us, allowing us to sell the AquaFlow device in Canada.

Distribution And Customers

    We maintain a highly trained sales force that works closely with our customers (primarily surgeons and other health care providers) to educate them on the benefits of our products, and the skills and techniques needed to perform minimally invasive surgical procedures. We supplement our direct sales efforts through advertising in medical and trade journals and by sponsoring surgical procedure courses, seminars and technical presentations chaired by leading ophthalmologists.

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    Our products are sold domestically through a network of independent territorial representatives who are compensated by commission programs geared to our yearly sales objectives. We have 10 independent and employee regional managers located throughout the United States to whom the territorial representatives report. International sales are primarily conducted through our subsidiaries, which sell through direct and independent sales representatives. In countries where our subsidiaries do not have a direct presence, sales are conducted through country or independent area medical distributors.

    We market our products to ophthalmologists, surgical centers, hospitals, managed care providers, health maintenance organizations and group purchasing organizations. No material part of our business, taken as a whole, is dependent upon a single or a few customers.

Sources And Availability Of Manufacturing Materials

    We manufacture our IOLs and our AquaFlow glaucoma device at our facilities located in California and Switzerland, and our ICLs at our facilities located in Switzerland. Many components of our products are purchased to our specifications from suppliers or subcontractors. Most of these components are standard parts available from multiple sources at competitive prices. We presently have one supplier of silicone, the principal raw material for our silicone IOLs, although we can purchase this raw material from several distributors. Similarly, certain items we use in our disposable surgical packs are provided by a single supplier. We also purchase products manufactured by others in the eye care industry. If any of these supply sources becomes unavailable, we believe that we would be able to secure alternate supply sources within a short period of time and with minimal or no disruption.

    Our Sonic WAVE Phacoemulsification System is manufactured by our subsidiary, Circuit Tree Medical, Inc. The components used in the manufacture of the Sonic WAVE Phacoemulsification System are available from multiple sources at competitive prices.

Intellectual Property And Licenses

    We and/or our licensors have pending patent applications and issued patents in various countries relating specifically to our products or various aspects of them, including our core patent (the "Mazzocco Patent") relating to methods of folding or deforming an IOL or ICL for use in minimally invasive surgery. The Mazzocco Patent was granted by the United States Patent Office in March 1986 to Thomas Mazzocco, M.D., a practicing ophthalmologist and a co-founder of the Company. The Mazzocco Patent will expire in the year 2002. We do not derive significant revenues from this patent, and we do not believe that its expiration is of material importance in relation to our overall sales. We have also acquired or applied for several patents for insertion devices, glaucoma devices and other products for ophthalmic use.

    In May 1995, Intersectional Research and Technology Complex Eye Microsurgery (IRTC) granted an exclusive royalty bearing license to our subsidiary, STAAR Surgical AG, to manufacture, use and sell IRTC's glaucoma devices in the United States, Europe, Latin America, Africa, and Asia, and non-exclusive rights with respect to the countries in the Commonwealth of Independent States (the former Union of Soviet Socialists Republic) and China. In January 1996, IRTC granted an exclusive royalty bearing license to STAAR Surgical AG to manufacture, use and sell implantable contact lenses using IRTC's biocompatible materials in the United States, Europe, Latin America, Africa, and Asia, and non-exclusive rights with respect to the Commonwealth of Independent States. The terms of these licenses extend for the lives of the patents. In connection with these licenses, IRTC also assigned to us its patent for its biocompatible material, which we use in manufacturing our ICLs and some of our IOLs. We have since adopted IRTC's biocompatible material and glaucoma device design for our AquaFlow glaucoma device, and have incorporated IRTC's biocompatible materials for use with our proprietary ICL design. These patents and the technology rights are of material importance to our

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refractive products market segment. Each of these patents will expire in the year 2009. We are continuing to expand our patent portfolios of refractive and glaucoma products so that we do not become dependent on the protection of any single patent.

    In connection with our acquisition of a majority of the outstanding shares of Circuit Tree Medical, Inc. in December 1999, we acquired patents relating to the STAAR WAVE Phaco Machine and other related technologies.

    We have registered the mark "STAAR" and our associated logo with the United States Patent and Trademark Office. We also have common law trademark rights to other marks and we have applied for registration for some of these marks.

    We have granted licenses to certain of our patents, trade secrets and technology, including our foldable technology, to other companies for use in connection with their cataract products. The licenses under the patents extend for the life of the patents. The licensees include Allergan Medical Optics ("AMO"), Alcon Surgical, Inc. ("Alcon"), Bausch & Lomb Surgical ("Bausch & Lomb"), CIBA Vision, Pharmacia & Upjohn, Inc. ("Pharmacia & Upjohn") and Canon STAAR, a joint venture we own with Canon, Inc. and Canon Sales Co., Inc. We licensed certain of our patented foldable technology on an exclusive basis to Canon STAAR (for Japan only), on a non-exclusive basis to Alcon, Bausch & Lomb, CIBA Vision and Canon STAAR (with respect to the world other than Japan), and on a co-exclusive basis to AMO. At the time these licenses were granted, we received substantial pre-payments of royalties on all but one of the licenses. We expect to receive continuing revenues from only one of these licenses. Our business strategy is not dependent upon realizing royalties from these licenses in the future.

Competition

    Competition in the medical device field is intense and characterized by extensive research and development and rapid technological change. Development by competitors of new or improved products, processes or technologies may make our products obsolete or less competitive. We will be required to devote continued efforts and significant financial resources to enhance our existing products and to develop new products for the ophthalmic industry.

    Our ICL will face significant competition in the marketplace from products that improve or correct refractive conditions, such as corrective eyeglasses and external contact lenses, and particularly from providers of conventional and laser surgical procedures. These are products long established in the marketplace and familiar to patients in need of refractive correction. Furthermore, corrective eyeglasses and external contact lenses are more easily obtained, in that a prescription is usually written following a routine eye examination in a doctor's office, without admitting the patient to a hospital or surgery center. We believe that the following providers of laser surgical procedures comprise our primary competition in the marketplace for patients requiring refractive corrections: Summit Technology, Inc. ("Summit"), VISX, Incorporated ("VISX"), Bausch & Lomb and Nidek Co., Ltd. Excimer lasers for photo-refractive keratectomy which are manufactured and marketed by Summit, VISX and Nidek Co., Ltd. are the only products that have received pre-market approval from the FDA for sale within the United States. There are other phakic refractive lenses being manufactured by Bausch & Lomb, Ophtec, and Medennium that are offered for sale outside the United States. We do not know when these lenses might obtain FDA approval for sale in the United States.

    We believe our primary competition in the development and sale of products used to surgically correct cataracts, namely foldable IOLs and phacoemulsification machines, includes Bausch & Lomb, AMO, Alcon, Pharmacia & Upjohn, Inc. and CIBA Vision. Each of these competitors is a licensee of our foldable technology. Significant competitors in the hard IOL market include Bausch & Lomb, AMO, Pharmacia & Upjohn, Inc., Alcon and CIBA Vision. These competitors have been established

11

for longer periods of time than we have and have significantly greater resources than we have, factors that give them the advantages of greater name recognition and larger sales operations.

    Our primary competition in the development and sale of products used to treat glaucoma is from pharmaceutical companies, primarily because drug therapy is, and for years has been, the accepted treatment for glaucoma. The portion of this market held by medical devices used to treat glaucoma is insignificant at present. We believe that Merck & Company, Inc., Alcon, Allergan and Bausch & Lomb are the largest providers of drugs used to treat glaucoma within the United States, and CIBA Vision Corporation, Pharmacia & Upjohn, Inc. and Lederle Laboratories, a subsidiary of American Home Products, are the largest internationally. There are other devices under development to be used in conjuction with a non-penetrating deep sclerectomy for the surgical management of glaucoma. These devices are manufactured by Alcon and Corneal.

Regulatory Requirements

    Our products are subject to regulatory approval or clearance in both the United States and in foreign countries. The following discussion outlines the various kinds of reviews to which our products or production facilities may be subject.

    Clinical Regulatory Requirements Within The United States.  Under the "Medical Device Amendments of 1976" (the "Medical Device Act"), a section of the Federal Food, Drug & Cosmetic Act, the FDA has the authority to adopt regulations that:

•

set standards for medical devices,



•

require proof of safety and effectiveness prior to marketing devices which the FDA believes require pre-market clearance,



•

require test data approval prior to clinical evaluation of human use,



•

permit detailed inspections of device manufacturing facilities,



•

establish "good manufacturing practices" that must be followed in device manufacture,



•

require reporting of serious product defects to the FDA, and



•

prohibit device exports that do not comply with the Medical Device Act unless they comply with established foreign regulations, do not conflict with foreign laws, and the FDA and the health agency of the importing country determine export is not contrary to public health.

Most of our products are "medical devices intended for human use" within the meaning of the Medical Device Act and are, therefore, subject to FDA regulation.

    The Medical Device Act establishes complex procedures for compliance based upon FDA regulations that designate devices as Class I (general controls, such as compliance with labeling and record-keeping requirements), Class II (performance standards in addition to general controls) or Class III (pre-market approval application ("PMAA") before commercial marketing). Class III devices are the most extensively regulated because the FDA has determined they are life-supporting, are of substantial importance in preventing impairment of health, or present a potential unreasonable risk of illness or injury. The effect of assigning a device to Class III is to require each manufacturer to submit to the FDA a PMAA that includes information on the safety and effectiveness of the device.

    A medical device that is substantially equivalent to a directly related medical device previously in commerce may be eligible for the FDA's abbreviated pre-market notification "510(k) review" process. FDA 510(k) clearance is a "grandfather" process. As such, FDA clearance does not imply that the safety, reliability and effectiveness of the medical device has been approved or validated by the FDA, but merely means that the medical device is substantially equivalent to a previously cleared

12

commercially-related medical device. The review period and FDA determination as to substantial equivalence should be made within 90 days of submission of a 510(k) application, unless additional information or clarification or clinical studies are requested or required by the FDA. As a practical matter, the review process and FDA determination often take significantly longer than 90 days.

    Our IOLs, ICLs and AquaFlow glaucoma device are Class III devices, and our lens injectors, phacoemulsification equipment, ultrasonic cutting tips and surgical packs are Class II devices. We have received FDA pre-market approval for our IOLs (including the Toric and the Collamer IOLs), and FDA 510(k) clearance for our phacoemulsification equipment, lens injectors, ultrasonic cutting tips and surgical packs. We have completed the enrollment for Phase III of the clinical study of the ICL that corrects myopia and we continue to enroll patients in Phase III of the clinical study of the ICL that corrects hyperopia. Our current plan is to submit an application to the FDA for pre-market approval of our ICL to correct myopia in early 2002. In November 2000, the Ophthalmic Device Panel of the FDA's Medical Advisory Committee formally recommended to the Food and Drug Administration to approve our PMA application for the AquaFlow glaucoma device, so long as we continue our two year study after approval and make minor modifications to the device's labeling.

    As a manufacturer of medical devices, our manufacturing processes and facilities are subject to continuing review by the FDA and various state agencies to insure compliance with good manufacturing practices. These agencies inspect our facilities from time to time to determine whether we are in compliance with various regulations relating to manufacturing practices, validation, testing, quality control and product labeling.

    In California, we are also subject to regulation by the local Air Pollution Control District and the United States Environmental Protection Agency as a result of some of the chemicals used in our manufacturing processes.

    Medical device laws and regulations similar to those described above are also in effect in some of the countries to which we export our products. These range from comprehensive device approval requirements for some or all of our medical device products to requests for product data or certifications.

    Clinical Regulatory Requirements In Foreign Countries.  There is a wide variation in the approval or clearance requirements necessary to market products in foreign countries. The requirements range from virtually no requirements to a level comparable to or even greater than those of the FDA. For example, many countries in South America have minimal regulatory requirements, while many developed countries, such as Japan, have requirements at least as stringent as those of the FDA. FDA acceptance is not always a substitute for foreign government approval or clearance.

    As of June 1998 the member countries of the European Union (the "Union") require that all medical products sold within their borders carry a Conformite' Europeenne Mark (CE Mark). The CE Mark denotes that the applicable medical device has been found to be in compliance with guidelines concerning manufacturing and quality control, technical specifications and biological or chemical and clinical safety. The CE Mark supersedes all current medical device regulatory requirements for Union countries. We have obtained the CE Mark for all of our principal products including our ICLs, IOLs (including the Toric IOL and Collamer IOL), and AquaFlow glaucoma device, and the Sonic WAVE Phacoemulsification System.

    Other Regulatory Requirements.  Sales of our products may be affected by health care reimbursement practices. For example, in January 1994, the Health Care Financing Administration adopted rules that limit Medicare reimbursement for IOLs implanted in Medicare patients to a flat fee of $150.

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    We are also subject to various federal, state and local laws applicable to our operations including, among other things, working conditions, laboratory and manufacturing practices, and the use and disposal of hazardous or potentially hazardous substances used in connection with research work.

Research And Development

    We are focused on furthering technological advancements in the ophthalmic products industry through continuous development and innovation of ophthalmic products and materials and related surgical techniques. We maintain an active internal research and development program comprised of 25 employees. Over the past year, we have principally focused our research and development efforts on: (i) developing our Toric ICL, an enhanced AquaFlow glaucoma device and IOLs and ICLs for the correction of presbyopia, (ii) improving insertion and delivery systems for our foldable products; (iii) generally improving the manufacturing systems and procedures for all products to reduce manufacturing costs; (iv) improving the WAVE Phacoemulsification Machine; and (v) developing products for the refractive market. Research and development expenses amounted to approximately $4,215,000, $4,339,000, and $3,570,000 for our 2000, 1999 and 1998 fiscal years, respectively.

Environmental Matters

    We are subject to federal, state, local and foreign environmental laws and regulations. We believe that our operations comply in all material respects with applicable environmental laws and regulations in each country where we have a business presence. Although we make capital expenditures for environmental protection when required, we do not anticipate having to make any significant expenditures during the years 2001 or 2002 which would have a material impact on our capital expenditures, earnings or competitive position. We are not aware of any pending litigation or significant financial obligations arising from current or past environmental practices that are likely to have a material adverse effect on our financial position.

Significant Subsidiaries

    Our only significant subsidiary is STAAR Surgical AG, a wholly owned subsidiary formed in Switzerland to develop, manufacture and distribute worldwide some of our products, including our ICLs and our AquaFlow glaucoma device. Together with STAAR Surgical AG, we have also formed or acquired a number of directly or indirectly owned subsidiaries to distribute and market our products in selected foreign countries. STAAR Surgical AG also controls 80% of Domilens, a major European sales subsidiary that distributes both our products and products from various competitors.

Employees

    Together with our subsidiaries, we had a total of 334 employees as of December 29, 2000, including 70 in administration, 101 in marketing and sales, 25 in research and development and technical services and 138 in manufacturing, quality control and shipping.

Financial Information About Foreign And Domestic Operations

    Approximately $30,712,000, $28,658,000 and $25,345,000 of our overall revenues were generated in the United States for our 2000, 1999 and 1998 fiscal years, respectively, constituting approximately 56%, 48% and 46% of our overall revenues for those years. We believe that international markets represent a significant opportunity for continued growth. Europe, which is our principal foreign market, generated approximately $19,729,000, $23,995,000 and $26,453,000 in revenues for our 2000, 1999 and 1998 fiscal years, respectively, constituting approximately 36%, 41% and 48% of our overall revenues for those fiscal years. The balance of our foreign sales were distributed among the Asian/Pacific, Middle Eastern, South African and South American geographic areas. Most all products sold in 2000

14

were manufactured in the United States and Switzerland. See Note 17 To The Consolidated Financial Statements.

    A significant portion of our revenues relate to our international sales and operations. We expect this to continue to be the case in the future. Our international sales and operations subject us to several potential risks, including;

•

risks associated with fluctuating exchange rates,



•

the regulation of fund transfers by foreign governments,



•

United States and foreign export and import duties and tariffs, and



•

political instability.

The occurrence of any of the foregoing could materially and adversely affect our business. We have not previously engaged in activities to mitigate the effects of foreign currency fluctuations, because historically we have been generally paid in U.S. dollars with respect to our international operations. As earnings from international operations increase, our exposure to fluctuations in foreign currencies may increase, and we may utilize forward exchange rate contracts or engage in other efforts to mitigate foreign currency risks.

    Our continued growth is in part dependent on the expansion of international sales of our products, however this expansion will involve operations in markets where we may not be experienced. We may not be successful in capturing a significant portion of these markets for many reasons, including unsuccessful distribution efforts and an inability to obtain regulatory approvals.

ITEM 2.  DESCRIPTION OF PROPERTY

    Our executive offices and our principal manufacturing and warehouse facilities are located at 1911 Walker Avenue, Monrovia, California. STAAR Surgical AG maintains executive offices and manufacturing and warehouse facilities at Hauptstrasse 104, Nidau, Switzerland. We also maintain complete laboratory facilities in each of our Monrovia and Nidau facilities. Certain of our sales subsidiaries also lease office facilities to facilitate their distribution activities.

    We do not own real property. Our California facilities consist of leased industrial buildings of approximately 107,000 square feet. The leases expire between 2002 and 2003, and currently require aggregate payments of approximately $46,000 per month. STAAR Surgical AG's facilities in Nidau, Switzerland consist of a leased industrial building of approximately 14,000 square feet. The lease expires in 2006, and currently requires payments of approximately $10,000 per month. We believe these properties are suitable and adequate for our purposes.

ITEM 3.  PENDING LEGAL PROCEEDINGS

    We are party to various claims and legal proceedings arising out of the normal course of our business. These claims and legal proceedings relate to contractual rights and obligations, employment matters, and claims of product liability. In addition to legal proceedings arising out of the normal course of our business, during 2000 we were named as a party in the following actions.

Mario Pelegrina v. Andrew F. Pollet, John R. Wolf, Peter J. Utrata, Volker D. Anhaeusser, Joseph Priske, William Huddleston, Carl Manisco, individuals, Pollet & Richardson, a California corporation, and Iotech, Inc., a California corporation, Defendants, and STAAR Surgical Company, Nominal Defendant, Court of Chancery of the State of Delaware, Case No. 18556. In December 2000, Mario Pelegrina filed this shareholder derivative suit against us and certain named directors and officers. Mr. Pelegrina alleges that these directors and officers breached their fiduciary duties by engaging in self-dealing and

15

waste of our assets. Because this is a shareholder derivative action, we are a putative plaintiff and stand to receive any damages that may be awarded.

Novastaar Investments, LLC and Lamar F. Laster, Jr. v. STAAR Surgical Company; Court of Chancery of the State of Delaware; Case No. 18555. Novastaar Investments, LLC filed this action pursuant to Section 220 of the Delaware General Corporation Law to gain inspection of designated books and records belonging to us. This action does not involve any claim against us for monetary damages.

STAAR Surgical Company v. Canon, Inc., Canon Sales Co., Inc. and Norio Kuroda, U. S. District Court for the Central District of California, Civil Action No. 00-04835 GAF (CTx). On May 8, 2000, we filed this action for tortious interference with contractual relations and tortious interference with actual and prospective business advantage. The claim arises from the attempts of Canon, Inc., Canon Sales Co., Inc. and Mr. Kuroda to gain distribution rights and access to our proprietary technology and ophthalmic product lines for the Japanese market. With our consent, this proceeding has been stayed pending further proceedings in the arbitration matter described below.

Canon Sales Co., Inc. and Canon, Inc. v. STAAR Surgical Company, Japan Commercial Arbitration Association, Case No. 00-03. On or about May 31, 2000, Canon, Inc. and Canon Sales Co., Inc. (referred to collectively in this discussion as the "Canon Companies") filed a Request for Arbitration with the Japan Commercial Arbitration Association. The Request for Arbitration relates to the joint venture we formed with the Canon Companies. The Canon Companies have alleged that we breached the joint venture agreement and certain distributor and license agreements. The Canon Companies are seeking unspecified monetary damages for these alleged breaches. On August 9, 2000, we filed a counterclaim in this proceeding, seeking an accounting from the Canon Companies for profits made by the Canon Companies as a result of unfair dealing, for a transfer of the Canon Companies interest in the joint venture to us at book value, and, in the event our request for a transfer is not granted, for the winding up, liquidation and dissolution of the joint venture.

John R. Wolf v. STAAR Surgical Company, Los Angeles Superior Court; Case No. BC235396. On August 18, 2000 John R. Wolf, our former President and Chief Executive Officer and a current member of the Board of Directors, filed this action seeking declaratory and injunctive relief. Mr. Wolf alleges he has the right to exercise certain options in order to purchase shares of our Common Stock and to receive copies of certain documents related to his prior employment. Mr. Wolf is seeking declaratory and injunctive relief, including a declaration of his rights and obligations as they relate to the exercise of stock options and an indemnification for loss of value of the Common Stock represented by the options. We have filed a cross-complaint seeking compensatory damages and ancillary relief on claims arising from Mr. Wolf's employment.

STAAR Surgical Company v. John R. Wolf, Los Angeles Superior Court; Case No. BC235396. On September 18, 2000 we filed a cross-complaint for declaratory relief and monetary damages against Mr. Wolf. In our action, we seek to obtain a judgment from the Court declaring that we are not obligated to issue to Mr. Wolf the Common Stock that he alleges he is entitled to receive. We are also asking the Court to enforce Mr. Wolf's promise to transfer to us 243,067 shares of our Common Stock in payment of certain loans made by the Company to him, or, alternatively, to enforce his promise to pay the loans with cash. Finally, we have asked the Court to declare that Mr. Wolf breached his fiduciary duties to the Company and that the Company had cause to terminate his employment.

John R. Wolf v. STAAR Surgical Company, Andrew F. Pollet, Mary Ann Sapone, David Bailey, Volker Anhaeusser and Peter Utrata, Cross-Complaint filed in Los Angeles Superior Court, Case No. BC235396. On or about March 2, 2001, the Company was served with a cross-complaint filed by Mr. Wolf alleging breach of his employment contract, civil conspiracy to breach his employment contract, intentional infliction of emotional distress, negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, wrongful termination in violation of public policy based on discrimination,

16

violation of section 12941 of the California Government Code, conversion, fraud and deceit, and violation of sections 12921 and 12945.2 of the California Labor Code. Mr. Wolf has asked to be awarded damages according to proof.

Vladimir Feingold v. STAAR Surgical Company, et al., Los Angeles County Superior Court, Case Nos. BC 216184. Mr. Feingold, previously employed by us as Executive Vice President for Research and Development and President of Staar Surgical AG, filed an action in September 1999 alleging claims for breach of contract and constructive termination, breach of the implied covenant of good faith and fair dealing, a common count, statutory unfair competition, and declaratory relief. Mr. Feingold sought $1.7 million in compensatory damages based on his employment contract, other compensatory damages for emotional distress and an award of punitive damages. We entered into an agreement settling this action in October 2000.

Kirtida ("Kirty") Patel v. STAAR Surgical Company, Orange County Superior Court; Case No. OOCC13556. This case was filed on November 9, 2000. Ms. Patel alleges that we wrongfully terminated her employment in violation of California law protecting against discharge in contravention of public policy and in violation of an alleged partially oral and partially written employment agreement. Ms. Patel's complaint includes, but is not limited to, allegations that certain present and former members of our management instructed her not to contact the FDA regarding its guidelines concerning stability studies she was conducting, authorized the shipment of products without having them first properly tested and validated, and did not provide accurate information to the FDA regarding the manufacture of certain products. Ms. Patel seeks unspecified monetary damages related to her discharge, including damages for emotional distress.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    There were no matters submitted to a vote of security holders during the quarter ended December 29, 2000.

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PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

    Our Common Stock is quoted on the National Association of Securities Dealers Automatic Quotation ("NASDAQ") National Market under the symbol "STAA." The following table sets forth the reported high and low sale prices of the Common Stock as reported by Nasdaq for the calendar periods indicated:

	Period	High		Low
2000:	Fourth Quarter	$	18.000	$	11.125
	Third Quarter		17.313		11.000
	Second Quarter		13.813		10.125
	First Quarter		13.875		10.250
1999:	Fourth Quarter	$	12.375	$	9.375
	Third Quarter		16.250		10.500
	Second Quarter		13.875		7.375
	First Quarter		10.938		7.125

    The last reported sale price for our Common Stock on the Nasdaq National Market on March 26, 2001 was $4.22 per share. As of March 26, 2001, there were approximately 1,157 record holders of our Common Stock.

    We have not paid any cash dividends on our Common Stock since our inception. We currently anticipate that all income will be retained to further develop our business and that no cash dividends on the Common Stock will be declared in the foreseeable future.

    On October 2, 2000 we completed a private placement of 1,500,000 shares of our Common Stock. CIBC World Markets and Adams, Harkness & Hill, Inc. acted as placement agents for this offering. The Common Stock was sold to institutions. The aggregate offering price of the Common Stock sold in this private placement was $21 million. Of this amount, approximately $2,300,000 was paid for placement agent fees, legal fees and other costs relating to the private placement. The Common Stock was sold pursuant to Rule 506 of Regulation D promulgated under the Securities Act of 1933, based upon the fact that there were less than 35 purchasers and all purchasers were accredited investors.

    On November 29, 1999 we purchased an additional 20% interest in Domilens, a German distributorship, (giving us a total interest of 80%) in exchange for cash and 125,000 shares of our Common Stock. This issuance was exempt from registration under the Securities Act of 1933 pursuant to the exemptions from registration provided by Section 4(2) of the Act.

    On December 3, 1999 we purchased a majority of the shares of Circuit Tree Medical, Inc. from its two shareholders in exchange for cash and a total of 145,772 shares of our Common Stock. This issuance was exempt from registration under the Securities Act of 1933 pursuant to the exemptions from registration provided by Section 4(2) of the Act.

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ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

    The following table sets forth selected consolidated financial data with respect to our five most recent fiscal years ended December 29, 2000, December 31, 1999, January 1, 1999, January 2, 1998 and January 3, 1997. The selected consolidated statement of income data set forth below for each of our three most recent fiscal years, and the selected consolidated balance sheet data set forth below at December 29, 2000 and December 31, 1999, are derived from our Consolidated Financial Statements which have been audited by BDO Seidman, LLP, independent certified public accountants, as indicated in their report which is included elsewhere in this Annual Report. The Company changed its method of accounting for start-up costs in 1998. The selected consolidated statement of income data set forth below for each of the two fiscal years in the periods ended January 2, 1998 and January 3, 1997, and the consolidated balance sheet data set forth below at January 1, 1999, January 2, 1998 and January 3, 1997 are derived from our audited consolidated financial statements not included in this Annual Report. The selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements of the Company, and the Notes thereto, included elsewhere in this Annual Report, and "Management's Discussion And Analysis Of Financial Condition And Results Of Operations" in Item 7.

	Fiscal Year Ended
	December 29, 2000			December 31, 1999			January 1, 1999			January 2, 1998			January 3, 1997
	(In thousands except per share data)
Statement of Operations
Sales	$	53,986		$	58,955		$	54,244		$	42,480		$	41,213
Royalty and other income		448			253			899			3,040			1,000
Total revenues		54,434			59,208			55,143			45,520			42,213
Cost of sales		26,329			22,935			18,533			10,262			10,196
Gross profit		28,105			36,273			36,610			35,258			32,017
Selling general and administrative
General and administrative		8,593			7,939			6,770			6,334			5,628
Marketing and selling		21,254			19,879			18,709			12,719			12,227
Research and development		4,215			4,339			3,570			3,936			4,085
Restructuring, impairment, and other non-recurring charges		13,776			—			—			—			—
Total selling general and administrative		47,838			32,157			29,049			22,989			21,940
Operating income (loss)		(19,733	)		4,116			7,561			12,269			10,077
Total other income (expense)		(5,662	)		(681	)		(763	)		(579	)		153
Income (loss) before income taxes, minority interest and cumulative effect of change in accounting method		(25,395	)		3,435			6,798			11,690			10,230
Income tax provision (benefit)		(6,580	)		862			1,999			4,271			3,339
Minority interest		87			419			662			—			—
Net income (loss) before accounting change		(18,902	)		2,154			4,137			7,419			6,891
Cumulative effect of accounting change		—			—			(1,680	)
Net income (loss)	$	(18,902	)	$	2,154		$	2,457		$	7,419		$	6,891
Diluted income (loss) per share before effect of change in accounting method	$	(1.23	)	$	0.15		$	0.29		$	0.53		$	0.50
Basic net income (loss) per share	$	(1.23	)	$	0.15		$	0.18		$	0.57		$	0.53
Diluted net income (loss) per share	$	(1.23	)	$	0.15		$	0.17		$	0.53		$	0.50
Weighted average number of basic shares		15,378			14,157			13,542			13,124			12,910
Weighted average number of diluted shares		15,378			14,756			14,268			14,113			13,867
Balance Sheet Data
Working capital	$	24,303		$	28,187		$	26,925		$	24,936		$	15,000
Total assets		80,152			85,160			73,290			62,391			52,056
Notes payable and current portion of long-term debt		7,944			3,203			2,312			1,608			8,193
Long-term debt		—			13,673			10,021			5,750			844
Stockholders' equity	$	58,465		$	52,684		$	47,706		$	44,783		$	36,604

    The following table sets forth unaudited operating data for each of the specified quarters of the fiscal years ended December 29, 2000 and December 31, 1999. This quarterly information has been prepared on the same basis as the annual consolidated financial statements and, in the opinion of

19

management, contains all adjustments necessary to state fairly the information set forth herein. The sum of the four quarters earnings per share may not agree to the fiscal year earnings per share due to rounding.

For the Fiscal Year Ended:	First Quarter		Second Quarter			Third Quarter		Fourth Quarter
	(in thousands except per share data)
December 29, 2000
Revenues	$	14,138	$	12,848		$	13,664	$	13,784
Gross Profit		8,658		2,718			8,310		8,419
Net Income (Loss)		264		(18,514	)		542		(1,194	)
Basic Income Per Share		.02		(1.25	)		.04		(.07	)
Diluted Income Per Share		.02		(1.25	)		.04		(.07	)
December 31, 1999
Revenues	$	14,783	$	14,774		$	13,824	$	15,827
Gross Profit		9,038		9,285			8,846		9,104
Net Income		673		677			527		277
Basic Income Per Share		.05		.05			.04		.02
Diluted Income Per Share		.05		.05			.04		.02

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    Except for the historical information contained in this Annual Report, the matters discussed in Management's Discussion And Analysis Of Financial Condition And Results Of Operations are forward-looking statements, the accuracy of which is necessarily subject to risks and uncertainties. Actual results may differ significantly from the discussion of such matters in the forward-looking statements.

Results of Operations

    The following table sets forth the percentage of total revenues represented by certain items reflected in the Company's income statement for the period indicated and the percentage increase or decrease in such items over the prior period.

	Percentage of Total Revenues						Percentage Change
	December 29, 2000		December 31, 1999		January 1, 1999		1999 vs. 2000		1998 vs. 1999
Total revenues	100.0	%	100.0	%	100.0	%	(8.1	)%	7.4	%
Cost of sales	48.4	%	38.7	%	33.6	%	14.8	%	23.7	%
Gross Profit	51.6	%	61.3	%	66.4	%	(22.5	)%	(.9	)%
Costs and expenses:
General and administrative	15.8	%	13.4	%	12.3	%	8.2	%	17.3	%
Marketing and selling	39.0	%	33.6	%	33.9	%	6.9	%	6.3	%
Research and development	7.7	%	7.3	%	6.5	%	(2.9	)%	21.5	%
Restructuring, impairment and other non-recurring charges	25.4	%	—		—		—		—
Total costs and expenses	87.9	%	54.3	%	52.7	%	48.8	%	10.7	%
Operating income(loss)	(36.3	)%	7.0	%	13.7	%	—		(45.6	)%
Other expense, net	(10.4	)%	(1.2	)%	(1.4	)%	730.2	%	(10.6	)%
Income(loss) before income taxes	(46.7	)%	5.8	%	12.3	%	—		(49.5	)%
Income tax provision(benefit)	(56.9	)%	(12.1	)%	1.5	%	3.6	%	—
Accounting Change—Elimination of minority interest	.2	%	.7	%	4.2	%	(79.4	)%	(82.1	)%
Net income	(34.7	)%	3.6	%	4.5	%	—		(12.3	)%

20

2000 Fiscal Year Compared to 1999 Fiscal Year

    Revenues.  Revenues for the year ended December 29, 2000 were $54.4 million, representing a 8.4% decrease over the $59.2 million in revenues for the year ended December 31, 1999. The primary reasons for the decrease in revenues were the reduced U.S. dollar amounts recorded by international subsidiaries due to the strength of the U.S. dollar as compared to foreign currencies most specifically the German Mark, decreased sales to the Company's joint-venture CanonSTAAR, continuing decline in sales of the Company's silicone IOL's in Europe and lower average selling prices on international sales of the Company's Implantable Contact Lens due to the change from direct selling to selling through international distributors. These decreases were offset by increased sales of the Sonic WAVE Phacoemulsification system which was introduced in the third quarter, increased revenue from the sales of the Collamer™ single piece IOL approved for sale in April 2000, increased revenues from sales of Toric™ IOL, and increased revenues from a full year of sales of custom surgical packs to our U.S. customers which began in mid-year 1999. Other revenue in 2000 increased over 1999 by $195,000.

    The Company is expanding its market focus beyond the cataract market to also include the refractive and glaucoma markets. The Company anticipates its growth in the refractive and glaucoma product markets will increase as the Company's refractive lenses (ICL™ and Toric™ IOL) and its glaucoma (AquaFlow™) product lines continue to gain market acceptance. The Company believes its sales of products used for the treatment of cataracts will grow with its increased international presence, its U.S. approval of new products such as its Collamer IOL and the introduction of the Sonic WAVE™ Phacoemulsification System.

    Cost of Sales.  Cost of sales increased to 48.4% of revenue for the year ended December 29, 2000 from 38.7% of revenue for the year ended December 31, 1999. The primary reason for this 10.1% increase relates to an inventory write-off of $5.2 million, recorded during the second quarter of 2000, of various items that no longer fit the Company's future direction. Additionally, despite higher average selling prices for IOLs, higher average unit cost caused the cost of sales as a percentage of revenue exclusive of the above-mentioned write-off to increase slightly to 38.8%. The increase in average selling price was due to the change in product mix to the Company's premium priced IOL's (Toric and Collamer). The higher average cost of IOL's was due principally to the changes in product mix to the Collamer IOL and to a lesser extent increased unit cost due to lower manufacturing activity levels causing the units produced to carry a higher per unit cost from absorption of fixed expenses. Additionally the full year of sales of custom surgical packs in the U.S., have a higher cost of sales as a percentage of sales when compared to the other products the Company offers. The Company expects IOL unit growth in 2001 to be modest and combined with a plan of reducing overall inventory the Company expects the cost of units produced in 2001 to increase. The Company will not be able to reduce the costs of sales to levels attained in 1997 and prior years until sales of its refractive lenses and its AquaFlow™ glaucoma device make up a larger percent of the Company's overall revenues.

    General and Administrative.  General and administrative expense for the year ended December 29, 2000 were $8.6 million or 15.8% of revenue as compared to $7.9 million or 13.4% of revenue for the year ended December 31, 1999. This increase in dollars is primarily attributable to increases in expenditures for professional service fees, expenses recorded in the second quarter at the time of the Company's restructuring plan and, increased expenses year over year from subsidiaries acquired or created in late 1999. The increase as a percent of revenues was due to the expenses increasing at a rate greater than the current growth rate of revenues.

    Marketing and Selling.  Marketing and selling expenses for the year ended December 29, 2000 were $21.3 million or 39.0% of revenue as compared to $19.9 million or 33.6% of revenue for the year ended December 31, 1999. The primary reasons for this increase are the compensation and travel costs related to direct sales management for IOL sales and the Company's Sonic WAVE Phacoemulsification System which were established during late 1999 and 2000, increased commissions generated by the

21

graduated commission schedule which has higher percentage rates as IOL sales price increases, average selling prices increase over 1999 due to the change in IOL mix to the Company's proprietary IOL's. Additionally the Company has continued to increase the expenses for product management to prepare for broader entry into the refractive and glaucoma markets. These increases were offset in part due to the reduced U.S. dollar amounts recorded by international subsidiaries due to the strength of the U.S. dollar as compared to foreign currencies most specifically the German Mark.

    Research and Development.  Research and development expenses for the year ended December 29, 2000 were $4.2 million or 7.7% of revenue as compared to $4.3 million or 7.3% of revenue for the year ended December 31, 1999. Research and development expense decreased slightly over the prior year due reduction in R&D staffing offset by increased spending related to the monitoring of clinical trials for the ICL™ for the correction of myopia, ICL™ for the correction of hyperopia and the AquaFlow™ glaucoma device. Additionally expenses increased related to the development and improvement of Company's Sonic WAVE Phacoemulsification System. The Company expects research and development expense to be in the range of $4.3 million to $4.6 million.

    Restructuring, impairment and other non-recurring charges  On June 22, 2000, the Company announced the details of its plan of restructuring. In conjunction with the implementation of the plan, the Company recorded a pretax charge to earnings of $13.8 million in the second quarter of fiscal 2000. The changes include approximately $0.9 million for restructuring of certain subsidiaries, approximately $4.0 million to write-off patents that were considered questionable in providing future value to the Company, approximately $l.9 million of costs incurred by the Company relating to activities that were abandoned, approximately $4.1 million relating to severance and other employee separation costs, approximately $1.9 million relating to the disposition of investment and assets related to the Company's abandoned entry into the Lasik market, and approximately $1.0 million relating to the closure of a foreign subsidiary. 19 employees were laid-off, terminated or resigned as part of the Company's restructuring plan.

    Other Expense or Income, Net.  Other expense for the year ended December 29, 2000 was a net of approximately $5.7 million or 10.4% of revenues as compared to approximately $0.7 million or 1.2% of revenues for the prior year. The primary reasons for this increase were $4.7 million charge relating to the write-off of its Japanese joint venture and a charge to related to a note receivable from a former officer which is currently under collateralized. The Company's disputes with its Japanese joint venture partners are currently in arbitration.

    Income Tax Provision.  Income tax benefit was $6.6 million for the year ended December 29, 2000 as compared to a provision of $.9 million for the year ended December 31, 1999. The reasons for the change relate to the dramatic reduction in income before income taxes which was due primarily to the charges taken in the second quarter which totaled $24 million before income taxes. During 2000, the Company recorded a deferred tax asset that resulted from the losses recorded for the year. The Company has been profitable in the past and with the introduction of new products expects to return to profitability in the future. The Company would have been profitable in the current year with the exclusion of charges relating to the restructuring plan and the reserve for notes receivable. The Company expects to have adequate future earnings to take advantage of the amounts recorded.

1999 Fiscal Year Compared To 1998 Fiscal Year

    Revenues.  Revenues for the year ended December 31, 1999 were $59.2 million, representing a 7.4% increase over the $55.1 million in revenues for the year ended January 1, 1999. The primary reasons for the increase in revenues were increased IOL market share in the United States which had been lost in 1998 due to a new product introduction by a competitor, increased revenue from the sales of the Toric™ IOL, increased revenue from sales of the Company's ICLs™ and revenue from new activities in the United States. Incremental revenues from the increase in United States IOL market

22

share, exclusive of increases related to sales of the Company's Toric™ IOL, amounted to approximately $1.1 million, incremental revenue from the Company's Toric™ IOL and the Company's ICLs™ was approximately $1.5 million and $1.1 million respectively. During 1999 the Company formed a wholly owned subsidiary that operates refractive laser centers and began selling custom surgical packs to its U.S. customers. Revenue from these new activities accounted for approximately $1.0 million. These increases were offset partially due to a decline in other revenue.

    Cost of Sales.  Cost of sales increased to 38.7% of revenue for the year ended December 31, 1999 from 33.6% of revenue for the year ended January 1, 1999. The primary reasons for this 5.1% increase relates to lower average selling prices for IOLs, higher cost to manufacture during the second half of 1998 and early 1999 and in a shift in product mix to the three-piece Elastimide lens which, by its design, is more costly to manufacture. The decline in average selling price was due in part to the addition of a very large customer and the bulk sale of IOLs during the fourth quarter at lower than average pricing. The reduced sales in 1998 resulted in lowered production activity in the second half of 1998 and early 1999 therefore, the units produced in those time periods reflected a higher per unit cost from absorption of fixed expenses. Additionally new activities of 1999, laser centers and custom surgical packs, have a higher cost of sales as a percentage of sales when compared to the other products the Company offers.

    General and Administrative.  General and administrative expense for the year ended December 31, 1999 was $7.9 million, or 13.4% of revenues, as compared to $6.8 million, or 12.3% of revenues for the prior fiscal year. This increase in dollars is primarily attributable to the Company starting to build the administrative infrastructure required to support the expected growth as its new products enter the marketplace. Additionally, there were increases in professional service fees, the costs of administration of the new laser center subsidiary, and travel and other expenses resulting from managing the sales subsidiaries. The increase as a percent of revenues was due to the expenses increasing at a rate greater than the current growth rate of revenues.

    Marketing and Selling.  Marketing and selling expense for the year ended December 31, 1999 was $19.9 million or 33.6% of revenues, as compared to $18.7 million or 33.9% of revenues for the prior fiscal year. The primary reasons for this increase are the marketing costs related to the product launch of the Company's Toric™ IOL in 1999 and preparation for the product launch of the Collamer IOL in early 2000. Additionally the Company has continued to increase the expenses for product management to prepare for broader entry into the refractive and glaucoma markets.

    Research and Development.  Research and development expense for the year ended December 31, 1999 was $4.3 million, or 7.3% of revenues as compared to $3.6 million or 6.5% of revenues for the year ended January 1, 1999. Research and development expense increased over the prior year due to increased spending related to monitoring of the clinical trials for the ICL™ for the correction of myopia, ICL™ for the correction of hyperopia and the AquaFlow™ glaucoma device. Additionally expenses increased related to the completion of the patient enrollment and implants for the clinical trial for the ICL™ for the correction of myopia and increased expenditures for developing new injection technologies for IOLs and ICLs™.

    Other Expense or Income, Net.  Other expense for the year ended December 31, 1999 was a net of approximately $.7 million or 1.2% of revenues as compared to approximately $.8 million or 1.4% of revenues for the prior year. The primary cause for the decrease in other expense was due to increased earnings from the Company's joint venture with Canon Staar.

    Income Tax Provision.  Income tax provision decreased to $.9 million or 1.4% of revenues for the year ended December 31, 1999 compared to $2.0 million or 3.6% of revenues for the prior fiscal year. The reasons for the reduction stem from the Company's lower pretax earnings and the receipt of more than 50% of its revenues from international sources, where tax rates are more favorable.

23

Liquidity And Capital Resources

    The Company has funded its activities over the past several years principally from cash flow generated from operations, credit facilities provided by institutional domestic and foreign lenders, private placement of common stock and the exercise of stock options and warrants.

    On June 22, 2000, the Company announced the details of its plan of restructuring. In conjunction with the implementation of the plan, the Company recorded a pretax charge to earnings of $13.8 million in the second quarter of fiscal 2000. The charges include approximately $0.9 million for the restructuring of certain subsidiaries, approximately $4.0 million to write-off patents that were determined to have no value to the Company, approximately $1.9 million of costs incurred by the Company relating to activities that were abandoned, approximately $4.1 million relating to severance and other employee separation costs, approximately $1.9 million relating to the disposition of investment and assets related to the Company's abandoned entry into the Lasik market, and approximately $1.0 million relating to the closure of a foreign subsidiary. Of the total restructuring charge, $4.2 million was accrued for future cash expenditures. At December 29, 2000, approximately $2.2 million of accrued expenses remained.

    In October 2000, the Company completed a private placement with institutional investors of 1.5 million shares of the Company's common stock for net proceeds of $18.7 million.

    The Company had a loan agreement with a domestic lender which carried an interest rate not to exceed the Prime Rate less 0.5% on any outstanding principal amount. The loan agreement granted the lender a security interest in the Company's accounts receivable, inventories, property, plant and equipment, and other general intangibles. The loan agreement also required that the Company maintain and satisfy certain financial tests and limited the amount of indebtedness the Company could incur (collectively the "restrictive covenants").

    The Company was current in its payment of principal and interest to the Lender as provided for under the loan agreement. However, the Company was not in compliance with certain of the restrictive covenants during the first quarter, and to a larger extent the second quarter of 2000, which is attributable to the Restructuring Plan. The Company obtained forbearance letters from the Lender who agreed to forbear from exercising its rights and remedies under the loan agreement.

    In an agreement with the lender, the Company paid off all of its term debt and a portion of its line-of-credit with funds obtained through the private placement of shares of the Company's common stock and renegotiated its line-of-credit. The new agreement provides a line-of-credit not to exceed $7.0 million at a rate of interest equal to the prime rate (9.50% at December 29, 2000) and grants the lender a security interest in the Company's accounts receivable, inventories, property, plant and equipment, and other general intangibles. The agreement has certain financial ratios and other restrictive covenants including the maintaining of minimum cash balances. The note as amended is due on July 2, 2001. The Company was not in compliance with the net income covenant at December 29, 2000 but obtained a waiver from the lender who agreed to waive its rights and remedies under the loan agreement. Borrowings outstanding as of December 29, 2000 were $5,724,024. The Company is in the process of seeking alternative financing to pay-down or payoff the line of credit, however there is no assurance the Company will be successful in obtaining the necessary financing or obtaining financing on favorable terms.

    During 2000, the Company renegotiated its revolving credit facility with a foreign lender. The new agreement provides for borrowings under a revolving credit facility and also provides for fixed term loans. Maximum allowable borrowings under the revolving credit facility are $1,835,000 (3,000,000 Swiss Francs at the exchange rate at December 29, 2000), at an interest rate of 5.5% per annum and a credit commission of .25% payable quarterly on the average debit balance. The loan does not have a

24

termination date and is secured by a general assignment of claims. Borrowings outstanding under the credit facility as of December 29, 2000 were $1,536,585 (2,512,316 Swiss Francs).

    The fixed term loan provides for borrowings of up to $1,223,000 (2,000,000 Swiss Francs).  Minimum advances of CHF 500,000 may be made for periods of 1 to 5 years. Payments in the amount of CHF 250,000 are due semi-annually beginning June 30, 2002. The base interest rate used follows Euromarket conditions for loans of the corresponding term and currency. There were no borrowings outstanding under the term loan as of December 29, 2000.

    The Company has a revolving overdraft facility with another foreign lender which provides for borrowings of up to approximately $950,000 (2.0 million Deutsch Marks at the exchange rate at December 29, 2000), at an interest rate of 9%. The loan is renewed annually with a due date of May 31, 2001 and is secured by an assignment of accounts receivable and inventory. Borrowings outstanding as of December 29, 2000 and December 31, 1999 were $683,505 (DM 1,438,352) and $511,299 (DM 939,025), respectively.

    As of December 29, 2000, the Company had net working capital of approximately $24.3 million as compared to $28.2 million and $26.9 million as of December 31, 1999 and January 1, 1999, respectively. The decrease in working capital as of December 29, 2000 is primarily due to the reclassification of long-term debt to notes payable as a result of the Company not fulfilling the bank's financial covenants. The increase in working capital from January 1, 1999 to December 31, 1999 was due to increases in inventories of $1.5 million; prepaid and deposits of $0.6 million; other current assets of $1.2 million; and a decrease in current deferred income tax of $2.8 million; offset by a decrease in cash of $1.3 million and increases in accounts payable or $2.5 million and other current liabilities of $1.0 million.

    Cash and cash equivalents were $6.1 million at December 29, 2000, an increase of $2.7 million from December 31, 1999. The increased cash is primarily the result of funds received from a private placement of the Company's common stock after having paid off the Company's long-term debt and a portion of its line-of-credit. The decline in the Company's cash position as of December 31, 1999 was due to increased investment in property and equipment in preparation for the launch of the Collamer IOL.

    Cash flows used in operating activities for the year ended December 29, 2000 were approximately $5.4 million, compared to 1999 and 1998 when operating activities generated approximately $4.9 million and $4.3 million, respectively. The increase related to changes in working capital is due primarily to increases in inventory, due to the launch of the Collamer IOL in the United States, of approximately $4.0 million; and accounts receivable of approximately $1.1 million. These increases exclude the impact of restructuring write-offs. Additionally, the Company reduced its accounts payable during 2000 by approximately $1.2 million. Working capital changes had a far lesser impact on cash in 1999 due to the fact that increases in inventories and prepaids, deposits, and other current assets were offset by corresponding increases in accounts payable and other current liabilities.

    Cash used in investing activities for the year ended December 29, 2000 were $3.8 million compared to December 31, 1999 and January 1, 1999 when the Company used $10.7 and $10.1 in investing activities. The change relates to an overall decrease in investments and in particular to decreased patent costs of approximately $3.1 million, decreased purchases of property and equipment of approximately $1.1 million and a decrease in other assets and acquisitions of approximately $2.0 million. Cash used in investing activities for the year ended December 31, 1999 increased over the previous year due to increased purchases of property and equipment and patents offset by a decrease in acquisitions.

    Cash flows from financing activities for the year ended December 29, 2000 were approximately $12.2 million compared to December 31, 1999 and January 1, 1999 when they were approximately

25

$5.2 million and $4.1 million, respectively. The increase is due to proceeds of approximately $18.7 million from a private placement of the Company's common stock offset by payments on notes payable and long-term debt. The increase in cash from financing activities for the year ended December 31, 1999 was attributable to an increase in proceeds from the issuance of common stock of approximately $1.1 million.

    The Company's capital expenditures for the fiscal years ended December 29, 2000 and December 31, 1999 were approximately $3.3 million and $4.5 million, respectively. The expenditures were used to upgrade existing production equipment, to set up new production facilities for new products, and to reduce current manufacturing costs. The Company's planned capital expenditures for 2001 are approximately $1.0 million, to be used for the continuous improvement of manufacturing processes.

    Capitalized additions for patents and licenses for the year ended December 29, 2000 and December 31, 1999 were approximately $.8 million and $3.9 million, respectively. The Company capitalizes the costs of acquiring patents and licenses as well as the legal costs of defending its rights to the patents. The Company expects to spend approximately $.5 million in 2001 for patents and licenses.

    Management believes that cash flow from operations and available credit facilities, together with its current cash balances, will provide adequate economic resources to fund existing operations.

Foreign Exchange

    Management does not believe that the fluctuation in the value of the dollar in relation to the currencies of its suppliers or customers in the last three fiscal years has adversely affected the Company's ability to purchase or sell products at agreed upon prices. No assurance can be given, however, that adverse currency exchange rate fluctuations will not occur in the future, which would affect the Company's operating results. See "Uncertainties And Risk Factors—Risks Associated With International Transactions" below.

Inflation

    Management believes inflation has not had a significant impact on the Company's operations during the past three years.

New Accounting Pronouncements

    In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which the Company adopted in 2000. This statement establishes accounting and reporting standards requiring every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company's adoption of SFAS 133 did not have a material impact on the consolidated financial statements.

    In December 1999, the Securities and Exchange Commission ("SEC") released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation and disclosure of revenue in the financial statements filed with the SEC. Subsequently, the SEC released SAB 101B, which delayed the implementation date of SAB 101 for registrants with fiscal years that begin between December 16, 1999 and March 15, 2000. The Company was required to be in conformity with the provisions of SAB 101, as amended by SAB 101B, no later than October 1, 2000. The Company believes the adoption of SAB 101, as amended by SAB 101B, has not had a material effect on the financial position, results of operations or cash flows of the Company for the year ended December 29, 2000.

26

    In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation, the Interpretation of APB Opinion No. 25" (FIN44). The Interpretation is intended to clarify certain problems that have arisen in practice since the issuance of APB No. 25, "Accounting for Stock Issued to Employees." The effective date of the Interpretation was July 1, 2000. The provisions of the Interpretation apply prospectively, but they will also cover certain events occurring after December 15, 1998 and after January 12, 2000. The Company believes the adoption of FIN 44 has not had a material affect on the current and historical consolidated financial statements, but may affect future accounting regarding stock option transactions due to the repricing discussed in Note 10.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    All sales by the Company are denominated in US dollars or the currency of the country of origin and, accordingly, the Company does not enter into hedging transactions with regard to any foreign currencies. Currency fluctuations can, however, increase the price of the Company's products to its foreign customers which can adversely impact the level of the Company's export sales from time to time. The majority of the Company's cash equivalents are bank accounts, and the Company does not believe it has significant market risk exposure with regard to its investments.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Financial Statements and the Report of Independent Certified Public Accountants are filed with this Annual Report on Form 10-K in a separate section following Part IV, as shown on the index under Item 14(a) of this Annual Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

    Not applicable.

27

PART III

ITEMS 10., 11., 12. AND 13.

    The information required in this item is incorporated herein by reference to portions of the Proxy Statement for Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days of the close of the fiscal year ended December 29, 2000.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

		Page
(a)(1)	Financial statements required by Item 14 of this form are filed as a separate part of this report following Part IV
	Report of Independent Certified Public Accountants	F-2
	Consolidated Balance Sheets at December 29, 2000 and December 31, 1999	F-3
	Consolidated Statements of Operations for the years ended December 29, 2000, December 31, 1999, and January 1, 1999	F-4
	Consolidated Statements of Stockholders' Equity and Comprehensive Income (loss) for the years ended December 29, 2000, December 31, 1999, and January 1, 1999	F-5
	Consolidated Statements of Cash Flows for the years ended December 29, 2000, December 31, 1999, and January 1, 1999	F-6
	Notes to Consolidated Financial Statements	F-12

(2)

Schedules required by Regulation S-X are filed as an exhibit to this report:

I.

Independent Certified Public Accountants' Report on Schedules and Consent

II.

Valuation and Qualifying Accounts and Reserves

Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements and the notes thereto

(3)

Exhibits

3.1	Certificate of Incorporation, as amended(9)
3.2	By-laws, as amended(10)
4.1	1990 Stock Option Plan(1)
4.2	1991 Stock Option Plan(2)
4.3	1995 STAAR Surgical Company Consultant Stock Plan(3)
4.4	1996 STAAR Surgical Company Non-Qualified Stock Plan(5)
4.5	Stockholders' Rights Plan, dated effective April 20, 1995(11)
4.6	1998 STAAR Surgical Company Stock Plan, adopted April 17, 1998(6)
10.1	Joint Venture Agreement dated May 23, 1988 between the Company, Canon Sales Co, Inc. and Canon, Inc.(8)
10.2	Promissory Note dated February 28, 1991 from John R. Wolf to the Company(5)

28

10.3	Stock Pledge/Security Agreement dated February 28, 1991 between John R. Wolf, the Company and Pollet & Associates(5)
10.4	Promissory Note dated February 28, 1991 from William C. Huddleston to the Company(5)
10.5	Modification dated September 15, 2000 to Promissory Note dated February 28, 1991 from William C. Huddleston to the Company(10)
10.6	Stock Pledge/Security Agreement dated February 28, 1991 among William C. Huddleston, the Company and Pollet & Associates(5)
10.7	Promissory Note dated May 26, 1992 from the Andrew F. Pollet and Sally M. Pollet Revocable Trust dated March 6, 1990(7)
10.8	Deed of Trust dated September 21, 1992 by the Andrew F. Pollet and Sally M. Pollet Revocable Trust dated March 6, 1990(7)
10.9	Promissory Note dated July 3, 1992 from William C. Huddleston to the Company(7)
10.10	Modification dated August 21, 2000 to Promissory Note dated July 3, 1992 from William C. Huddleston to the Company(10)
10.11	Stock Pledge/Security Agreement dated July 3, 1992 among William C. Huddleston, the Company and Pollet & Associates(7)
10.12	Lease dated November 9, 1992 by and between Linda Lee Brown and Phyllis Ann Bailey and the Company regarding real property located at 1911 Walker Avenue, Monrovia, California(7)
10.13	Indenture of Lease dated September 1, 1993 between the Company and FKT Associates(10)
10.14	Second Amendment to Indenture of Lease dated September 21, 1998 between the Company and FKT Associates(10)
10.14	Indenture of Lease dated October 20, 1983 between Dale E. Turner & Francis R. Turner(7)
10.15	Promissory Note dated March 18, 1993 from William C. Huddleston to the Company(11)
10.16	Modification dated August 21, 2000 to Promissory Note dated March 18, 1993 from William C. Huddleston to the Company(10)
10.17	Employment Agreement dated March 31, 1994 between the Company and Stephen L. Ziemba(11)
10.18	Modification To Employment Agreement dated September 20, 1996 between the Company and Stephen L. Ziemba(11)
10.19	Second Modification to Employment Agreement dated October 6, 2000 between the Company and Stephen L. Ziemba(10)
*10.20	Patent License Agreement dated May 24, 1995 with Eye Microsurgery Intersectoral Research and Technology Complex(11)
10.21	Patent License Agreement dated January 1, 1996 with Eye Microsurgery Intersectoral Research and Technology Complex(11)
10.22	Agreement dated December 31, 1997 between the Company and Mentor Corporation(8)
10.23	Agreement effective January 4, 1998 between STAAR Surgical AG and Gunther Roepstorff(8)
10.24	Supply Agreement dated January 28, 1998 between the Company and Mentor Medical, Inc.(8)

29

10.25	Promissory Note dated September 4, 1998 from John R. Wolf to the Company(8)
10.26	Stock Pledge Agreement dated September 4, 1998 between the Company and John R. Wolf(8)
10.27	Stock Pledge Agreement dated September 4, 1998 between the Company and William C. Huddleston(8)
10.28	Promissory Note dated September 4, 1998 from Andrew F. Pollet to the Company(8)
10.29	Stock Pledge Agreement dated September 4, 1998 between the Company and Andrew F. Pollet(8)
10.30	License and Supply Agreement dated May 6, 1999 between LensTec Incorporated, Lenstec Barbados Inc., STAAR Surgical AG and the Company (9)
10.31	Equipment Purchase and Sale Agreement dated May 6, 1999 between Lenstec, Incorporated and the Company(9)
*10.32	Employment Agreement dated April 28, 1999 between the Company and John Santos(10)
10.33	Modification to Employment Agreement dated May 31, 2000 between the Company and John Santos(10)
10.34	Second Modification to Employment Agreement dated September 5, 2000 between the Company and John Santos(10)
10.35	Promissory Note dated June 16, 1999 from Peter J. Utrata, M.D. to the Company(9)
10.36	Stock Pledge Agreement dated June 16, 1999 by Peter J. Utrata, M.D. in favor of the Company(9)
10.37	Agreement dated July 14, 1999 between CIBC World Markets and the Company(10)
10.38	Employment Agreement dated October 1, 1999 by and between John R. Wolf and the Company(10)
10.39	Employment Agreement dated October 1, 1999 between the Company and William C. Huddleston(10)
10.40	Modification to Employment Agreement dated August 15, 2000 between the Company and William C. Huddleston(10)
10.41	Promissory Note dated November 11, 1999 from Peter J. Utrata, M.D. to the Company (9)
10.42	Promissory Note dated November 12, 1999 from John R. Wolf to the Company(9)
10.43	Promissory Note dated November 17, 1999 from William C. Huddleston to the Company(9)
10.44	Agreement entered into on November 29, 1999 by and between STAAR Surgical AG and Gunther Roepstorff(9)
10.45	Stock Purchase Agreement dated December 5, 1999 by and among the Company, Circuit Tree Medical, Inc., Alex Urich and Michael Curtis(8)
10.46	Standard Industrial/Commercial Multi-Tenant Lease-Gross dated April 5, 2000 entered into between the Company and Kilroy Realty, L.P.(10)
10.47	Promissory Note dated April 7, 2000 from Carl M. Manisco to the Company(10)
10.48	Promissory Note dated April 7, 2000 from William C. Huddleston to the Company(10)
10.49	Modification dated August 21, 2000 to Promissory Note dated April 7, 2000 from William C. Huddleston to the Company(10)

30

10.50	Description of oral agreement between John R. Wolf and the Company dated April 18, 2000(10)
10.51	Agreement dated May 12, 2000 between CIBC World Markets and the Company(10)
10.52	Promissory Note dated June 2, 2000 from Peter J. Utrata, M.D. to the Company(10)
10.53	Stock Pledge Agreement dated June 2, 2000 between the Company and Peter J. Utrata, M.D.(10)
10.54	Resignation, Settlement and Release Agreement dated June 9, 2000 between the Company and Michael Lloyd(10)
10.55	Parking Lot and Storage Lease dated June 11, 2000 between the Company and Gilbert Bates and LaVonne Bates(10)
10.56	Promissory Note dated November 1, 2000 from Andrew F. Pollet to the Company(10)
10.57	Deed of Trust dated September 5, 2000 against real property commonly known as 10934 Alto Court, Oak View, California executed in favor of the Company by Andrew F. Pollet and Sally M. Pollet, as individuals and as trustees of the Andrew  F. and Sally M. Pollet Revocable Trust dated March 6, 1990(10)
10.58	Agreement dated September 8, 2000 between the Company and CIBC World Markets(10)
10.59	Consulting Agreement dated September 19, 2000 between the Company and Donald R. Sanders, Ltd.(10)
10.60	Form of Purchase Agreement entered into between the Company and Fortis Advantage Portfolios, Inc.—Capital Appreciation Portfolio(10)
10.61	Form of Purchase Agreement entered into between the Company and Fortis Series Fund, Inc.—Aggressive Growth Series(10)
10.62	Form of Purchase Agreement entered into between the Company and Phoenix Edge Series Fund Engemann Small & Mid Cap Growth Series(10)
10.63	Form of Purchase Agreement entered into between the Company and Phoenix-Engemann Small Cap Fund(10)
10.64	Form of Purchase Agreement entered into between the Company and Phoenix-Engemann Small & Mid-Cap Growth Fund(10)
10.65	Form of Purchase Agreement entered into between the Company and Pequot Scout Fund, L.P.(10)
10.66	Form of Purchase Agreement entered into between the Company and Pequot Navigator Offshore Fund, Inc.(10)
10.67	Form of Purchase Agreement entered into between the Company and Baystar International, Ltd.(10)
10.68	Form of Purchase Agreement entered into between the Company and Baystar Capital, L.P.(10)
10.69	Form of Purchase Agreement entered into between the Company and Invesco Global Health Sciences Fund(10)
10.70	Promissory Note dated September 5, 2000 from Andrew F. Pollet to the Company(10)
10.71	Settlement Agreement and Mutual Release dated October 27, 2000 between the Company and Vladimir Feingold(10)

31

10.72	Revolving Line of Credit Note with Wells Fargo Bank, National Association dated October 31, 2000
10.73	Promissory Note dated October 23, 2000 from Andrew F. Pollet to the Company(10)
10.74	Settlement Agreement and Mutual Release dated December 4, 2000 between the Company and William C. Huddleston(10)
10.75	Employment Agreement dated December 19, 2000 between the Company and David Bailey(10)
10.76	Royalty Buy-Out Agreement dated May 30, 2000 between the Company and Bausch & Lomb Surgical, Inc(10)
21	List of Significant Subsidiaries(10)

(Footnotes to Exhibits):

*

To be filed by Amendment

(1)

Incorporated by reference from the Company's Registration Statement on Form S-8, File No. 33-37248, as filed on October 11, 1990

(2)

Incorporated by reference from the Company's Registration Statement on Form S-8, File No. 33-76404, as filed on March 11, 1994

(3)

Incorporated by reference from the Company's Registration Statement on Form S-8, File No. 33-60241, as filed on June 15, 1995

(4)

Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 29, 1995, as filed on March 28, 1996

(5)

Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended January 3, 1997, as filed on April 2, 1997

(6)

Incorporated by reference from the Company's Proxy Statement for its Annual Meeting of Stockholders held on May 29, 1998, as filed on May 4, 1999.

(7)

Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended January 1, 1998, as filed on April 1, 1998

(8)

Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended January 1, 1999, as filed on April 1, 1999

(9)

Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1999, as filed on March 28, 2000

(10)

Filed herewith

(11)

Re-filed herewith pursuant to Reg. S-K 229.10(d)

32

SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March   , 2001.

STAAR SURGICAL COMPANY
By:	/s/ DAVID BAILEY David Bailey, President and Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant on March   , 2000 and in the capacities indicated.

/s/ DAVID BAILEY David Bailey	President, Chief Executive Officer and Chairman
/s/ JOHN SANTOS John Santos	Chief Financial Officer (principal accounting and financial officer)
/s/ DAVID BAILEY David Bailey	Director
/s/ PETER UTRATA, M.D. Peter Utrata, M.D.	Director
/s/ VOLKER ANHAEUSSER Volker Anhaeusser	Director

33

STAAR SURGICAL COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 29, 2000,
DECEMBER 31, 1999 AND JANUARY 1, 1999

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
STAAR Surgical Company

    We have audited the accompanying consolidated balance sheets of STAAR Surgical Company and subsidiaries as of December 29, 2000 and December 31, 1999, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for each of the three years in the period ended December 29, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of STAAR Surgical Company and subsidiaries as of December 29, 2000 and December 31, 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 29, 2000, in conformity with accounting principles generally accepted in the United States of America.

    As discussed in the Summary of Accounting Policies to the consolidated financial statements, the Company changed its method of accounting for start-up costs in 1998.

/s/ BDO SEIDMAN, LLP

Los Angeles, California
March 12, 2001

F-2

STAAR SURGICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 29, 2000 and December 31, 1999

			2000			1999
ASSETS
Current assets:
	Cash and cash equivalents		$	6,087,018		$	3,344,128
	Accounts receivable, less allowance for doubtful accounts of $781,028 and $373,496 (Note 1)			9,662,028			9,426,813
	Other receivables (Note 7)			2,978,657			3,020,027
	Inventories (Note 2)			20,807,872			22,318,131
	Prepaids, deposits and other current assets			4,175,144			4,530,362
	Deferred income tax, current (Note 7)			1,763,042			815,019
		Total current assets		45,473,761			43,454,480
Investment in joint venture (Note 4)				—			3,577,450
Property, plant and equipment, net (Note 3)				13,625,907			12,676,480
Patents and licenses, net of accumulated amortization of $3,147,571 and $5,076,132 (Notes 8 and 9)				10,537,878			14,599,361
Goodwill, net of accumulated amortization of $1,038,984 and $784,169 (Note 8)				6,357,425			7,744,267
Deferred income tax, non-current (Note 7)				3,087,772			—
Other assets				1,069,450			3,108,337
			$	80,152,193		$	85,160,375
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Notes payable (Note 5)		$	7,944,114		$	1,391,472
	Accounts payable			6,198,735			7,448,714
	Current portion of long-term debt (Note 6)			—			1,811,164
	Other current liabilities (Note 12)			7,028,304			4,616,037
		Total current liabilities		21,171,153			15,267,387
Long-term debt, net of current portion (Note 6)				—			13,673,254
Deferred income tax, non-current (Note 7)				—			2,596,419
Other long-term liabilities (Note 12)				312,239			403,631
		Total liabilities		21,483,392			31,940,691
Minority interest				203,920			536,055
Commitments and contingencies (Note 11)
Stockholders' equity (Notes 10 and 16):
	Common stock, $.01 par value; 30,000,000 shares authorized; issued and outstanding 16,948,831 and 14,752,339			169,488			147,523
	Capital in excess of par value			75,046,594			51,205,459
	Accumulated other comprehensive loss			(1,583,793	)		(1,282,025	)
	Retained earnings (deficit)			(9,429,764	)		9,471,835
				64,202,525			59,542,792
		Notes receivable from officers and directors (Note 10)		(5,737,644	)		(6,859,163	)
		Total stockholders' equity		58,464,881			52,683,629
			$	80,152,193		$	85,160,375

See accompanying summary of accounting policies and notes to consolidated financial statements.

F-3

STAAR SURGICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 29, 2000, December 31, 1999 and January 1, 1999

			2000			1999			1998
Sales			$	53,985,872		$	58,954,700		$	54,244,315
Royalty and other income (Note 9)				448,489			253,441			898,443
		Total revenues		54,434,361			59,208,141			55,142,758
Cost of sales				26,329,007			22,934,939			18,533,319
		Gross profit		28,105,354			36,273,202			36,609,439
Selling, general and administrative expenses:
	General and administrative (Note 13)			8,592,801			7,939,083			6,769,791
	Marketing and selling			21,254,420			19,878,986			18,709,076
	Research and development			4,215,106			4,338,828			3,569,876
	Restructuring, impairment, and other nonrecurring charges (Note 15)			13,776,496			—			—
		Total selling, general and administrative expenses		47,838,823			32,156,897			29,048,743
		Operating income (loss)		(19,733,469	)		4,116,305			7,560,696
Other income (expense):
	Equity in earnings (loss) of joint venture (Note 4)			(4,698,043	)		586,143			438,314
	Interest income			1,294,392			363,539			123,505
	Interest expense			(1,496,487	)		(1,046,611	)		(683,850	)
	Other income (expense)			(761,459	)		(584,886	)		(640,560	)
		Total other income (expense)		(5,661,597	)		(681,815	)		(762,591	)
Income before income taxes, minority interest and cumulative effect of change in accounting method				(25,395,066	)		3,434,490			6,798,105
Income tax (benefit) provision (Note 7)				(6,579,999	)		861,766			1,999,030
Minority interest				86,532			418,667			661,623
Income (loss) before cumulative effect of change in accounting method				(18,901,599	)		2,154,057			4,137,452
Cumulative effect of change in accounting method, write-off of start-up costs, net of income taxes of $695,826				—			—			1,680,813
Net income (loss)			$	(18,901,599	)	$	2,154,057		$	2,456,639
Basic earnings (loss) per share (Notes 10 and 16):
	Income (loss) before cumulative effect of change in accounting method		$	(1.23	)	$	.15		$	0.30
	Cumulative effect of change in accounting method			—			—			(0.12	)
	Net income (loss)		$	(1.23	)	$	.15		$	0.18
Dilutive earnings (loss) per share (Notes 10 and 16):
	Income (loss) before cumulative effect of change in accounting method		$	(1.23	)	$	.15		$	0.29
	Cumulative effect of change in accounting method			—			—			(0.12	)
	Net income (loss)		$	(1.23	)	$	.15		$	0.17

See accompanying summary of accounting policies and notes to consolidated financial statements.

F-4

STAAR SURGICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

Years Ended December 29, 2000, December 31, 1999 and January 1, 1999

	Common Stock			Capital in Excess of Par Value			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income			Notes Receivable			Total
Balance, at January 2, 1998	$	132,462		$	42,810,700		$	4,861,139		$	(695,502	)	$	(2,326,015	)	$	44,782,784
Common stock issued upon exercise of options (Note 10)		5,686			3,063,025			—			—			(2,928,147	)		140,564
Common stock issued upon exercise of warrants (Note 10)		1,868			219,733			—			—			—			221,601
Common stock issued as payment for services (Note 10)		50			64,950			—			—			—			65,000
Common stock repurchased and cancelled (Note 10)		(120	)		(203,980	)		—			—			—			(204,100	)
Stock-based compensation (Note 10)		—			85,000			—			—			—			85,000
Foreign currency translation adjustment		—			—			—			159,011			—			159,011
Net income		—			—			2,456,639			—			—			2,456,639
Balance, at January 1, 1999		139,946			46,039,428			7,317,778			(536,491	)		(5,254,162	)		47,706,499
Common stock issued upon exercise of options (Note 10)		5,384			3,290,855			—			—			(1,605,001	)		1,691,238
Common stock issued as payment for acquisitions (Note 10)		2,708			2,497,286			—			—			—			2,499,994
Common stock repurchased and cancelled (Note 10)		(515	)		(622,110	)		—			—			—			(622,625	)
Foreign currency translation adjustment		—			—			—			(745,534	)		—			(745,534	)
Net income		—			—			2,154,057			—			—			2,154,057
Balance, at December 31, 1999		147,523			51,205,459			9,471,835			(1,282,025	)		(6,859,163	)		52,683,629
Common stock issued upon exercise of options (Note 10)		4,987			3,518,531			—			—			(1,167,250	)		2,356,267
Common stock issued upon exercise of warrants (Note 10)		551			170,601			—			—			—			171,152
Common stock issued as payment for services (Note 10)		1,427			1,486,016			—			—			—			1,487,443
Common stock issued in private placement (Note 10)		15,000			18,665,988			—			—			—			18,680,988
Proceeds from notes receivable (Note 10)		—			—			—			—			788,769			788,769
Notes receivable reserve (Note 10)		—			—			—			—			1,500,000			1,500,000
Foreign currency translation adjustment		—			—			—			(301,768	)		—			(301,768	)
Net loss		—			—			(18,901,599	)		—			—			(18,901,599	)
Balance, at December 29, 2000	$	169,488		$	75,046,594		$	(9,429,764	)	$	(1,583,793	)	$	(5,737,644	)	$	58,464,881

    Comprehensive income (loss) and its components consist of the following:

	2000			1999			1998
Net income (loss)	$	(18,901,599	)	$	2,154,057		$	2,456,639
Foreign currency translation adjustment		(301,768	)		(745,534	)		159,011
Comprehensive income (loss)	$	(19,203,367	)	$	1,408,523		$	2,615,650

See accompanying summary of accounting policies and notes to consolidated financial statements.

F-5

STAAR SURGICAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 29, 2000, December 31, 1999 and January 1, 1999
Increase (Decrease) in Cash and Cash Equivalents

				2000			1999			1998
Cash flows from operating activities:
	Net income (loss)			$	(18,901,599	)	$	2,154,057		$	2,456,639
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation of property and equipment			2,140,250			2,172,732			2,172,834
		Amortization of intangibles			1,589,874			2,053,735			2,166,164
		Write-off of start-up costs			—			—			1,680,813
		Write-off of accounts receivable			448,901			—			—
		Change in deferred revenue			(448,489	)		(232,143	)		(232,143	)
		Equity in operations of joint venture			3,577,450			(586,143	)		(438,314	)
		Deferred income taxes			(6,632,214	)		(17,222	)		(277,919	)
		Stock-based compensation expense			—			—			85,000
		Common stock issued for services			1,224,040			—			65,000
		Non-cash restructuring and inventory write-down			16,528,568			—			—
		Minority interest			(332,135	)		(319,984	)		661,623
		Notes receivable reserve			1,500,000			—			—
Changes in working capital, net of effects of acquisitions
		Accounts receivable			(1,102,008	)		740,636			(672,715	)
		Other receivable			(202,415	)		(637,092	)		1,863,170
		Inventories			(4,019,779	)		(2,178,152	)		(2,086,968	)
		Prepaids, deposits, and other current assets			(98,375	)		(1,817,401	)		(714,454	)
		Accounts payable			(1,249,979	)		2,473,492			(713,574	)
		Other current liabilities			605,334			1,045,451			(1,736,673	)
			Net cash provided by (used in) operating activities		(5,372,576	)		4,851,966			4,278,483
Cash flows from investing activities:
	Acquisition of property and equipment				(3,339,107	)		(4,469,214	)		(2,019,533	)
	Increase in patents and licenses				(775,339	)		(3,911,916	)		(2,104,454	)
	Proceeds from notes receivable and other				788,769			—			—
	Decrease in other assets				(473,941	)		(1,938,951	)		(1,718,231	)
	Dividends received from joint venture				—			187,170			—
	Acquisitions (net of cash acquired)				—			(540,683	)		(4,269,923	)
			Net cash used in investing activities		(3,799,618	)		(10,673,594	)		(10,112,141	)
Cash flows from financing activities:
	Increase in borrowings under notes payable and long-term debt				413,582			3,733,333			4,433,648
	Payments on notes payable and long-term debt				(6,369,637	)		(1,474,664	)		(1,908,803	)
	Net borrowings (payments) under line-of-credit				(3,028,000	)		1,894,434			1,402,175
	Proceeds from the exercise of stock options and warrants				2,519,919			1,510,613			362,165
	Proceeds from private placement				18,680,988			—			—
	Payments for repurchase of common stock				—			(442,000	)		(204,100	)
			Net cash provided by financing activities		12,216,852			5,221,716			4,085,085
Effect of exchange rate changes on cash and cash equivalents					(301,768	)		(745,534	)		159,011
Increase (decrease) in cash and cash equivalents					2,742,890			(1,345,446	)		(1,589,562	)
Cash and cash equivalents, at beginning of year					3,344,128			4,689,574			6,279,136
Cash and cash equivalents, at end of year				$	6,087,018		$	3,344,128		$	4,689,574

See accompanying summary of accounting policies and notes to consolidated financial statements.

F-6

STAAR SURGICAL COMPANY AND SUBSIDIARIES
SUMMARY OF ACCOUNTING POLICIES

Years Ended December 29, 2000, December 31, 1999 and January 1, 1999

Organization and Description of Business

STAAR Surgical Company (the "Company"), a Delaware corporation, was incorporated in 1982 for the purpose of developing, producing, and marketing Intraocular Lenses (IOLs) and other products for minimally invasive ophthalmic surgery. The Company has evolved to become a developer, manufacturer and global distributor of products used by ophthalmologists and other eye care professionals to improve or correct vision in patients suffering from refractive conditions, cataracts and glaucoma. Products manufactured by the Company for use in correcting refractive conditions such as myopia (near-sightedness); hyperopia (far-sightedness) and astigmatism include its Implantable Contact Lenses (ICL™) and Toric™ Intraocular Lens. Products manufactured by the Company for use in restoring vision adversely affected by cataracts include its line of IOLs, and the Sonic WAVE Phacoemulsification System. The Company's AQUA-FLOW™ glaucoma device is surgically implanted in the outer tissues of the eye to maintain a space that allows increased drainage of intraocular fluid thereby reducing intraocular pressure which may lead to deterioration of vision in patients afflicted with glaucoma. The Company also sells other instruments, devices and equipment that are manufactured either by the Company or by others in the ophthalmic products industry.

    The Company's most significant subsidiary is STAAR Surgical AG, a wholly owned subsidiary formed in Switzerland to develop, manufacture and distribute worldwide certain of the Company's products, including the ICLs and its AQUA-FLOW glaucoma device. The Company and STAAR Surgical AG have also formed or acquired a number of direct or indirect owned subsidiaries to distribute and market the Company's products in selected foreign countries. STAAR Surgical AG also controls 80% of a major European sales subsidiary that distributes both the Company's products and products from various other manufacturers.

Basis of Presentation

    The accompanying financial statements consolidate the accounts of the Company and its wholly and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Assets and liabilities of foreign subsidiaries are translated at rates of exchange in effect at the close of the period. Revenues and expenses are translated at the weighted average of exchange rates in effect during the year. The resulting translation gains and losses are deferred and are shown as a separate component of stockholders' equity as accumulated other comprehensive income. During 2000, 1999 and 1998, the net foreign translation gain (loss) was $(301,768), $(745,535) and $159,011 and net foreign currency transaction loss was $182,245, $156,674 and $120,737, respectively. Investment in the Japanese joint venture has been accounted for using the equity method of accounting, until the period ended December 29, 2000, when the investment was written off. (see Note 4).

    The Company's fiscal year ends on the Friday nearest December 31.

Revenue Recognition

    The Company generally supplies a quantity of foldable IOLs with different specifications to customers, generally ophthalmologists, surgical centers, hospitals and other health providers, on a consignment basis and recognizes sales when an ophthalmic surgeon implants the consigned foldable IOL. Sales of the AQUA-FLOW and the ICL and sales to foreign distributors are recognized upon shipment. Revenue from license and technology agreements is recorded as income over the term of the respective agreement when the Company has satisfied the terms of such agreements and is notified of the amounts.

F-7

Income Taxes

    The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in a Company's financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

Cash and Cash Equivalents

    The Company considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents.

Inventories

    Inventories are valued at the lower of cost (first-in, first-out) or market (net realizable value).

Property, Plant and Equipment

    Property, plant and equipment are stated at cost.

    Depreciation is provided on the straight-line method over the estimated useful lives, which are generally not greater than ten years. Leasehold improvements are amortized over the life of the lease or estimated useful life, if shorter. Property, plant and equipment are reviewed each year to determine whether any events or circumstances indicate that the carrying amount of the assets may not be recoverable. Such review includes estimating future cash flows. Property, plant and equipment costs are expensed when determined not realizable.

Patents and Licenses

    The Company capitalizes the costs of acquiring patents and licenses as well as the legal costs of successfully defending its rights to these patents. Amortization is computed on the straight-line basis over the estimated useful lives, which range from 8 to 20 years. Capitalized patent costs are reviewed each year based on management's estimates of future cash flows of the related products. Patent and license costs are expensed when determined not realizable.

    The Company's ability to compete effectively is materially dependent upon the proprietary nature of the designs, processes, technologies and materials owned, used by or licensed to the Company. The Company has been and will continue to be involved in litigation to protect its copyrights, patents and proprietary properties and technology.

Goodwill

    Goodwill represents the excess of the purchase price over the fair value of net assets acquired and is being amortized on a straight-line basis over fifteen to twenty years. The Company periodically evaluates the recoverability of goodwill. The measurement of possible impairment is based primarily on the Company's ability to recover the unamortized balance of the goodwill from expected future operating cash flows on an undiscounted basis.

F-8

Start-Up Costs

    Effective September 30, 1998, the Company adopted Statement of Position 98-5 "Reporting on the Costs of Start-up Activities" (SOP 98-5) issued by the American Institute of Certified Public Accountants. SOP 98-5 requires that the costs of start-up activities, including organization costs, be expensed as incurred. Start-up activities are defined broadly as those one-time activities related to opening a new facility, introducing a new product or service, conducting business in a new territory, conducting business with a new class of customer, initiating a new process in an existing facility, or commencing some new operation.

    Although SOP 98-5 is effective for fiscal years beginning after December 15, 1998, earlier application is encouraged. Accordingly, the Company elected early application and wrote-off the $1.7 million (net of tax benefit) of start-up costs that had been previously capitalized and included in other assets. In accordance with SOP 98-5, the write-off of such costs is being reported as a cumulative effect of change in accounting method.

Accounting Estimates

    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, contingent liabilities, revenues, and expenses at the date and for the periods that the financial statements are prepared. Actual results could differ from those estimates.

Fair Value of Financial Instruments

    The carrying values of cash equivalents, receivables, accounts payable, and current notes payable approximate their fair values because of the short maturity of these instruments. With respect to long-term debt, based on the borrowing rates currently available to the Company for similar bank and equipment loans (which interest rates primarily float with prime), the amounts reported approximate the fair value of the respective financial instruments.

Net Income Per Share

    The Company presents income per share data in accordance with the provision of Statement of Financial Accounting Standards No. 128, Earnings per Share (SFAS 128), which provides for the calculation of Basic and Diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could occur if securities or other contracts (such as stock options and warrants) to issue common stock were exercised or converted into common stock. For the year ended December 29, 2000, 5,000 warrants and 1,891,916 options to purchase shares of the Company's common stock were outstanding. These potential common shares were excluded from the computation of diluted earnings per share for 2000 because their inclusion would have an antidilutive effect.

Stock Based Compensation

    The Company has adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), which established a fair value method of accounting for stock-based compensation plans. In accordance with SFAS 123, the Company has chosen to continue to account for stock-based compensation utilizing the intrinsic value method prescribed in APB 25.

F-9

Accordingly, compensation cost for stock options is measured as the excess, if any, of the fair market price of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. Also, in accordance with SFAS 123, the Company has provided footnote disclosure with respect to stock-based employee compensation.

Comprehensive Income

    The Company has adopted Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income," ("SFAS 130"). SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The Company has chosen to report comprehensive income in the Statement of Stockholders' Equity. Comprehensive income is comprised of net income and all changes to stockholders' equity except those due to investments by owners and distributions to owners.

Segments of an Enterprise

    The Company has adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," ("SFAS 131"). SFAS 131 requires that public companies report certain information about operating segments, products, services and geographical areas in which they operate and their major customers. Adoption of SFAS 131 resulted in expanded disclosures for the year and all prior periods. See Note 17, Geographic and Product Data.

Reclassifications

    Certain reclassifications have been made to the prior year consolidated financial statements to conform to the 2000 presentation.

New Accounting Pronouncements

    In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which the Company adopted in 2000. This statement establishes accounting and reporting standards requiring every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company's adoption of SFAS 133 did not have a material impact on the consolidated financial statements.

    In December 1999, the Securities and Exchange Commission ("SEC") released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation and disclosure of revenue in the financial statements filed with the SEC. Subsequently, the SEC released SAB 101B, which delayed the implementation date of SAB 101 for registrants with fiscal years that begin between December 16, 1999 and March 15, 2000. The Company was required to be in conformity with the provisions of SAB 101, as amended by SAB 101B, no later than October 1, 2000. The Company believes the adoption of SAB 101, as amended by SAB 101B, has not had a material effect on the financial position, results of operations or cash flows of the Company for the year ended December 29, 2000.

    In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation, the Interpretation of APB Opinion No. 25" (FIN44). The Interpretation is intended to clarify certain problems that have arisen in practice since the issuance of APB No. 25,

F-10

"Accounting for Stock Issued to Employees." The effective date of the Interpretation was July 1, 2000. The provisions of the Interpretation apply prospectively, but they will also cover certain events occurring after December 15, 1998 and after January 12, 2000. The Company believes the adoption of FIN 44 has not had a material affect on the current and historical consolidated financial statements, but may affect future accounting regarding stock option transactions due to the repricing discussed in Note 10.

F-11

STAAR SURGICAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 29, 2000, December 31, 1999 and January 1, 1999

NOTE 1—ACCOUNTS RECEIVABLE

    Accounts receivable are summarized as follows:

	2000		1999
Domestic	$	6,756,051	$	5,258,117
Foreign		3,687,005		4,542,192
		10,443,056		9,800,309
Less allowance for doubtful accounts		781,028		373,496
	$	9,662,028	$	9,426,813

NOTE 2—INVENTORIES

    Inventories are summarized as follows:

	2000		1999
Raw materials and purchased parts	$	2,844,524	$	2,137,400
Work in process		3,615,099		3,128,247
Finished goods		14,348,249		17,052,484
	$	20,807,872	$	22,318,131

NOTE 3—PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment are summarized as follows:

	2000		1999
Machinery and equipment	$	19,041,195	$	16,147,260
Furniture and fixtures		6,587,122		6,956,595
Leasehold improvements		4,642,139		4,339,670
		30,270,456		27,443,525
Less accumulated depreciation and amortization		16,644,549		14,767,045
	$	13,625,907	$	12,676,480

NOTE 4—INVESTMENT IN JOINT VENTURE

    The Company owns a 50% equity interest in a joint venture, the CANON-STAAR Company, Inc. ("CSC"), with Canon Inc. ("Canon") and Canon Sales Co, Inc. ("Canon Sales"). The joint venture was formed to manufacture and sell the Company's IOL products to Canon Sales or other distributors in Japan. The Company sold CSC an exclusive license to manufacture and market its products in Japan. The Company used the equity method of accounting for this investment. During June 2000, the Company wrote off its investment in CSC of $3,577,450 due to ongoing litigation between the joint venture partners and concerns over the recovery of the value of the investment (see Notes 11 and 15). The financial statements of CSC include assets of approximately $10,028,000 and $9,783,000, and liabilities of approximately $2,494,000 and $2,131,000, as of December 29, 2000 and December 31, 1999, respectively. The Company's disputes with its Japanese joint venture partners are currently in arbitration.

F-12

    The Company's equity in earnings of the joint venture is calculated as follows:

	2000			1999			1998
Joint venture net income	$	—		$	1,172,286		$	876,627
Equity interest		50	%		50	%		50	%
Total joint venture net income		—			586,143			438,314
Charge related to write-off of joint venture		(4,698,043	)		—			—
Equity in earnings (loss) of joint venture	$	(4,698,043	)	$	586,143		$	438,314

    The Company recorded sales of certain IOL products to CSC of approximately $344,000, $1,917,000 and $16,000 in 2000, 1999 and 1998, respectively.

NOTE 5—NOTES PAYABLE

    The Company has a revolving credit facility with a Swiss bank, amended in 2000, which provides for borrowings up to $1,835,000 (3,000,000 Swiss Francs (CHF) at the exchange rate at December 29, 2000), at an interest rate of 5.5%. A commission rate of 0.25% is payable each quarter. The loan does not have a termination date and is secured by a general assignment of claims. Borrowings outstanding under this facility as of December 29, 2000 and December 31, 1999 were $1,536,585 (2,512,316 CHF) $880,173 (1,322,689 CHF).

    The loan agreement, which includes the provisions for the revolving credit facility also contains provisions for fixed term loans. The fixed term loan provides for borrowings of up to $1,223,000 (2,000,000 CHF).  Minimum advances of CHF 500,000 may be made for periods of 1 to 5 years. Payments in the amount of CHF 250,000 are due semi-annually beginning June 30, 2002. The base interest rate used follows Euromarket conditions for loans of the corresponding term and currency. There were no borrowings outstanding under the term loan as of December 29, 2000.

    The revolving credit facility and the fixed term loan noted above require the Company to satisfy certain financial tests and include other positive and negative covenants. The Company was in compliance with the financial covenants as of December 29, 2000.

    The Company has a revolving overdraft facility with a German bank which provides for borrowings of up to approximately $950,000 (2.0 million Deutsch Marks at the exchange rate at December 29, 2000), at an interest rate of 9%. The loan is renewed annually with a due date of May 31, 2001 and is secured by an assignment of accounts receivable and inventory. Borrowings outstanding as of December 29, 2000 and December 31, 1999 were $683,505 (DM 1,438,352) and $511,299 (DM 939,025), respectively.

    In October 2000, the Company renegotiated its line-of-credit with its current domestic lender. The new agreement provides for borrowings of up to $7.0 million at a rate of interest equal to the prime rate (9.50% at December 29, 2000) and grants the lender a security interest in the Company's accounts receivable, inventories, property, plant, and equipment, and other general intangibles. The agreement has certain financial ratios and other restrictive covenants including the maintaining of minimum cash balances. The note as amended is due on July 2, 2001. Borrowings outstanding as of December 29, 2000 were $5,724,024. The Company was not in compliance with the net income covenant. The Company has obtained a waiver from the Lender who agreed to waive its rights and remedies under

F-13

the loan agreement. Currently, the Company is in the process of seeking alternative financing to pay-down or payoff the loan agreement, however there is no assurance the Company will be successful in obtaining the necessary financing or obtaining financing on favorable terms.

NOTE 6—LONG-TERM DEBT

    Long-term debt consists of the following:

	2000		1999
Note payable to bank, interest at a rate not to exceed prime less .5% payable monthly, due June 1, 2001(1)	$	—	$	8,752,024
Notes payable to bank, payable in monthly installments plus interest at a rate not to exceed prime less .25% due March 1, 2003 (2) and August 1,2004 (3)		—		6,369,637
Note payable to the sellers of a corporation purchased by the Company, interest at 6%, payable in equal annual installments over a five year period		—		362,757
				15,484,418
Less current portion		—		1,811,164
Long-term debt due after one year	$	—	$	13,673,254

(1)

In July 1999, the Company renegotiated its line-of-credit with its current domestic lender. Under the agreement, the Company could borrow up to $10,000,000 on a revolving basis, at a rate of interest not to exceed the prime interest rate (8.50% at December 31, 1999) less .5% (or, at the election of the Company, if more than $500,000 is outstanding, at a rate of interest equal to LIBOR, plus a margin of 1.25 to 1.75% depending on the Company's funded debt to EBITDA coverage ratio).

(2)

In November 1997, the Company's domestic lender supplemented the Company's domestic credit facility by committing through March 31, 1998 to make additional advances to the Company of up to $5 million for business acquisitions. On January 5, 1998, the Company borrowed $4,375,162 under the agreement. Borrowings were payable in monthly installments of $83,334 plus interest at a rate not to exceed the prime interest rate (8.50% at December 31, 1999) less .25% (or at the election of the Company, if more than $100,000 is outstanding, at a rate of interest equal to LIBOR, plus 1.75%).

(3)

In July 1999, the Company's domestic lender supplemented the Company's domestic credit facility with a term note to the Company of $4 million. Borrowings were payable in monthly installments of $66,667 plus interest at a rate not to exceed the prime interest rate (8.50% at December 31, 1999) less .25% (or at the election of the Company, if more than $500,000 is outstanding, at a rate of interest equal to LIBOR, plus 1.75%).

    The line of credit and the notes described above required the Company to satisfy certain financial tests and limited the amount of indebtedness the Company could incur. The Company was in compliance with the financial restrictive covenants as of December 31, 1999 and was current in its payment of principal and interest to the lender as provided for under the loan agreements. However, the Company was not in compliance with certain of the restrictive covenants during 2000 primarily due to the Restructuring Plan (see Note 15). The Company obtained forbearance letters from the Lender who agreed to forbear from exercising its rights and remedies under the loan agreement and renegotiated the line-of-credit (see Note 5). In return, the Company paid off all of its term debt and a portion of its line-of-credit with funds obtained through a private placement of shares of the Company's common stock (see Note 10).

F-14

NOTE 7—INCOME TAXES

    The Company uses the asset and liability method of accounting for income taxes.

    The provision (benefit) for income taxes consists of the following:

		2000			1999			1998
Current tax provision (benefit):
	U.S. federal	$	(393,156	)	$	480,939		$	100,264
	State		18,240			(649,758	)		96,851
	Foreign		316,621			963,130			1,384,008
Total current provision (benefit)			(58,295	)		794,311			1,581,123
Deferred tax provision (benefit):
	U.S. federal and state		(6,521,704	)		67,455			(328,990	)
	Foreign		—			—			51,071
Total deferred provision (benefit)			(6,521,704	)		67,455			(277,919	)
Provision (benefit) for income taxes			(6,579,999	)		861,766			1,303,204
Tax benefit from cumulative change in accounting method			—			—			695,826
Provision (benefit) for income taxes, before cumulative effect of change in accounting method		$	(6,579,999	)	$	861,766		$	1,999,030

    Included in the 2000 current United States federal net tax benefit is the carryback of a portion of the 2000 net taxable loss to 1998. This carryback will result in a refund of $932,000 of taxes previously paid. The Company has federal and state tax net operating loss carryforwards from 1999 and 2000 of $11,071,455 and $9,237,440 respectively, expiring on various dates through 2020.

    The Company has net income taxes recoverable at December 29, 2000 and December 31, 1999 of $1,630,583 and $2,023,922, respectively, reported on the balance sheet as other receivables.

    The provision (benefit) based on income before taxes differs from the amount obtained by applying the statutory federal income tax rate to income before taxes as follows:

	2000		1999		1998
Computed provision for taxes based on income at statutory rate	34.0	%	34.0	%	34.0	%
Permanent differences	(.3	)	21.8		—
State taxes, net of federal income tax benefit	2.3		(22.3	)	(0.8	)
Tax effect attributed to foreign operations	(2.0	)	(8.4	)	1.6
Loss related to previously excluded foreign earnings	(2.8	)	—		—
Valuation allowance	(5.4	)	—		—
Effective tax provision rate	25.8	%	25.1	%	34.8	%

    Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $3.6 million at December 29, 2000. Those earnings are considered to be indefinitely reinvested and, accordingly, no provision for United States federal and state income taxes has been provided thereon.

F-15

Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to both United States income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred United States income tax liability is not practicable because of the complexities associated with its hypothetical calculation.

    Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets (liabilities) as of December 29, 2000 and December 31, 1999 are as follows:

		2000		1999
Current deferred tax assets (liabilities):
	Allowance for doubtful accounts	219,000		112,000
	Inventory reserves and uniform capitalization	541,000		431,000
	Accrued vacation	203,000		177,000
	State taxes	(375,000	)	118,000
	Deferred revenue	85,000		90,000
	Reserve for note receivable	591,000		—
	Reserve for restructuring costs	556,000		—
	Discount on trade receivables	(57,000	)	(113,000	)
Total current deferred tax assets (liabilities)		1,763,000		815,000
Noncurrent deferred tax assets (liabilities):
	Net operating loss and capital loss carryforwards	5,387,000		—
	Business, foreign and AMT credit carryforwards	1,164,000		—
	Depreciation and amortization	(2,400,000	)	(2,596,000	)
	State taxes	114,000		—
	Reserve for restructuring costs	333,000		—
	Valuation allowance	(1,511,000	)	—
Total noncurrent deferred tax assets (liabilities)		3,087,000		(2,596,000	)

NOTE 8—BUSINESS ACQUISITIONS

    On January 5, 1998, the Company completed the acquisition or establishment of five international subsidiaries (including the control of 60% of a major European distributor) for the sales of ophthalmic products. Total consideration for the acquisitions was approximately $4.5 million in 1998 and $1.1 million in 1997 and resulted in recording of goodwill of approximately $4.2 million in 1998 and $1.0 million in 1997.

    Pro forma financial information for the Company and the foreign distributors for the year ended January 2, 1998, as if the acquisition of the foreign distributors occurred as of January 2, 1997 are as follows:

Revenues	$	62,710
Net income	$	7,810
Net income per diluted share	$	0.55

F-16

    On November 29, 1999, the Company acquired an additional 20% of the shares of a major European distributor for total consideration of approximately $1.5 million in cash, $1 million in shares and debt of $325,000, resulting in goodwill of approximately $2.8 million.

    Pro forma amounts for this acquisition are not included, as the effect on operations is not material to the Company's financial statements.

    On January 4, 1999 the Company acquired all of the issued and outstanding shares of a distributor of ophthalmic products in exchange for $130,000 cash, $150,000 in product allowances and assumption of $100,000 in liabilities. The acquisition has been accounted for by the purchase method of accounting and accordingly, the operating results have been included in the Company's consolidated results of operations from the date of acquisition. The purchase price has been allocated to the fair value of net identifiable assets acquired of $380,000. As part of the Company's restructuring plan the subsidiary was closed during 2000 (see Note 15).

    Pro forma amounts for this acquisition are not included, as the effect on operations is not material to the Company's financial statements.

    On December 5, 1999 the Company acquired 80% of the issued and outstanding shares of a company in the medical device industry in exchange for approximately $500,000 in cash, $1.5 million in common stock and $500,000 in debt. The acquisition has been accounted for by the purchase method of accounting and accordingly, the company's operating results have been included in the Company's operations from the date of acquisition. The purchase price has been allocated to both the fair value of net tangible assets acquired of $87,000, and patents of $2,437,587, which are being amortized on a straight-line basis over the estimated useful life of 15 years.

    Pro forma amounts for this acquisition are not included, as the effect on operations is not material to the Company's financial statements.

NOTE 9—PATENTS AND LICENSING AGREEMENTS

    During 1995, the Company acquired from the Intersectoral Research and Technology Complex Eye Microsurgery ("IRTC"), a Russian Federation located in Moscow, Russia, exclusive patent rights to use and sell glaucoma devices in the United States and certain foreign countries. During 1996, the Company acquired from IRTC exclusive rights to several domestic and foreign patents associated with the Company's ICLs. The transactions involve a specified amount for the patent rights and payments of royalties over the life of the patents.

    In 1996, the Company acquired a license, as part of the settlement of litigation with Allergan Medical Optics, relating to an apparatus for insertion of an intraocular lens. The amount paid has been included in patents in the accompanying balance sheet.

    The Company has issued Allergan Medical Optics ("AMO"), Alcon Surgical, Inc. (Alcon), Pharmacia & Upjohn, Bausch and Lomb Surgical and CIBA Vision licenses to utilize certain of its patents involving foldable IOLs in the United States and selected foreign countries. Each license has a certain amount of prepaid royalties (which were received by the Company when the license was issued) that will be utilized by the licensee as sales of the licensed products are made. The Company recorded $448,000, $232,000 and $232,000 of royalty income in 2000, 1999 and 1998, respectively, from these licenses.

F-17

    During 1999 in connection with its acquisition of a majority of the outstanding shares of Circuit Tree Medical, Inc., the Company acquired patents related to the Wave™ phacoemulsification machine and other related technologies.

    During 2000, in connection with the Company's plan of restructuring, $4.0 million in patents were written off (see Note 15).

NOTE 10—STOCKHOLDERS' EQUITY

Common Stock

    In 1998, the Company issued 5,000 shares to consultants for services rendered to the Company. Also, during 1998, the Company repurchased and cancelled 12,007 shares.

    In 1999, the Company issued 270,772 shares as partial consideration for business acquisitions. Also, during 1999, the Company repurchased and cancelled 39,500 shares.

    In 2000, the Company issued 142,683 shares, at market, to consultants for services rendered to the Company. Also, during 2000, the Company completed a private placement with institutional investors of 1.5 million shares of the Company's common stock for net proceeds of $18.7 million.

Notes Receivable

    As of December 29, 2000 and December 31, 1999, notes receivable from officers and directors totalling $7,237,643 and $6,859,163, were outstanding. The notes were issued in connection with purchases of the Company's common stock. The notes bear interest at rates ranging between 3.69% and 8%, or at the lowest federal applicable rate allowed by the Internal Revenue Service. The notes are secured by stock pledge agreements and mature on various dates through November 1, 2005.

    During 2000, the Company recorded a $1.5 million reserve against notes receivable from its previous president. The action was considered necessary due to collateralization of the notes by the Company's stock and that subsequent to year-end the stock price declined sharply.

F-18

Options

    The table below summarizes the transactions in the Company's several stock option plans:

	Number of Shares		Weighted Average Exercise Price
Balance at January 2, 1998	1,822,775		$	8.56
Options granted	890,000		$	6.25
Options exercised	(568,690	)	$	5.40
Options forfeited	(598,500	)	$	12.50
Balance at January 1, 1999	1,545,585		$	6.69
Options granted / reissued	453,000		$	10.07
Options exercised	(538,420	)	$	6.13
Options forfeited / cancelled	—			—
Balance at December 31, 1999	1,460,165		$	7.75
Options granted / reissued	1,604,250		$	10.35
Options exercised	(498,666	)	$	7.03
Options forfeited / cancelled	(673,833	)	$	8.05
Balance at December 29, 2000	1,891,916		$	9.95
Options exercisable (vested) at December 29, 2000	1,058,417		$	9.21

    Under provisions of the Company's 1991 Stock Option Plan, 2,000,000 shares were reserved for issuance. Generally, options under this plan are granted at fair market value at the date of the grant, become exercisable over a 3-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from date of grant. Pursuant to this plan, options for 434,000 shares were outstanding at December 29, 2000, with exercise prices ranging between $2.50 to $14.50 per share.

    In 1996, the Board of Directors of the Company approved the 1996 Non-Qualified Stock Plan, authorizing the granting of options to purchase or awards of the Company's common stock. Under provisions of the Non-Qualified Stock Plan, 600,000 shares were reserved for issuance. Generally, options under the plan are granted at fair market value at the date of the grant become exercisable over a 3-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from date of grant. Pursuant to this plan, options for 175,000, 152,000 and 160,000 shares were outstanding at December 29, 2000, December 31, 1999 and January 1, 1999, respectively. The options were originally issued with an exercise price of $12.50 per share. During 1998 the exercise price was reduced to $6.25 per share by action of the Board of Directors.

    In 1998, the Board of Directors of the Company approved the 1998 Stock Option Plan, authorizing the granting of incentive options and/or non-qualified options to purchase or awards of the Company's common stock. Under the provisions of the plan, 1,000,000 shares were reserved for issuance; however, the maximum number of shares authorized may be increased provided such action is in compliance with Article IV of the Plan. Generally, options under the plan are granted at fair market value at the date of the grant, become exercisable over a 3-year period, or as determined by the Board of Directors, and expire over periods not exceeding 10 years from the date of grant. Pursuant to the plan, options for 810,000, 998,000 and 650,000 shares were outstanding at December 29, 2000, December 31, 1999, and January 1, 1999, respectively with exercise prices ranging between $6.25 and $13.63 per share.

F-19

    In 1998, officers, employees and others exercised 568,690 options from the 1990, 1991 and non-qualified stock option plans at prices from $1.15 to $12.00 resulting in cash, notes and stock proceeds totaling $3,068,711.

    In 1999, officers, employees and others exercised 538,420 options from the 1990, 1991, and non-qualified stock option plans at prices from $1.60 to $12.00 resulting in cash, notes and stock proceeds totaling $3,296,239.

    In 2000, officers, employees and others exercised 498,666 options from the 1990, 1991, 1996, 1998 and non-qualified stock option plans at prices from $2.50 to $13.63 resulting in cash and notes totaling $3,523,518.

    FASB 123, Accounting for Stock-Based Compensation, requires the Company to provide pro forma information regarding net income and earnings per share as if compensation cost for the Company's stock option plans had been determined in accordance with the fair value based method prescribed in FASB 123. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2000; dividend yield of 0 percent; expected volatility of 42 percent; risk free rate of 4.5 percent; and expected lives of 1-5 years; and in 1999; dividend yield of 0 percent; expected volatility of 73 percent; risk free rate of 6.5 percent; and expected lives of 3 years; and in 1998: dividend yield of 0 percent; expected volatility of 35 percent; risk-free interest rate of 4.5 percent; and expected lives of 3-7 years.

    The weighted average fair value of options granted during the year ended December 29, 2000, December 31, 1999 and January 1, 1999 were $1.32 to $4.55, $5.62 and $1.84 to $2.89, respectively.

    Under the accounting provisions of FASB 123, the Company's net income and earnings per share for 2000, 1999 and 1998 would have been reduced to the pro forma amounts indicated below:

		2000			1999		1998
Net income (loss)
	As reported	$	(18,902,000	)	$	2,154,000	$	2,457,000
	Pro forma	$	(20,499,000	)	$	1,584,000	$	2,340,000
Basic earnings (loss) per share
	As reported	$	(1.23	)	$	.15	$	.18
	Pro forma	$	(1.33	)	$	.11	$	.17
Diluted earnings (loss) per share
	As reported	$	(1.23	)	$	.15	$	.17
	Pro forma	$	(1.33	)	$	.11	$	.16

    Due to the fact that the Company's stock option programs vest over many years and additional awards are made each year, the above proforma numbers are not indicative of the financial impact had the disclosure provisions of FASB 123 been applicable to all years of previous option grants. The above numbers do not include the effect of options granted prior to 1995 that vested in 1996 through 2000.

F-20

The following table summarizes information about stock options outstanding at December 29, 2000.

Range of Exercise Prices	Number Outstanding at 12/29/00	Options Outstanding Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number Exercisable at 12/29/00	Weighted-Average Exercise Price
$2.50	25,000	0.6 years	$	2.50	25,000	$	2.50
$4.75 to $6.25	440,150	6.1 years	$	6.09	435,150	$	6.09
$7.50 to $10.63	708,166	7.1 years	$	10.10	144,500	$	9.97
$11.00 to $14.50	718,600	6.7 years	$	12.42	453,767	$	12.34
$2.50 to $14.50	1,891,916	6.6 years	$	9.95	1,058,417	$	9.21

Warrants

    The table below summarizes the transactions related to the Company's warrants to purchase common stock:

	Number of Shares		Weighted-Average Exercise Price
Balance at January 2, 1998	246,894		$	1.91
Warrants exercised	(186,750	)	$	1.19
Balance at January 1, 1999	60,144		$	3.94
Warrants exercised	—			—
Balance at December 31, 1999	60,144		$	3.94
Warrants exercised	(55,144	)	$	3.10
Balance at December 29, 2000	5,000		$	1.20

    All warrants are exercisable as of December 29, 2000.

NOTE 11—COMMITMENTS AND CONTINGENCIES

Lease Obligations

    The Company leases certain property, plant and equipment under capital and operating lease agreements. In the later part of 1995, the Company entered into a capital lease agreement to finance surgical equipment that was sent to China in consideration of a five-year exclusive supply agreement with a hospital in Hangzhou, China. During 1998, the lease obligations were fulfilled and in 1999, the buyout provisions of the leases were exercised.

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    Annual future minimum lease payments under noncancellable operating lease commitments as of December 29, 2000 are as follows:

Fiscal Year
2001		$	1,299,687
2002			1,093,763
2003			757,478
2004			445,521
2005			418,709
Thereafter			270,294
	Total	$	4,285,452

    Rent expense was approximately $1,109,000, $1,125,000 and $1,147,000 for the years ended December 29, 2000, December 31, 1999 and January 1, 1999, respectively.

Supply Agreement

    During 1999, the Company entered into a license and supply agreement with another manufacturer for one of its products. This agreement commits the Company to purchases of $3,172,000 over the next 18 months and gives the Company the right to license and re-sell the product.

Litigation and Claims

    The Company is party to various claims and legal proceedings arising out of the normal course of its business. These claims and legal proceedings relate to contractual rights and obligations, employment matters, shareholder suits and claims of product liability. While there can be no assurance that an adverse determination of any such matters could not have a material adverse impact in any future period, management does not believe, based upon information known to it, that the final resolution of any of these matters will have a material adverse effect upon the Company's consolidated financial position and annual results of operations and cash flows.

    The Company's disputes with its Japanese joint venture partners Canon, Inc. and Canon Sales Co., Inc. are currently in arbitration before the Japan Commercial Arbitration Association. The Canon Companies have alleged that we breached the joint venture agreement and certain distributor and license agreements. The Canon Companies are seeking unspecified monetary damages for these alleged breaches. In our counterclaim we are seeking an accounting from the Canon Companies for profits made by the Canon Companies as a result of unfair dealing, for a transfer of the Canon Companies interest in the joint venture to us at book value, and, in the event our request for a transfer is not granted, for the winding up, liquidation and dissolution of the joint venture.

    The Company terminated its former President and Chief Executive Officer, John R. Wolf, on May 30, 2000. Mr. Wolf filed an action against the Company claiming that his termination was wrongful. Mr. Wolf also filed an action for declaratory relief and injunctive relief relating to his attempt to exercise stock options. The Company believes it has claims against Mr. Wolf relating to loans made by the Company to him, and has filed an action against Mr. Wolf on that basis. The Company's action also seeks a declaration that the Company had cause to terminate Mr. Wolf's employment.

F-22

NOTE 12—OTHER LIABILITIES

Other Current Liabilities

    Included in other current liabilities at December 29, 2000 and December 31, 1999 are approximately $1,386,000 and $1,283,000 of commissions due to outside sales representatives; income tax payable of $784,000 and $360,000; deferred revenue of $0 and $232,000; and accrued restructuring costs of $2,236,000 and $0, respectively.

Other Long-Term Liabilities

    Included in other long-term liabilities at December 29, 2000 and December 31, 1999 is a pension obligation related to an officer of a foreign subsidiary of approximately $248,000 and $246,000, respectively.

NOTE 13—RELATED PARTY TRANSACTIONS

    The Company has had significant related party transactions as discussed in Notes 4 and 10.

    During 2000, 1999 and 1998, a law firm, of which a partner was an officer, director and stockholder of the Company, received approximately $2,000,000, $247,000 and $525,000 for fees in connection with legal services performed on behalf of the Company. As of December 29, 2000 and December 31, 1999, included in prepaid, deposits, and other current assets are $0 and $230,000 of prepaid legal fees.

    The Company paid an override sales commission, based upon a percentage of the Company's sales, to a corporation owned by an officer of the Company in its capacity as a sales representative for the Company. This agreement relates back to 1983, when the officer initially became associated with the Company in a sales and marketing capacity. Commissions paid or accrued under this arrangement totaled approximately $0, $337,000 and $400,000 during 2000, 1999 and 1998, respectively. During 1999, the Company paid $1,250,000 in consideration for cancellation of the agreement. The amount was included in Other Assets at December 31, 1999 and was written off during 2000 in the Company's plan of restructuring (see Note 15).

NOTE 14—SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

    Net cash provided by operating activities includes interest paid of approximately $1,490,000, $1,046,000 and $740,000 for the years ended December 29, 2000, December 31, 1999 and January 1,

F-23

1999, respectively. Income taxes paid amounted to approximately $648,000, $1,312,000 and $1,450,000 for the years ended December 29, 2000, December 31, 1999 and January 1, 1999, respectively.

		2000		1999			1998
Non cash financing activities:
	Notes receivable (Note 10)	$	1,167,250	$	1,605,001		$	2,928,147
Acquisition of business:
	Assets acquired	$	—	$	4,403,000		$	4,027,000
	Goodwill		—		3,137,000			4,247,000
	Liabilities assumed		—		(1,763,000	)		(3,736,000	)
	Common stock issued		—		(2,500,000	)		—
	Cash paid		—		(2,197,000	)		(163,000	)
	Debt incurred	$	—	$	(1,080,000	)	$	(4,375,000	)

NOTE 15—RESTRUCTURING PLAN

    On June 22, 2000, the Company announced the details of its plan of restructuring. In conjunction with the implementation of the plan, the Company recorded a pretax charge to earnings of $13.8 million in the second quarter of fiscal 2000. The changes include approximately $0.9 million for restructuring of certain subsidiaries, approximately $4.0 million to write-off patents that were determined to have no value to the Company, approximately $l.9 million of costs incurred by the Company relating to activities that were abandoned, approximately $4.1 million relating to severance and other employee separation costs, approximately $1.9 million relating to the disposition of investment and assets related to the Company's abandoned entry into the Lasik market, and approximately $1.0 million relating to the closure of a foreign subsidiary. 19 employees were laid-off, terminated or resigned as part of the Company's restructuring plan.

    In addition, the Company wrote-off approximately $5.2 million in inventory that no longer fit the Company's future direction and took a $4.7 million charge relating to the write-off of its Japanese joint venture. The Company's disputes with its Japanese joint venture partners are currently in arbitration.

    At December 29, 2000 the Company had approximately $2.2 million of accrued restructuring charges consisting of future payments to former employees and lease obligations.

NOTE 16—NET INCOME (LOSS) PER SHARE

    The following is a reconciliation of the weighted average number of shares used to compute basic and diluted earnings (loss) per share:

	2000	1999	1998
Basic weighted average shares outstanding	15,377,623	14,156,708	13,541,644
Diluted effect of stock options and warrants	—	598,898	726,385
Diluted weighted average shares outstanding	15,377,623	14,755,606	14,268,029

F-24

NOTE 17—GEOGRAPHIC AND PRODUCT DATA

    The Company develops, manufactures and distributes medical devices used in minimally invasive ophthalmic surgery. Substantially all of the Company's revenues result from the sale of the Company's medical devices. The Company distributes its medical devices in the cataract, refractive and glaucoma segments within ophthalmology. During the years presented, revenues from the refractive and glaucoma segments were less than 10% of total revenue. Accordingly, there is not enough difference for the Company to account for these products separately or to justify segmented reporting by product type.

    The Company markets its products in over 40 countries and has manufacturing sites in the United States and Switzerland. Other than the United States and Germany, the Company does not conduct business in any country in which its sales in that country exceed 5% of consolidated sales. Sales are attributed to countries based on the location of customers. The composition of the Company's sales to unaffiliated customers between those in the United States, Germany, and those in other locations for each year, is set forth below.

	2000		1999		1998
Sales to unaffiliated customers
US	$	29,501,000	$	27,976,000	$	24,446,000
Germany		14,182,000		16,916,000		17,526,000
Other		10,303,000		14,063,000		12,272,000
Total	$	53,986,000	$	58,955,000	$	54,244,000

    The composition of the Company's property, plant and equipment between those in the United States, Switzerland, and those in other countries is set forth below.

	2000		1999		1998
Property, plant and equipment
US	$	10,920,000	$	9,705,000	$	8,028,000
Switzerland		2,270,000		2,198,000		1,789,000
Other		436,000		773,000		563,000
Total	$	13,626,000	$	12,676,000	$	10,380,000

    The Company sells its products internationally, which subject the Company to several potential risks, including fluctuating exchange rates (to the extent the Company's transactions are not in U.S. dollars), regulation of fund transfers by foreign governments, United States and foreign export and import duties and tariffs and political instability.

F-25

STAAR SURGICAL COMPANY AND SUBSIDIARIES
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Column A		Column B		Column C		Column D			Column E
Description		Balance at Beginning of Year		Additions		Deductions			Balance at End of Year
2000
	Allowance for doubtful accounts deducted from accounts receivable in balance sheet	$	373,000	$	408,000	$	—		$	781,000
	Reserve for obsolescence deducted from inventories in balance sheet		185,000		411,000		—			596,000
	Accrued restructuring costs		—		4,236,000		2,000,000			2,236,000
	Notes receivable reserve		—		1,500,000		—			1,500,000
		$	558,000	$	6,555,000	$	2,000,000		$	5,113,000
1999
	Allowance for doubtful accounts deducted from accounts receivable in balance sheet	$	233,000	$	143,000	$	—		$	376,000
	Reserve for obsolescence deducted from inventories in balance sheet		61,000		124,000		—			185,000
		$	294,000	$	267,000	$	—		$	561,000
1998
	Allowance for doubtful accounts deducted from accounts receivable in balance sheet	$	128,000	$	105,000	$	—		$	233,000
	Reserve for obsolescence deducted from inventories in balance sheet		131,000		—		70,000	(1)		61,000
		$	259,000	$	105,000	$	70,000		$	294,000

(1)

Obsolete inventory written down to zero value.

F-26

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORT ON SCHEDULE

The Board of Directors
STAAR Surgical Company

    The audits referred to in our report dated March 12, 2001, included the related financial statement schedule as of December 29, 2000, and for each of the three years in the period ended December 29, 2000, included in the annual report on Form 10-K of STAAR Surgical Company and subsidiaries. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, such financial statement schedule presents fairly, in all material respects, the information set forth therein.

/s/ BDO SEIDMAN, LLP

Los Angeles, California
March 12, 2001

F-27

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT

The Board of Directors
STAAR Surgical Company

    We consent to incorporation by reference in the Registration Statement (No. 33-37248) (No. 33-76404) and (No. 33-60241) on Form S-8 of STAAR Surgical Company of our report dated March 12, 2001, relating to the consolidated balance sheets of STAAR Surgical Company and subsidiaries as of December 29, 2000 and December 31, 1999 and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows and related schedule for each of the three years in the period ended December 29, 2000, which report appears in the December 29, 2000 annual report on Form 10-K of STAAR Surgical Company and subsidiaries.

/s/ BDO SEIDMAN, LLP

Los Angeles, California
March 28, 2001

F-28

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PART I

ITEM 1. BUSINESS

ITEM 2. DESCRIPTION OF PROPERTY
ITEM 3. PENDING LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
2000 Fiscal Year Compared to 1999 Fiscal Year
1999 Fiscal Year Compared To 1998 Fiscal Year
Liquidity And Capital Resources
Foreign Exchange
Inflation
New Accounting Pronouncements
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

PART III

ITEMS 10., 11., 12. AND 13.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 29, 2000, DECEMBER 31, 1999 AND JANUARY 1, 1999
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 29, 2000 and December 31, 1999
STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 29, 2000, December 31, 1999 and January 1, 1999
STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) Years Ended December 29, 2000, December 31, 1999 and January 1, 1999
STAAR SURGICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 29, 2000, December 31, 1999 and January 1, 1999 Increase (Decrease) in Cash and Cash Equivalents

Organization and Description of Business
Basis of Presentation
Revenue Recognition
Income Taxes
Cash and Cash Equivalents
Inventories
Property, Plant and Equipment
Patents and Licenses
Goodwill
Start-Up Costs
Accounting Estimates
Fair Value of Financial Instruments
Net Income Per Share
Stock Based Compensation
Comprehensive Income
Segments of an Enterprise
Reclassifications
New Accounting Pronouncements

Common Stock
Notes Receivable
Options

Warrants
Lease Obligations
Supply Agreement
Litigation and Claims
Other Current Liabilities
Other Long-Term Liabilities

STAAR SURGICAL COMPANY AND SUBSIDIARIES SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT ON SCHEDULE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT

EX-3.2

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Amended June 6, 1995
Amended September 28, 2000

BYLAWS

STAAR SURGICAL COMPANY
(A Delaware Corporation)

ARTICLE I

Offices

    SECTION 1.  Registered Office.  The registered office of the Corporation within the State of Delaware shall be in the City of Dover, County of Kent.

    SECTION 2.  Other Offices.  The Corporation may also have an office or offices other than said registered office at such place or places, either within or without the State of Delaware, as the Board of Directors shall from time to time determine or the business of the Corporation may require.

ARTICLE II

Meetings of Stockholders

    SECTION 1.  Place of Meetings.  All meeting of the stockholders for the election of directors or for any other purpose shall be held at any such place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of meeting or in a duly executed waiver thereof.

    SECTION 2.  Annual Meeting.  The annual meeting of the stockholders, commencing with the year 1986, shall be held at 10:00 A.M. on the fifteenth of June if not a legal holiday, and if a legal holiday, then on the next succeeding day not a legal holiday, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of meeting or in a duly executed waiver thereof. At such annual meeting, the stockholders shall elect, by a plurality vote, a Board of Directors and transact such other business as may properly be brought before the meeting.

    SECTION 3.  Special Meetings.  Special Meetings of the stockholders, unless otherwise prescribed by statute, may be called at any time by the Board of Directors or the Chairman of the Board, if one shall have been elected, or the President.

    SECTION 4.  Notice of Meetings.  Except as otherwise expressly required by statute, written notice of each annual and special meeting of the stockholders stating the date, place, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder of record entitled to vote thereat not less than ten (10) or more than sixty (60) days before the date of the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Notice shall be given personally or by mail, and, if by mail, shall be sent in a postage prepaid envelope, addressed to the stockholder at his address as it appears on the records of the Corporation. Notice by mail shall be deemed given at the time when the same shall be deposited in the United States mail, postage prepaid. Notice of any meeting shall not be required to be given to any person who attends such meeting, except when such person attends the meeting in person or by proxy for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, or who, either before or after the meeting, shall submit a signed written waiver of notice, in person or by proxy. Neither the business to be transacted at, nor the purpose of, an annual or special meeting of stockholders need be specified in any written waiver of notice.

    SECTION 5.  List of Stockholders.  The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before each meeting of stockholders, a complete

list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city, town or village where the meeting is to be held, which place shall be specified in the notice of meeting, or, if not specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

    SECTION 6.  Quorum, Adjournments.  The holders of a majority of the voting power of the issued and outstanding stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meeting of stockholders, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented by proxy at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented by proxy. At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty days, or, if after adjournment a new record date is set, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

    SECTION 7.  Organization.  At each meeting of the stockholders, the Chairman of the Board, if one shall have been elected, or in his absence or if one shall not have been elected, the President shall act as chairman of the meeting. The Secretary, or in his absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting, shall act as secretary of the meeting and keep the minutes thereof.

    SECTION 8.  Order of Business.  The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting.

    SECTION 9.  Voting.  Except as otherwise provided by statute or the Certificate of Incorporation, each stockholder of the Corporation shall be entitled at each meeting of the stockholders to one vote for each share of capital stock of the Corporation standing in his name on the record of stockholders of the Corporation:

    (a) on the date fixed pursuant to the provisions of Section 6 of Article V of these Bylaws as the record date for the determination of the stockholders who shall be entitled to notice of and to vote at such meeting; or

    (b) if no such record date shall have been so fixed, then at the close of business on the date next preceding the day on which notice thereof shall be given, or, if notice is waived, at the close of business on the date next preceding the date on which the meeting is held.

    Each stockholder entitled to vote at any meeting of the stockholders may authorize another person or persons to act for him by a proxy signed by such stockholder or his attorney-in-fact but no proxy shall be voted after three years from its date, unless the proxy provides for a longer period. Any such proxy shall be delivered to the secretary of the meeting at or prior to the time designated in the order of business for so delivering such proxies. When a quorum is present at any meeting, the vote of the holders of a majority of the voting power of the issued and outstanding stock of the Corporation entitled to vote thereon, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Certificate of Incorporation or of these By-Laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each

ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted.

    SECTION 10.  Inspectors.  The Board of Directors may, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any of the inspectors so appointed shall fail to appear, the chairman of the meeting shall, or if inspectors shall not have been appointed, the chairman of the meeting may, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as an inspector of an election of directors. Inspectors need not be stockholders.

    SECTION 11.  No Action by Consent.  No action permitted or required to be taken by stockholders pursuant to the Delaware General Corporation Law may be taken by consent or consents in writing.

ARTICLE III

Board of Directors

    SECTION 1.  General Powers.  The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the Certificate of Incorporation directed or required to be exercised or done by the stockholders.

    SECTION 2.  Number, Qualifications, Election and Term of Office.

    (a) The number of directors that shall constitute the entire Board of Directors of this Corporation shall consist of a number within the limits set forth in Article TWELFTH of the Corporation's Certificate of Incorporation (not less than three (3) nor more than seven (7) persons). The exact number of directors shall be fixed, within the forgoing limitations, by the vote of a majority of the entire Board of Directors. The exact number of directors constituting the entire Board of Directors is presently fixed at five (5). Directors need not be stockholders. Except as otherwise provided by statute or this Corporation's Certificate of Incorporation or these Bylaws, the directors shall be elected at the annual meeting of stockholders. Each director shall hold office until his successor shall have been elected and qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these Bylaws.

    (b) The directors of the Corporation shall be divided into three (3) classes as nearly equal in size as practicable, which classes are hereby designated Class I, Class II and Class III. The term of office of the initial Class I directors shall expire at the first regularly-scheduled annual meeting of stockholders to be held after the annual meeting of stockholders for 1995 (scheduled to be held on June 6, 1995), or any adjournments thereof; the term of office of the initial Class II directors shall expire at the second succeeding annual meeting of stockholders to be held after the annual meeting of stockholders for 1995, or any adjournments thereof; and the term of office of the initial Class III directors shall expire at the third succeeding annual meeting of the stockholders to be held after the annual meeting of stockholders for 1995, or any adjournments thereof. For the purposes hereof, the initial Class I, Class II and Class III directors shall be those directors so designated and elected at the annual meeting of stockholders for 1995, or any adjournments thereof. The designation of said directors to Class I, Class II and Class III shall be by a majority

vote of the Board or, if agreement cannot be reached, by length of prior service on the Board. At each annual meeting after the annual meeting of stockholders for 1995 or any adjournments thereof, directors to replace those of the Class whose terms expire at such annual meeting shall be elected to hold office until the third succeeding annual meeting and until their respective successors shall have been duly elected and qualified. If the number of directors is hereafter changed, any newly created directorships or decrease in directorships shall be so apportioned among the classes so as to make all classes as nearly equal in number as practicable.

    (c) Any decrease in the number of directors constituting the Board of Directors shall be effective at the time of the next succeeding annual meeting of the stockholders unless there shall be vacancies in the board of Directors, in which case such decrease may become effective at any time prior to the next succeeding annual meeting to the extent of the number of such vacancies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

    SECTION 3.  Place of Meeting.  Meetings of the Board of Directors shall be held at such place or places, within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be specified in the notice of any such meeting.

    SECTION 4.  Election of Directors.  At each meeting of the stockholders for the election of directors, the persons receiving the greatest number of votes shall be the directors.

    SECTION 5.  Nominations.

    5.1. Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors.

    5.2. Such nominations, if not made by the Board of Directors, shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 20 days notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the secretary of the Corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to stockholders. Each such notice shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment or each such nominee, and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee.

    5.3. Notice of nominations which are proposed by the Board of Directors shall be given on behalf of the Board by the chairman of the meeting.

    5.4. The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.

    SECTION 6.  Annual Meeting.  The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business as soon as practicable after each annual meeting of the stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such other time or place (within or without the State of Delaware) as shall be specified in a notice thereof given as hereinafter provided in Section 9 of this Article III.

    SECTION 7.  Regular Meetings.  Regular meetings of the Board of Directors shall be held at such time and place as the Board of Directors may fix. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular

meetings of the Board of Directors need not be given except as otherwise required by statute or these Bylaws.

    SECTION 8.  Special Meetings.  Special meetings of the Board of Directors may be called by the Chairman of the Board, if one shall have been elected, or by two or more directors of the Corporation or by the President.

    SECTION 9.  Notice of Meetings.  Notice of each special meeting of the Board of Directors (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 9, in which notice shall be stated the time and place of the meeting. Except as otherwise required by these Bylaws, such notice need not state the purpose of such meeting. Notice of each such meeting shall be mailed, postage prepaid, to each director, addressed to him at his residence or usual place of business, by first-class mail, at least two days before the day on which such meeting is to be held, or shall be sent addressed to him at such place by telegraph, cable, telex, telecopier or other similar means, at least twenty-four hours before the time at which such meeting is to be held. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting, except when he shall attend for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

    SECTION 10.  Quorum and Manner of Acting.  A majority of the entire Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and, except as otherwise expressly required by statute or the Certificate of Incorporation or these Bylaws, the act of a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of the time and place of any such adjourned meeting shall be given to the directors unless such time and place were announced at the meeting at which the adjournment was taken, in which case such notice shall only be given to the directors who were not present thereat. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. The directors shall act only as a Board and the individual directors shall have no power as such.

    SECTION 11.  Organization.  At each meeting of the Board of Directors, the Chairman of the Board, if one shall have been elected, or, in the absence of the Chairman of the Board or if one shall not have been elected, the President (or, in his absence, another director chosen by a majority of the directors present) shall act as chairman of the meeting and preside thereat. The Secretary, or, in his absence, any person appointed by the Chairman shall act as secretary of the meeting and keep the minutes thereof.

    SECTION 12.  Resignations.  Any director of the Corporation may resign at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

    SECTION 13.  Vacancies.  Newly created directorships resulting from any increase in the number of directors, and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled exclusively by the affirmative vote of a majority of the remaining members of the Board of Directors (and not by stockholders), although less than a quorum, or by a sole remaining director. Each director so elected shall hold office until his successor shall have been elected and qualified, or until his death, or until he shall have resigned, or have been removed, as provided in this Corporation's Certificate of Incorporation or as herein provided in these Bylaws.

    SECTION 14.  Removal of Directors.  Except as otherwise provided by statute, any director may be removed only for cause.

    SECTION 15.  Compensation.  Directors and members of committees of the Board of Directors may be compensated for their services, and shall be reimbursed for expenses, as fixed or determined by

resolution of the Board of Directors. This Section 15 shall not be construed to preclude any director from serving the corporation in any other capacity, as an officer, agent, employee, or otherwise, and receiving compensation for those services.

    SECTION 16.  Committees.  The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, including any executive committee, each committee to consist of three or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. Except to the extent restricted by statute or the Certificate of Incorporation, each such committee, to the extent provided in the resolution creating it, shall have and such committee shall serve at the pleasure of the Board of Directors and have such name as may be determined from time to time to be affixed to all papers which require it. Each such committee shall serve at the pleasure of the Board of Directors and have such name as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors.

    SECTION 17.  Action by Consent.  Unless restricted by the Certificate of Incorporation, any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or such committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board of Directors or such committee shall be filed with the minutes of the proceedings of the Board of Directors or such committee.

    SECTION 18.  Telephonic Meeting.  Unless restricted by the Certificate of Incorporation, any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

ARTICLE IV

Officers

    SECTION 1.  Number and Qualifications.  The officers of the Corporation shall be elected by the Board of Directors and shall include the President, one or more Vice-Presidents, the Secretary, the Treasurer, the Chairman of the Board of Directors, and the Vice-Chairman of the Board of Directors. If the Board of Directors wishes it may also elect other officers (including one or more Assistant Treasurers and one or more Assistant Secretaries), as may be necessary or desirable for the business of the Corporation. Any two or more offices may be held by the same person, except the offices of President and Secretary; provided, however, that such two offices may be held by the same person if all of the outstanding shares of the Corporation are owned by such person. Each officer shall hold office until the first meeting of the Board of Directors following the next annual meeting of the stockholders, and until his successors shall have been elected and shall have qualified, or until his death, or until he shall have resigned or have been removed, as hereinafter provided in these Bylaws.

    SECTION 2.  Resignations.  Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board of Directors or the Chairman of the Board or the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective.

    SECTION 3.  Removal.  Any officer of the Corporation may be removed, either with or without cause, at any time, by the Board of Directors at any meeting thereof.

    SECTION 4.  Chairman of the Board.  The Chairman of the Board, if one shall have been elected, shall be a member of the Board, an officer of the Corporation and, if present, shall preside at each meeting of the Board of Directors or the stockholders. He shall advise and counsel with the

President and shall perform such other duties as may from time to time be assigned to him by the Board of Directors.

    SECTION 5.  The President.  The President shall be the Chief Executive Officer of the Corporation. He shall, in the absence of the Chairman of the Board or if a Chairman of the Board shall not have been elected, preside at each meeting of the Board of Directors or the stockholders. He shall perform all duties incident to the office of President and Chief Executive Officer and such other duties as may from time to time be assigned to him by the Board of Directors.

    SECTION 6.  Vice-Presidents.  Each Vice President shall perform all such duties as from time to time may be assigned to him by the Board of Directors or the President. At the request of the President or in his absence or in the event of his inability or refusal to act, the Vice-President, or if there shall be more than one, the Vice-Presidents in the order determined by the Board of Directors (or if there be no such determination, then the Vice Presidents in the order of their election), shall perform the duties of the President, and, when so acting, shall have the powers of and be subject to the restrictions placed upon the President in respect of the performance of such duties.

    SECTION 7.  Treasurer.  The Treasurer shall:

    (a) have charge and custody of, and be responsible for, all the funds and securities of the Corporation;

    (b) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation;

    (c) deposit all moneys and other valuables to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to its direction;

    (d) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever;

    (e) disburse the funds of the Corporation and supervise the investments of its funds, taking proper vouchers therefor;

    (f)  render to the Board of Directors, whenever the Board of Directors may require, an account of the financial condition of the Corporation; and

    (g) in general, perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board of Directors.

    SECTION 8.  Secretary.  The Secretary shall:

    (a) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders;

    (b) see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law;

    (c) be custodian of the records and the seal of the Corporation and affix and attest the seal to all certificates for shares of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal;

    (d) see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and

    (e) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors.

    SECTION 9.  The Assistant Treasurer.  The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such

determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as from time to time may be assigned by the Board of Directors.

    SECTION 10.  The Assistant Secretary.  The Assistant Secretary, or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties as from time to time may be assigned by the Board of Directors.

    SECTION 11.  Officers' Bonds or Other Security.  If required by the Board of Directors, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety or sureties as the Board of Directors may require.

    SECTION 12.  Compensation.  The compensation of the officers of the Corporation for their services as such officers shall be fixed from time to time by the Board of Directors. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation.

ARTICLE V

Shares, etc.

    SECTION 1.  Share Certificates.  Each owner of shares of the Corporation shall be entitled to have a certificate, in such form as shall be approved by the Board of Directors, certifying the number of shares of the Corporation owned by him. The certificates representing shares shall be signed in the name of the Corporation by the Chairman of the Board or the President or a Vice-President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation (which seal may be a facsimile, engraved or printed); provided, however, that where any such certificate is countersigned by a transfer agent, or is registered by a registrar (other than the Corporation or one of its employees), the signatures of the Chairman of the Board, President, Vice-President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer upon such certificates may be facsimiles, engraved or printed. In case any officer who shall have signed any such certificate shall have ceased to be such officer before such certificate shall be issued, it may nevertheless be issued by the Corporation with the same effect as if such officer were still in office at the date of their issue. When the Corporation is authorized to issue shares of more than one class there shall be set forth upon the face or back of the certificate, or the certificate shall have a statement that the Corporation will furnish to any shareholder, upon request and without charge, a full statement of the powers, designations, preferences, and relative, participating, optional or other special rights of each class of stock or series thereof, and the qualifications, limitations or restrictions of such preferences and/or rights and/or limitations of each such series so far as the same have been fixed and the authority of the Board of Directors to designate and fix the relative rights, preferences and limitations of other series.

    SECTION 2.  Books of Account and Record of Stockholders.  There shall be kept correct and complete books and records of account of all the business and transactions of the Corporation. There shall also be kept, at the office of the Corporation, in the State of New York, or such other State as determined by the Corporation, or at the office of its transfer agent in said State, a record containing the names and addresses of all stockholders of the Corporation, the number of shares held by each, and the dates when they became the holders of record thereof.

    SECTION 3.  Transfers of Shares.  Transfers of shares of the Corporation shall be made on the records of the Corporation only upon authorization by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. The person in whose name shares shall stand on the record of stockholders of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be

made for collateral security and not absolutely and written notice thereof shall be given to the Secretary or to a transfer agent, such fact shall be noted on the records of the Corporation.

    SECTION 4.  Transfer Agents and Registrars.  The Board of Directors may appoint, or authorize any officer or officers to appoint, one or more transfer agents and one or more registrars and may require all certificates for shares of stock to bear the signature of any of them.

    SECTION 5.  Regulations.  The Board of Directors may make such additional rules and regulations, not inconsistent with these Bylaws, as it may deem expedient concerning the issue, transfer and registration or certificates for shares of the Corporation.

    SECTION 6.  Fixing of Record Date.  The Board of Directors may fix, in advance, a date not more than fifty (50) nor less than ten (10) days before the date then fixed for the holding of any meeting of the stockholders or before the last day on which the consent or dissent of the stockholders may be effectively expressed for any purpose without a meeting, as the time as of which the stockholders entitled to notice of and to vote at such meeting or whose consent or dissent is required or may be expressed for any purpose, as the case may be, shall be determined, and all persons who were stockholders of record of voting shares at such time, and no others, shall be entitled to notice of and to vote at such meeting or to express their consent or dissent, as the case may be. The Board of Directors may fix, in advance, a date not more than fifty (50) not less than ten (10) days preceding the date fixed for the payment of any dividend or the making of any distribution or the allotment of rights to subscribe for securities of the Corporation, or for the delivery of evidence of rights or evidence of interest arising out of any change, conversion or exchange of shares or other securities, as the record date for the determination of the stockholders entitled to receive any such dividend, distribution, allotment, rights or interests, and in such case only the stockholders of record at the time so fixed shall be entitled to receive such dividend, distribution, allotment, rights or interests.

    SECTION 7.  Lost, Destroyed or Mutilated Certificates.  The holder of any certificate representing shares of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of such certificate, and the Corporation may issue a new certificate in the place of any certificate theretofore issued by it which the owner thereof shall allege to have been lost or destroyed or which shall have been mutilated. The Board of Directors may, in its discretion, require such owner or his legal representatives to give to the Corporation a bond in such sum, limited or unlimited, and in such form and with such surety or sureties as the Board of Directors in its absolute discretion shall determine, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss of destruction of any such certificate, or the issuance of such new certificate.

ARTICLE VI

Indemnification

    On the terms, to the extent, and subject to the condition prescribed by statute and by such rules and regulations, not inconsistent with statute, as the Board of Directors may in its discretion impose in general or particular cases or classes of cases, (a) the Corporation shall indemnify any person made, or threatened to be made, a party to an action or proceeding, civil or criminal, including an action by or in the rights of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise which any director or officer of the Corporation served in any capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate, was a director or officer of the Corporation, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, and (b) the Corporation may pay, in advance of final disposition of any such action or proceeding, expenses incurred by such person in defining such action or proceeding.

    On the terms, to the extent, and subject to the conditions prescribed by statute and by such rules and regulations, not inconsistent with statute, as the Board of Directors may in its discretion impose in

general or particular cases or classes of cases, (a) the Corporation shall indemnify any person made a party to an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that he, his testator or intestate, is or was a director or officer of the Corporation, against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, or in connection with an appeal therein, and (b) the Corporation may pay, in advance of final disposition of any such action, expenses incurred by such person in defending such action or proceeding.

ARTICLE VII

General Provisions

    SECTION 1.  Dividends.  Subject to statute and the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of the Corporation, unless otherwise provided by statute or the Certificate of Incorporation.

    SECTION 2.  Reserves.  Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may, from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors may think conducive to the interests of the Corporation. The Board of Directors may modify or abolish any such reserves in the manner in which it was created.

    SECTION 3.  Seal.  The seal of the Corporation shall be in such form as shall be approved by the Board of Directors.

    SECTION 4.  Fiscal Year.  The first fiscal year of the Corporation shall be December 31, but may thereafter be changed by resolution of the Board of Directors.

    SECTION 5.  Checks, Notes, Drafts, Etc..  All checks, notes, drafts or other orders for the payment of money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or by an officer or officers authorized by the Board of Directors to make such designation.

    SECTION 6.  Execution of Contracts, Deeds, Etc.  The Board of Directors may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances.

    SECTION 7.  Voting of Stock in Other Corporations.  Unless otherwise provided by resolution of the Board of Directors, the Chairman of the Board or the President, from time to time, may (or may appoint one or more attorneys or agents to) cast the votes which the Board of Directors may be entitled to cast as a stockholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of the shares or other securities of such other corporation, or to consent in writing to any action by any such other corporation. In the event one or more attorneys or agents are appointed, the Chairman of the Board or the President may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent. The Chairman of the Board or the President may, or may instruct the attorneys or agents appointed to, execute or cause to be executed in the name and on behalf of the Corporation and under its seal or otherwise, such written proxies, consents, waivers or other instruments as may be necessary or proper in the premises.

ARTICLE VIII

Amendments

    These Bylaws may be amended or repealed or new Bylaws may be adopted at any annual or special meeting of stockholders at which time a quorum is present or represented, by the vote of the holders of shares entitled to vote in the election of directors provided that notice of the proposed amendment or repeal or adoption of new Bylaws is contained in the notice of such meeting. These Bylaws may also be amended or repealed or new Bylaws may be adopted by the Board at any regular or special meeting of the Board of Directors. If any Bylaw regulating an impending election of directors is adopted, amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of the stockholders for the election of directors the By-law so adopted, amended or repealed, together with a concise statement of the changes made. Bylaws adopted by the Board of Directors may be amended or repealed by the stockholders.

    Notwithstanding anything contained in these Bylaws to the contrary, Section 11 of Article II, Section 2 of Article III, Section 13 of Article III and Section 14 of Article III of these Bylaws shall not be altered, amended or repealed, and no provisions inconsistent therewith shall be adopted, except in accordance with Article Fourteenth of the Certificate of Incorporation of this Corporation.

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BYLAWS STAAR SURGICAL COMPANY (A Delaware Corporation)
ARTICLE I Offices
ARTICLE II Meetings of Stockholders
ARTICLE III Board of Directors
ARTICLE IV Officers
ARTICLE V Shares, etc.
ARTICLE VI Indemnification
ARTICLE VII General Provisions
ARTICLE VIII Amendments

EX-4.5

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Exhibit 4.5

STOCKHOLDERS' RIGHTS PLAN

Stockholders' Rights Plan, dated effective as of April 20, 1995 (the "Plan"), between STAAR Surgical Company, a Delaware corporation (the "Company"), and American Stock Transfer & Trust Company, a New York corporation (the "Rights Agent").

WHEREAS, on April 20, 1995 (the "Rights Declaration Date"), the Board of Directors of the Company authorized and declared an dividend distribution of one (1) Right for each share of common stock, $.01 par value, of the Company (the "Common Stock") outstanding at the close of business on April 20, 1995 (the "Record Date") and has authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for each share of Common Stock issued between the Record Date (whether originally issued or delivered from the Company's treasury) and the Distribution Date, each Right initially representing the right to purchase one share of Common Stock upon the terms and subject to the conditions hereinafter set forth (the "Rights");

WHEREAS, the Board of Directors expressly made the adoption of the Plan contingent upon subsequent approval of the stockholders of the Company at the Annual Meeting of Stockholders to be held on June 6, 1995, and any adjournments thereof; and

WHEREAS, if this Plan is not approved by the stockholders of the Company at said Annual Meeting of Stockholders or and any adjournments thereof, this Plan shall be null and void ab initio and of no further force and effect.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

Section 1. CERTAIN DEFINITIONS.

    For purposes of this Plan, the following terms have the meanings indicated:

(a) Acquiring Persons—The term "Acquiring Persons" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock then outstanding. Notwithstanding the foregoing, the term "Acquiring Person" shall not include:

     (i) the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan, or

    (ii) any Person who or which, together with Affiliates and Associates of such Person, would be an Acquiring Person solely by reason of (A) being the Beneficial Owner of shares of Voting Stock of the Company, the Beneficial Ownership of which was acquired by such Persons pursuant to any action or transaction or series of related actions or transactions approved by the Board of Directors (provided, however that at the time of such approval of the Board of Directors there are then in office not less than two Continuing Directors (as such term is hereinafter defined) and such action or transaction or series of related actions or transactions are approved by a majority of the Continuing Directors then in office) before such Person otherwise became an Acquiring Person or (B) a reduction in the number of issued and outstanding shares of Voting Stock of the Company pursuant to a transaction or a series of related transactions approved by the Board of Directors (provided that at the time of such approval of the Board of Directors there are then in office not less than two Continuing Directors and such transaction or series of related transactions are approved by a majority of the Continuing Directors then in office); provided, further, however, that in the event such Person described in the foregoing clause (ii) does not become an Acquiring

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Person by reason of subclause (A) or (B) of said clause (ii), such Person shall nonetheless become an Acquiring Person in the event such Person thereafter acquires Beneficial Ownership of an additional one percent (1%) of the Voting Stock of the Company, unless the acquisition of such additional Voting Stock would not result in such Person becoming an Acquiring Person by reason of subclause (A) or (B) of subclause (ii).

(b) Act—The term "Act" shall mean the Securities Act of 1933, as amended.

(c) Affiliate and Associates—The terms "Affiliate" and "Associates" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

(d) Beneficial Owner—A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities:

     (i) which such Person or any of such Persons' Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities rendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, or (B) securities issuable upon exercise or Rights at any time prior to the occurrence of a Triggering Event, or (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section 11(i) hereof in connection with an adjustment made with respect to any Original Rights;

    (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph (ii) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or

    (iii) which are beneficially owned, directly or indirectly, by any Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) of this paragraph (d)) or disposing of any voting securities of the Company.

    Notwithstanding anything in this Section 1(d) to the contrary, noe of the Company's directors, officers or financial advisers shall be deemed a "Beneficial Owner" of, or to "beneficially own," any securities of the Company owned by any other director, officer or financial adviser of the Company by virtue of such Persons acting in their capacities as such, including in connection with the formulation and publication of the Board of Director's recommendation of its position, and actions taken in furtherance thereof, with respect to an acquisition proposal relating to the Company or a tender or exchange offer for the Common Shares of the Company.

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    Further notwithstanding anything in this Section 1(d) to the contrary, a Person engaged in the business of underwriting securities shall not be deemed a "Beneficial Owner" of, or to "beneficially own," any securities acquired in good faith in a firm commitment underwriting until the expiration of forty (40) days after the date of such acquisition.

(e) Business Day—The term "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of California or the State of New York are authorized or obligated by law or executive order to close.

(f)  Close of Business—The term "close of business" on any given date shall mean 5:00 P.M., California time, on the next succeeding day which is a Business Day.

(g) Common Stock—The term "Common Stock" shall mean the common stock, $.01 par value, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person.

(h) Continuing Director—The term "Continuing Director" shall mean (i) any member of the Board of Directors of the Company, while such Person is a member of the Board, who is not an Acquiring Person or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or any such Affiliate or Associate, and was a member of the Board prior to the date of this Plan, or (ii) any Person who subsequently becomes a member of the Board, while such Person is a member of the Board, who is not an Acquiring Person or an Affiliate or Associate of an Acquiring Person or a representative of an Acquiring Person or any such Affiliate or Associate, if such Person's nomination for election or election to the Board is recommended or approved by a majority of the Continuing Directors.

(i)  Current Market Price—The term "current market price" shall have the meaning set forth in Section 11(d) hereof.

(j)  Distribution Date—The term "Distribution Date" shall have the meaning set forth in Section 3(a) hereof.

(k) Exchange Act—The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended and in effect on the date of this Plan.

(l)  "Expiration Date"—The term "Expiration Date" shall have the meaning set forth in Section 7(a) hereof.

(m) Final Expiration Date—the term "Final Expiration Date" shall have the meaning set forth in Section 7(a) hereof.

(n) Person—The term "Person" shall mean any individual, firm or corporation, partnership or other entity.

(o) Principal Party—The term "Principal Party" shall have the meaning set forth in Section 13(b) hereof.

(p) Purchase Price—The term "Purchase Price" shall have the meaning set forth in Section 4(a) hereof.

(q) Redemption Price—The term "Redemption Price" shall have the meaning set forth in Section 23(a) hereof.

(r) Rights—The term "Rights" shall have the meaning set forth in the WHEREAS clause at the beginning of this Plan.

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(s) Rights Certificates—The term "Rights Certificates" shall have the meaning set forth in Section 3(a) hereof.

(t) Section 11(a)(ii) Event—the term "Section 11(a)(ii) Event" shall mean any event described in Section 11(a)(ii) hereof.

(u) Section 13 Event—The term "Section 13 Event" shall mean any event described in clauses (x), (y) or (z) of Section 13(a) hereof.

(v) Stock Acquisition Date—The term "Stock Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, shall include, a report filed pursuant to the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such.

(w) Subsidiary—The term "Subsidiary" shall mean, with reference to any Person, any corporation of which an amount of voting securities sufficient to elect at least a majority of the directors of such corporation is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such Person.

(x) Trading Day—The term "Trading Day" shall have the meaning set forth in Section 11(d) hereof.

(y) Triggering Event—The term "Triggering Event" shall mean any Section 11(a)(ii) Event or any Section 13 Event.

Section 2. APPOINTMENT OF RIGHTS AGENT.

    The Company hereby appoints the Rights Agent to act as agent for the Company in accordance will the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time-to-time appoint such Co-Rights Agents as it may deem necessary or desirable.

Section 3. ISSUANCE OF RIGHTS CERTIFICATE.

    (a)  Provision of Rights Certificate.  Until the earlier of (i) the close of business on the tenth (10th) day after the Stock Acquisition Date (or, if the tenth (10th) day after the Stock Acquisition Date occurs before the Record Date, the close of business on the Record Date), or (ii) the close of business on the tenth (10th) business day (or such later date as may be determined by action of the Board of Directors {but only if at the time of such determination by the Board of Directors there are then in office not less than two Continuing Directors and such action is approved by a majority of the Continuing Directors then in office} prior to such time as any Person becomes an Acquiring Person) after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock then outstanding (the earlier of (i) or (ii) being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the Company). As soon as practicable after the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each share of Common Stock so

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held, subject to adjustment as provided herein. In the event that an adjustment in the number of rights per share of Common Stock has been made pursuant to Section 11(p) hereof, at the time of distribution of the Rights Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole number of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates.

    (b)  Provision of Summary of Rights.  As promptly as practicable following the Record Date, the Company will send a copy of a Summary of Rights, in substantially the form attached hereto, as Exhibit B (the "Summary of Rights"), by first-class, postage prepaid mail, to each recorded holder of the Common Stock as of the close of business on the Record Date, at the address of such holder shown on the records of the Company; provided, however, the Company shall not be required to send a copy of the Summary of Rights to any stockholders who have received a copy of this Plan in connection with any proxy materials delivered to such stockholders which materials seek such stockholders' approval of this Plan. With respect to certificates for the Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for the Common Stock and the registered holders of the Common Stock shall also be the registered holders of the associated Rights. Until the earlier of the Distribution Date or the Expiration Date, the transfer of any certificates representing shares of Common Stock in respect of which Rights have been issued shall also constitute the transfer of the Rights associated with such shares of Common Stock.

    (c)  Legend.  Rights shall be issued in respect of all shares of Common Stock which are issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date. Certificates representing such shares of Common Stock shall also be deemed to be certificates for Rights, and shall bear the following legend:

"THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE STOCKHOLDERS' RIGHTS PLAN DATED AS OF APRIL 20, 1995 (THE "RIGHTS PLAN") BETWEEN STAAR SURGICAL COMPANY (THE "COMPANY") AND AMERICAN STOCK TRANSFER & TRUST COMPANY (THE "RIGHTS AGENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS PLAN, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE RIGHTS AGENT WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS PLAN, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE PROMPTLY AFTER THE RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS PLAN, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS PLAN), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID."

    With respect to such certificates containing the foregoing legend, until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock represented by such certificates shall e evidenced by such certificates alone and registered holders of Common Stock shall also be the registered holders of the associated Rights, and the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Stock represented by such certificates.

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Section 4. FORM OF RIGHTS CERTIFICATES.

    (a)  General.  The Rights Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof) shall be substantially in the form set forth in Exhibit A hereto and may have such marks of identification or designation an such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Plan, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time-to-time be listed, or to conform to usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the holders thereof to purchase such number of shares of Common Stock as shall be set forth therein at the price set forth therein (such exercise price per share, the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein.

    (b)  Held by Acquiring Person.  Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has a primary purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend:

"THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS PLAN). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS PLAN."

Section 5. COUNTERSIGNATURE AND REGISTRATION.

    (a)  Execution. The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the person who signed such Rights Certificates had not ceased to be such officer of the Company; and any rights Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company

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to sign such Rights Certificate, although at the date of the execution of this Plan any such person was not such an officer.

    (b)  Maintenance of Books.  Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office or offices designated as the appropriate place for surrender of Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the name and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates, and the date of each of the Rights Certificates.

Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.

    (a)  Transfer, Split Up, Combination and Exchange of Rights.  Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the Expiration Date, any Rights Certificate or Certificates may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder thereof to purchase a like number of shares of Common Stock as the Rights Certificate or Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrender Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section  14 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate or Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates.

    (b)  Loss, Theft, Destruction or Mutilation.  Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will execute and deliver a new Rights Certificate of like tenor to the Rights Agent for counter signature and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.

Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.

    (a)  Exercise of Rights.  Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein including, without limitation, the restrictions on exercisability set forth in Section 9(c) and Section 23(a) hereof) in whole or in part at any time after the Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the principal office or offices of the Rights Agent designated for such purpose,

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together with payment of the aggregate Purchase Price with respect to the total number of shares of Common Stock as to which such surrendered Right are then exercisable, at or prior to the earlier of (i) the close of business on April 20, 2003, (the "Final Expiration Date"), or (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and (ii) being herein referred to as the "Expiration Date").

    (b)  Purchase Price.  The Purchase Price for each share of Common Stock pursuant to the exercise of a Right shall initially be fifty dollars ($50.00), and shall be subject to adjustment from time-to-time as provided in Section 11 and Section 13(a) hereof and shall be payable in accordance with paragraph (c) below.

    (c)  Delivery of Rights Certificates.  Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price per one share of Common Stock to be purchased as set forth below, and an amount equal to any applicable transfer tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the shares of Common Stock (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of shares of Common Stock to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Common Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of shares of Common Stock as are to be purchased (in which case certificates for the shares of Common Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. The payment of the Purchase Price shall be made in cash or by certified bank check or bank draft payable to the Company.

    (d)  Partial Exercise.  In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to the provisions of Section 14 hereof.

    (e)  Rights Held by Acquiring Person.  Notwithstanding anything in this Plan to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has a primary purpose or effect the avoidance of this Section 7(e), shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Plan or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of

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Rights Certificates or other Persons as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder.

    (f)  Satisfactory Evidence of Exercise.  Notwithstanding anything in this Plan to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.

Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.

    All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Plan. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.

    (a)  Reservation of Capital Stock.  The Company covenants and agrees that, from and after the Distribution Date, it will cause to be reserved and kept available out of its authorized and unissued shares of Common Stock not reserved for another purpose the number of shares of Common Stock that, as provided in this Plan, will be sufficient to permit the exercise in full of all outstanding Rights; provided, however, that the Company shall not be required to reserve and keep available shares of Common Stock or other securities sufficient to permit the exercise in full of all outstanding Rights pursuant to the adjustments set forth in Section 11(a)(ii)  or Section 13 hereof unless the Rights become exercisable pursuant to such adjustments.

    (b)  Listing on Stock Exchange.  So long as the shares of Common Stock issuable and deliverable upon the exercise of the Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise.

    (c)  Registration.  The Company shall use its best efforts to (i) file, as soon as required by law following the Distribution Date, a registration statement under the Act, with respect to the securities purchasable upon exercise of the rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public

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announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding any provision of this Plan to the contrary, the Rights shall not be exercised in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained.

    (d)  Fully Paid; Non-Assessable.  The Company covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Common Stock delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price) be duly and validly authorized and issued and fully paid and nonassessable.

    (e)  Transfer Taxes and Charges.  The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for a number of shares of Common Stock upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax which may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number of shares of Common Stock in respect of a name other than that of, the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for a number of shares of Common Stock in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due.

Section 10. COMMON STOCK RECORD DATE.

    Each Person in whose name any certificate for a number of shares of Common Stock (or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such shares of Common Stock represented thereby on, and such certificates shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the date upon which the Rights Certificate evidenced such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the Common Stock transfer books of the Company are closed, such Person shall be dated, the next succeeding Business Day on which the Common Stock transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceeding of the Company except as provided herein.

Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS.

    The Purchase Price, the number and kind of shares covered by each Right and the Number of Rights outstanding are subject to adjustment from time-to-time as provided in this Section 11.

(a)  Certain Events.

(i)  Stock Dividend, Subdivision, Combination or Reclassification.  In the event the Company shall at any time after the date of this Plan (A) declare a dividend on the Common Stock payable in shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine the outstanding Common Stock into a smaller number of shares, or (D) issue any shares of its capital stock in the reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and

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Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Common Stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of Common Stock which, if such Right had been exercised immediately prior to such date and at a time when the Common Stock transfer books of the Company were open, such holder would have owned upon such exercise and be entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)  hereof.

(ii) Reduction in Purchase Price in the Event of Stock Acquisition.  In the event that any Person shall, at any time after the Rights Declaration Date (as defined in the WHEREAS clause at the beginning of this Plan), become an Acquiring Person, unless the event causing such person to become an Acquiring Person is an acquisition of shares of Common Stock pursuant to a tender offer or an exchange offer for all outstanding shares of Common stock at a price and on terms determined by at least a majority of the members of the Board of Directors who are not officers of the Company (provided that at the time of such determination of the Board of Directors there are then in office not less than two Continuing Directors and such determination is also made by a majority of the Continuing Directors then in office), after receiving advice from one or more investment banking firms, to be (a) at a price which is fair to stockholders (taking into account all factors which such members of the Board deem relevant including, without limitation, prices which could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to realize maximum value) and (b) otherwise in the best interests of the Company and its stockholders (a "Qualifying Tender Offer"), then, subject to the last sentence of Section 23(a) and except as otherwise provided in this Section 11, each holder of a Right (except as provided in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof, the number of shares of Common Stock as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of shares of Common Stock for which a Right was exercisable immediately prior to the first occurrence of the Section 11(a)(ii) Event and (y) dividing that product by fifty percent (50%) of the current market price (as determined pursuant to Section 11(d) hereof) per share of the Common Stock on the date of the occurrence of such Section 11(a)(ii) Event.

    (b)  Grant of Subscription Rights.  In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Common Stock entitling them to subscribe for or purchase (for a period expiring within forty-five (45) calendar days after such record date) Common Stock (or shares having the same rights, privileges and preference as the shares of Common Stock ["equivalent common stock"]) or securities convertible into Common Stock or equivalent common stock at a price per share of Common Stock or per share of equivalent common stock (or having a conversion price per share, if a security convertible into Common Stock or equivalent common stock) less than the current stock market price as determined pursuant to Section 11(d) hereof) per share of Common Stock on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date, plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock and/or equivalent common stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price, and the denominator of which shall be the number of shares of Common Stock outstanding on such record date, plus the number of additional shares of Common Stock and/or

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equivalent common stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights. Shares of Common Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.

    (c)  Distribution of Property.  In case the Company shall fix a record date for a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other that a dividend in Common Stock, but including any dividend payable in stock other than Common Stock) or subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the current market price (as determined pursuant to Section 11(d) hereof) per share of Common Stock on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to a share of Common stock, and the denominator of which shall be such current market price (as determined pursuant to Section 11(d) hereof) per share of Common Stock. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would have been in effect if such record date had not been fixed.

    (d)  Determination of Market Price.  For the purpose of any computation herein, the "current market price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that in the event that the current market price per share of the Common Stock is determined during a period following the announcement by the issuer of such Common Stock of (A) a dividend or distribution of such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock (other than the Rights), or (B) any subdivision, combination or reclassification of such Common Stock, and prior to the expiration of the requisite thirty (30) Trading Day period after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the "current market price" shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the NASDAQ National Market System or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by NASDAQ, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported by NASDAQ or, if the shares of Common Stock are not listed or admitted to trading on NASDAQ, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the

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Board of Directors of the Company. If on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date as determined in good faith by the Board of Directors of the Company shall be used. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, a Business Day. If the Common Stock is not publicly held or not so listed or traded, "current market price" per share shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

    (e)  De Minimus Adjustments. Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one-thousandth of a share of Common Stock or other share as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction which mandates such adjustment, or (ii) the Expiration Date.

    (f)  Adjustments Upon Section 11(a)(ii) or Section 13 Events.  If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares or fraction of a share of capital stock other than Common Stock, thereafter the number or fraction of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time-to-time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Common Stock shall apply on like terms and to any such other shares.

    (g)  Evidence of Adjustments.  All rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of shares of Common Stock purchasable from time-to-time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

    (h)  Calculation of Adjusted Rights to Purchase Common Stock.  Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that fraction of a share (or number of shares) of Common Stock (calculated to the nearest one-thousandth) obtained by (i) multiplying (x) the number of shares covered by a Right immediately prior to this adjustment, by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

    (i)  Adjustment in Rights in Lieu of Shares.  The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment in the number of shares of Common Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of shares of Common Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after

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adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificate has been issued, shall be at least ten (10) days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders of record in substitution and replacement for the Rights Certificate held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement.

    (j)  No Requirement to Amend Rights Certificates.  Irrespective of any adjustment or change in the Purchase Price or the fraction of a share (or number of shares) of Common Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per share and the number of shares which were expressed in the initial Rights Certificates issued hereunder.

    (k)  Reduction Below Stated or Par Value.  Before taking any action that would cause an adjustment reducing the Purchase Price below the then stated or par value, if any, of the number of shares of Common Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue such number of fully paid and nonassessable shares of Common Stock at such adjusted Purchase Price.

    (l)  Deferral of Adjustment.  In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercise after such record date the number of shares of Common Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of shares of Common Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment.

    (m)  Reductions in Purchase Price.  Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in their good faith judgement the Board of Directors of the Company shall determine to be advisable in order that any (i) consolidation or subdivision of the Common Stock, (ii) issuance wholly for cash of any shares of Common Stock at less than the current market price, (iii) issuance wholly for cash of shares of Common Stock or securities which by their terms are convertible into or exchangeable for shares of Common Stock, (iv) stock dividends, or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Common Stock shall not be taxable to such stockholders.

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    (n)  Covenant Not to Consolidate, Merger or Transfer or Sell Assets or Earning Power.  The Company covenants and agrees that is shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in an transaction which complies with Section 11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets or earning power aggregating more than fifty percent (50%) of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation, merger or sale there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the stockholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates.

    (o)  Covenant Not to Diminish or Eliminate Rights.  The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.

    (p)  Proportionate Adjustments.  Anything in this Plan to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Declaration Date and prior to the Distribution Date (i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common stock, or (iii) combine the outstanding shares of Common Stock into a small number of shares, the number of Rights associated with each share of Common stock then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each share of Common Stock following any such event shall equal the result obtained by multiplying the number of Rights associated with each share of Common Stock immediately prior to such event by a fraction, the numerator which shall be the total number of shares of Common Stock outstanding immediately prior to the occurrence of the event, and the denominator of which shall be the total number of share of Common Stock outstanding immediately following the occurrence of such event.

    (q)  Substitution of Common Stock Equivalents.  In lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof, the Board of Directors may, and, in the event that the number of shares of Common Stock which are authorized by the Company's Certificate of Incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights is not sufficient to permit the exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, the Board of Directors shall, to the extent permitted by applicable law and any material agreements then in effect to which the Company is a party, (A) determine the value of the shares of Common Stock (the "Adjustment Shares") issuable upon the exercise of a Right immediately after the adjustments provided for in Section 11(a)(ii) (the "Current Value") and (B) with respect to each Right (other than Rights which have become void pursuant to the provisions hereof), make adequate provision to substitute for any or all such Adjustment Shares, upon payment of the applicable Purchase, Price, (1) cash, (2) other equity securities of the Company (including, without limitation, shares, or units of shares of preferred stock which, by virtue of having dividend, voting and liquidation rights substantially comparable to those of the Common Stock, are deemed in good faith by the Board of Directors to have substantially the same value as shares of Common Stock [such shares or units of shares of preferred stock are

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herein called "Common Stock equivalents"]), (3) debt securities of the Company, (4) other assets, (5) a reduction of the Purchases Price, or (6) any combination of the foregoing having a value which, when added to the value of the shares of Common Stock actually issued upon exercise of such Right, shall have an aggregate value equal to the Current Value, where such aggregate value has been determined in good faith by the Board of Directors based upon the advice of a nationally recognized independent investment banking firm selected in good faith by the Board of Directors; provided, however, that if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the date (the "Section 11(a)(ii) Trigger Date") which is the later of (a) the first occurrence of a Section 11(a)(ii) Event and (b) the date on which the Company's right of redemption pursuant to Section 23(a) expires, then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of Common Stock (to the extent available) and then, if necessary, cash, which shares and cash have an aggregate value equal to the excess of (x) the Current Value over (y) the Purchase Price times the number of one and one-half shares of Common Stock for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event. If, upon the occurrence of a Section 11(a)(ii) Event, the number of shares of Common Stock that are authorized by the Company's Restated Certificate of Incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to permit exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, and if the Board of Directors shall determine in good faith that it is likely that sufficient additional shares of Common Stock could be authorized for issuance upon exercise in full of the Rights, then, if the Board of Directors so elects, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such thirty (30) day period, as it may be extended, is herein called the "Substitution Period"). To the extent that the Company determines that some action must be taken pursuant to the first or second sentence of this Section 11(q), the Company (1) shall provide, subject to Section 11(a)(ii) hereof and the last sentence of this Section 11(q), that such action shall apply uniformly to all outstanding Rights and (2) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(q), the value of the Common Stock shall be the Current market price per share of the Common Stock on the Section 11(a)(ii) Trigger Date and the per share or per unit value of any "Common Stock equivalent" shall be deemed to equal the current market price per share of the Common Stock on such date. The Board of Directors may, but shall not be required to, establish procedures to allocate the right to receive Common Stock upon the exercise of the Rights among holders of Rights pursuant to this Section 11(q).

Section 12.  CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.

    Whenever an adjustment is made as provided in Section 11 and Section 13 hereof, the Company shall (a)  promptly prepare a certificate setting forth such adjustment and a brief statement o the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with the transfer agent for the Common Stock, a copy of such certificate, and (c) mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing shares of Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be fully protected in relying and on any such certificate on any adjustment therein contained.

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Section 13.  CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.

(a) Reduction of Purchase Price in the Event of Consolidation, Merger, or Sale or Transfer of Assets or Earning Power. In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer) in one transaction or a series of related transactions, assets or earning power aggregating more than fifty percent (50%) of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or any Subsidiary of the Company in one or more transactions each of which complies with Section 11(o) hereof), then, and in each such case, proper provisions shall be made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price (disregarding any adjustment of the Purchase Price pursuant to Section 11(a)(ii) hereof) in accordance with the terms of this Plan, such number of validly authorized and issued, fully paid, nonassessable and freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of shares of Common Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of shares for which a right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence), and dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Plan) by (2) fifty percent (50%) of the current market price (determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Plan; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13 Event.

(b) Definition of Principal Party. The term "Principal Party" shall mean: (i) in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or consolidation; and (ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; provided, however, that in any

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such case, (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered "Principal Party" shall refer to such other Person; and (2) in case such Person is a Subsidiary, directly or indirectly, o more than one Person, the Common Stocks of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value.

(c) Covenant of Principal Party to Provide Supplemental Agreement. The Company shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have s sufficient number of authorized shares of its Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets mentioned in paragraph (a) of this Section 13, the Principal Party will:

    (i)  prepare and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date; and

    (ii) will deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act.

    The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a).

(d) Qualifying Tender Offer. Notwithstanding anything in this Plan to the contrary, Section 13 shall not be applicable to a transaction described in subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is consummated with a Person or Persons who acquired shares of Common Stock pursuant to a tender offer or exchange offer for all outstanding shares of Common Stock which complies with the provisions of Section 11(a)(ii)  hereof (or a wholly owned Subsidiary of any such Person or Persons); (ii) the price per share of Common Stock offered in such transaction is not less than the price per share of Common Stock paid to all holders of shares of Common Stock whose shares were purchased pursuant to such tender offer or exchange offer; and (iii) the form of consideration being offered to the remaining holders of shares of Common Stock pursuant to such transaction is the same as the form of consideration paid pursuant to such tender offer or exchange offer. Upon consummation of any such transaction contemplated by this Section 13(d), all Rights hereunder shall expire.

Section 14.  FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

(a) Cash in Lieu of Fractional Rights. The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates which evidence fractional rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Rights would be otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any day shall be the last

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quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other over-the-counter system then in use, or on any such date the Rights are not quoted by any such organization, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on such principal national stock exchange on which the Rights are listed or admitted to trading, as reported in the principal consolidated transaction reporting system with respect to securities listed on such principal national securities exchange, or if the Rights are not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used.

(b) Cash in Lieu of Fractional Shares. The Company shall not be required to issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock. In lieu of fractional shares of Common Stock the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share of Common Stock. For purposes of this Section 14(b), the current market value of a share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the date of such exercise.

(c) Waiver of Right Holder. The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares of Common Stock upon exercise of a Right, except as permitted by this Section 14.

Section 15.  RIGHTS OF ACTION.

    All rights of action in respect of this Plan, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Rights Certificate and in this Plan. Without limiting the foregoing or any remedies available to the holders of the Rights, the holders of the Rights would not have an adequate remedy at law for any breach of this Plan and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Plan.

Section 16.  AGREEMENT OF RIGHTS HOLDERS.

    Every holder of a Right by accepting of the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

    (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Stock;

    (b) after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed;

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    (c) subject to Section 6(a) and Section 7(b) hereof, the Company and the Rights Agent may deem and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be required to be affected by any notice to the contrary; and

    (d) notwithstanding anything in this Plan to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Plan by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligations; provided, however, the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.

Section 17.  HOLDER OF RIGHTS CERTIFICATE NOT DEEMED A STOCKHOLDER.

    No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the fraction of a share (or number of shares) of Common Stock or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 24 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof.

Section 18.  CONCERNING THE RIGHTS AGENT.

(a) Compensation; Indemnity; Limitation on Liability. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time-to-time, on demand of the Rights Agent, its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the administration and execution of this Plan in the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Plan, including the costs and expenses of defending against any claim of liability in the premises. Anything in this Plan to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits) even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

    (b) Reliance. The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Plan in reliance upon any Rights Certificate or certificate for Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons or otherwise upon the advice of counsel as set forth in Section 20(a) hereof.

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Section 19.  MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.

(a) Merger or Consolidation. Any corporation into which the rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agents or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Plan without the execution or filing of any paper or any further action on the part of any of the parties hereto; provided, however, that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Plan, any of the Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificate so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and this Plan.

(b) Use of Prior Name. In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificate shall have the full force provided in the Rights Certificates and in this Plan.

Section 20.  DUTIES OF RIGHTS AGENT.

    The Rights Agent undertakes the duties and obligations imposed by this Plan upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

    (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

    (b) Whenever in the performance of its duties under this Plan the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of "current market price") be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the Vice Chairman of the Board, if any, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Plan in reliance upon such certificate.

    (c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct.

    (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Plan or in the Rights Certificates or be required to verify the same (except as to its countersignature on such Rights Certificates), but all such statements and recitals are and shall be deemed to have been made by the Company only.

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    (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Plan or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Plan or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11 or Section 13 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Plan or any Rights Certificate or as to whether any shares of Common Stock will, when so issued, be validly authorized and issued, fully paid and nonassessable.

    (f)  The Company agrees that it will perform, execute acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Plan.

    (g) The Rights Agent is hereby authorized and directed to accept instructions will respect to the performance of its duties hereunder from the Chairman of the Board, the Vice Chairman of the Board, if any, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or for any delay in waiting for thise instructions.

    (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Plan. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.

    (i)  The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agent, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct; provided, however, reasonable care was exercised in the selection and continued employment thereof.

    (j)  No provision of this Plan shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

    (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause (1) and/or (2) thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company.

Section 21.  CHANGE OF RIGHTS AGENT.

    The Rights Agent or any successor rights Agent may resign and be discharged from its duties under this Plan upon sixty (60) days' notice in writing mailed to the Company, and to each transfer

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agent of the Common Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon sixty (60) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to the transfer agent of the Common Stock, by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of sixty (60) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificates may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least one hundred million dollars ($100,000,000). After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

Section 22.  ISSUANCE OF NEW RIGHTS CERTIFICATES.

    Notwithstanding any of the provisions of this Plan or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Plan. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversation or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

Section 23.  REDEMPTION AND TERMINATION.

(a) Redemption of Rights. The Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the close of business on the tenth (10th) day following the Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior to the Record Date, the close of business on the tenth (10th) day following the Record Date) subject to extension by the Company

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pursuant to Section 26 hereof, or (ii) the Final Expiration Date, redeem all but not less than all the then outstanding Rights at a redemption price of $.001 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price") and the Company may, at its option, pay the Redemption Price either in shares of Common Stock (based on the "current market price", as defined in Section 11(d) hereof, of the shares of Common Stock at the time of redemption) or cash; provided, however, if the Board of Directors of the Company authorizes redemption of the Rights in either of the circumstances set forth in clauses (1) and (2) below, then there must be Continuing Directors then in office and such authorization shall require the concurrence of a majority of such Continuing Directors: (2) such authorization occurs on or after the time a Person becomes an Acquiring Person, or (2) such authorization occurs on or after the date of a change (resulting from a proxy or consent solicitation) in a majority of the directors in office at the commencement of such solicitation of any Person who is a participant in such solicitation has stated (or, if upon the commencement of such solicitation, a majority of the Board of Directors of the Company has determined in good faith) that such person (or any of its Affiliates or Associates) intends to take, or may consider taking, any action which would result in such Person becoming an Acquiring Person or which would cause the occurrence of a Triggering Event unless, concurrent with such solicitation, such Person (or one or more of its Affiliates or Associates) is making a cash tender offer pursuant to a Schedule 14D-1 (or any successor form) filed with the Securities and Exchange Commission for all outstanding shares of Common Stock not beneficially owned by such Person (or by its Affiliates or Associates); provided further, however, that if, following the occurrence of a Stock Acquisition Date and following the expiration of the right or redemption hereunder but prior to any Triggering Event, (1) a Person who is an Acquiring Person shall have transferred or otherwise disposed of a number of shares of Common Stock in one transaction or a series of transactions, not directly or indirectly involving the Company or any of its Subsidiaries, which did not result in the occurrence of a Triggering Event such that such Person is thereafter a Beneficial Owner of ten percent (10%) or less of the outstanding shares of Common Stock, and (2) there are no other Persons, immediately following the occurrence of the event described in clause (1), who are Acquiring Persons, then the right of redemption shall be reinstated and thereafter be subject to the provisions of this Section 23. Notwithstanding anything contained in this Plan to the contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the Company's right of redemption hereunder has expired.

(b) Effectiveness; Notice. Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such holders at each holder's last address as it appears upon the registry books of the Right Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made.

Section 24.  NOTICE OF CERTAIN EVENTS.

(a) General. In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the holders of Common Stock or to make any other distribution to the holders of Common Stock (other than a regular quarterly cash dividend out of

24

earnings or retained earnings of the Company), or (ii) to offer to the holders of Common Stock rights or warrants to subscribe for or to purchase any additional shares of Common Stock or shares of stock of any class or any other securities, rights or options, or (iii) to effect any reclassification of its Common Stock (other than a reclassification involving only the subdivision of outstanding shares of Common Stock), or (iv) to effect any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series of related transactions, of more than fifty percent (50%) of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the shares of Common Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the shares of Common Stock for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Common Stock whichever shall be the earlier.

(b) Section 11(a)(ii) Events. In case any other events set forth in Section 11(a)(ii) hereof shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to Common Stock shall be deemed thereafter to refer, if appropriate, to other securities.

Section 25.  MANNER OF NOTICES.

    Notices or demands authorized by this Plan to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid addressed (until another address is filed in writing with the Rights Agent) as follows:

STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

Attention: Chairman of the Board and
Chief Executive Officer

Copy to:

Pollet, Skousen & Woodbury, a Law Corporation
10900 Wilshire Boulevard, Suite 500
Los Angeles, California 90024

Attention: John M. Woodbury, Jr., Esq.

    Subject to the provisions of Section 21, any notice or demand authorized by this Plan to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent shall be

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sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:

American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005

Attention: Vice President, Stock Transfer

    Notices or demands authorized by this Plan to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the holder of certificates representing shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage pre-paid, addressed to such holder at the address of such holder as shown on the registry books of the Company.

Section 26.  SUPPLEMENTS AND AMENDMENTS.

(a) Before Rights Redeemable. For as long as the Rights are then redeemable and except as provided in paragraph (c) of this Section  26, the Company may in its sole and absolute discretion, and the Rights Agent shall if the Company so directs, supplement or amend any provision of this Plan without the approval of any holders of the Rights or the Common Stock (notwithstanding their approval or ratification of this Plan) including, without limitation: (i) lowering the thresholds set forth in Sections 1(a) and 3(a) to not less than the greater of (x) the sum of .001% and the largest percentage of the outstanding shares of Common Stock then known by the Company to be beneficially owned by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) and (y) ten percent (10%); (ii) fixing a Final Expiration Date later than the date set forth in Section 7(a) hereof (but not to exceed three {3} years in addition to the date initially specified in said Section); or (iii) increasing the Purchase Price (but not by an amount exceeding fifty percent (50%) or the original Purchase Price), as it may be adjusted pursuant to the terms of this Plan.

(b) After Rights Redeemable. At any time when the Rights are not then redeemable and except as provided in paragraph (c) of Section  26, the Company may, and the Rights Agent shall if the Company so directs, supplement or amend this Plan without the approval of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable, provided, however, that: (1) no such supplement or amendment pursuant to clause (iii) above shall (A) lengthen any time period relating to when Rights may be redeemed at such time as the Rights are not then redeemable, or (B) lengthen any other time period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights; and (2) no such supplement or amendment pursuant to clause (iv) above shall materially adversely affect the interest of the holders of Rights Certificates as such.

(c) After Person Becomes Acquiring Person. Notwithstanding anything contained in this Plan to the contrary, supplements or amendments may be made after the time that any Person becomes an Acquiring Person (other than pursuant to a Qualifying Tender Offer) only if at the time of the action of the Board of Directors approving such supplement or amendment there are then in office not less than two Continuing Directors and such supplement or amendment is approved by a majority of the Continuing Directors then in office.

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(d) Supplement or Amendment by Rights Agent. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, the Rights Agent shall execute such supplement or amendment.

Section 27.  SUCCESSORS.

    All the covenants and provisions of this Plan by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

Section 28.  DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.

    For all purposes of this Plan, any calculation of the number of shares of common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company (with, where specifically provided for herein, the concurrence of the Continuing Directors) shall have the exclusive power and authority to administer this Plan and to exercise all rights and powers specifically granted to the Board (with, where specifically provided for herein, the concurrence of the Continuing Directors) or to the Company, or as may be necessary or advisable in the administration of this Plan, including, without limitation, the right and power to (i) interpret the provisions of this Plan and (ii) make all determinations deemed necessary or advisable for the administration of this Plan. All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board (with, where specifically provided for herein, the concurrence of the Continuing Directors) in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board or the Continuing Directors to any liability to the holders of the Rights.

Section 29.  BENEFITS OF PLAN.

    Nothing in this Plan shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock) any legal or equitable right, remedy or claim under this Plan; but this Plan shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock).

Section 30.  SEVERABILITY.

    If any term, provision, covenant or restriction of this Plan is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Plan shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Plan to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language form this Plan would adversely affect the purpose or effect of this Plan, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire unit the close of business on the tenth (10th) day following the date of such determination by the Board of Directors. Without limiting the foregoing, if any provision requiring that a determination be made by less than the entire Board (or at a time or with the concurrence of a group of directors consisting of less than the entire Board) is held by a court of competent jurisdiction or

27

other authority to be invalid, void or unenforceable, such determination shall then be made by the Board in accordance with applicable law and the Company's Certificate of Incorporation and By-laws.

Section 31.  GOVERNING LAW.

    This Plan, each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State, except that the rights and obligations of the Rights Agent shall be governed by the laws of the State of New York.

Section 32.  COUNTERPARTS.

    This Plan may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

Section 33.  DESCRIPTIVE HEADINGS.

    Descriptive headings of the several Sections of this Plan are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Plan to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

Attest:			STAAR SURGICAL COMPANY
By:		By:
Name:	William C. Huddleston	Name:	John R. Wolf
Title:	Secretary	Title:	President and Chairman of the Board
Attest:			AMERICAN STOCK TRANSFER & TRUST COMPANY
By:		By:
Name:		Name:
Title:		Title:

29

Exhibit A

[Form of Rights Certificate]

Certificate No. R—                    (      ) Rights

NOT EXERCISABLE AFTER APRIL 20, 2003 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE STOCKHOLDERS' RIGHTS PLAN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE STOCKHOLDERS' RIGHTS PLAN) AND ANY SUBSEQUENT HOLDER OF THE RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE STOCKHOLDERS' RIGHTS PLAN). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH PLAN.]¹

¹

The portion of the legend in brackets shall be inserted only if applicable and shall replace the preceding sentence.

RIGHTS CERTIFICATE
STAAR SURGICAL COMPANY

    This certifies that            , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Stockholders' Rights Plan, dated as of April 20, 1995 (the "Rights Plan"), between Staar Surgical Company, a Delaware corporation (the "Company"), and American Stock Transfer & Trust Company, a New York corporation (the "Rights Agent"), to purchase from the Company at any time prior to 5:00 p.m. (New York time) on April 20, 2003 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one (1) fully paid, non-assessable share of common stock, par value $.01 (the "Common Stock"), of the Company, at a purchase price of fifty dollars ($50.00) per share (the "Purchase Price"), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate duly executed. The Purchase Price shall be paid in cash. The number of Rights evidenced by this Rights Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, and the number and Purchase Price as of April 20, 1995, based on the Common Stock as constituted at such date.

    Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Plan), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Plan), (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Plan, a transferee of person who, after such transfer, became an Acquiring Person or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.

    As provided in the Rights Plan, the Purchase Price and the number and kind of shares of Common Stock or other capital stock or other securities, which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events.

30

    This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Plan, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Plan reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Plan. Copies of the Rights Plan are on file at the above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent.

    This Rights Certificate, with or without other Rights Certificates, upon surrender at the principal office or offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of shares of Common Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.

    Subject to the provisions of the Rights Plan the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $.001 per Right at any time prior to the earlier of the close of business on (i) the tenth (10th) day following the Stock Acquisition Date (as such time period may be extended pursuant to the Rights Plan) and (ii) the Final Expiration Date. Under certain circumstances set forth in the Rights Plan, the decision to redeem shall require the concurrence of a majority of the Continuing Directors. After the expiration of the redemption period, the company's right of redemption may be reinstated if an Acquiring Person reduces his beneficial ownership to ten percent (10%) or less of the outstanding shares of Common Stock in a transaction or series of transactions not involving the Company.

    No fractional shares of Common Stock will be issued upon the exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as provided in the Rights Plan.

    No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Common Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Plan or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Plan), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Plan.

    This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

31

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

Dated as of
Attest:		STAAR SURGICAL COMPANY
By:		By:
Name:		Name:
Title:	Secretary	Title:	President
Countersigned:
American Stock Transfer & Trust Company
By:
	Authorized Signature

32

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if
such holder desires to transfer the Rights Certificate.)

FOR VALUE RECEIVED            hereby sells, assigns and transfers unto (print name and address of transferee)                         this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint                        Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution.

Dated:
	Signature
Signature Guaranteed:

Certificate

    The undersigned hereby certifies by checking the appropriate boxes that:

(1)

this Rights Certificate [  ] is [  ] is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Plan);

(2)

after due inquiry and to the best knowledge of the undersigned, it [  ] did [  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated:
	Signature
Signature Guaranteed:

Notice

    The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.

1

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)

To: STAAR Surgical Company

    The undersigned hereby irrevocably elects to exercise            (      ) Rights represented by this Rights Certificate to purchase the shares of Common Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to: (Please insert name, address, and social security or other identifying number)            . If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to: (Please insert name, address, and social security or other identifying number) .

Dated:
	Signature
Signature Guaranteed:

Certificate

    The undersigned hereby certifies by checking the appropriate boxes that:

(1)

the Rights evidenced by this Rights Certificate [  ] are [  ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Plan);

(2)

after due inquiry and to the best knowledge of the undersigned, it [  ] did [  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated:
	Signature
Signature Guaranteed:

Notice

    The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the fact of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.

1

Exhibit B

SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK

    On April 20, 1995, the Board of Directors of STAAR Surgical Company (the "Company") unanimously adopted a resolution approving the immediate effectiveness of a Stockholders' Rights Plan (the "Rights Plan"), subject to subsequent approval of the Rights Plan by the stockholders of the Company at the Annual Meeting of Stockholders of the Company on June 6, 1995, or any adjournments thereof. On June 6, 1995 the stockholders of the Company approved the adoption of the Plan.

    Pursuant to the terms of the Rights Plan, the Company declared a dividend distribution of one Right for each outstanding share of Common Stock to stockholders of the Company of record at the close of business on April 20, 1995. Each Right entitles the registered holder to purchase from the Company one share of Common Stock at a price of $50.00 per share (the "Purchase Price"), subject to adjustment. The Purchase Price shall be paid in cash. The description and the terms of the Rights are set forth in the Rights Plan.

    Initially, the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate Rights Certificates will be distributed. The Rights will separate from the Common Stock and a Distribution Date will occur upon the earlier of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of Common Stock (the "Stock Acquisition Date"), or (ii) 10 business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning 15% or more of such outstanding shares of Common Stock. Until the Distribution Date, (i) the Rights will be evidenced by Common Stock certificates and will be transferred with and only with such Common Stock certificates, (ii) new Common Stock certificates issued after June 6, 1995, will contain a notation incorporating the Rights Plan by reference and (iii) the surrender for transfer of any outstanding Common Stock certificates also will constitute the transfer of the Rights associated with the Common Stock represented by such certificates.

    The Rights are not exercisable until the Distribution Date and will expire at the close of business on April 20, 2003, unless earlier redeemed by the Company as described below.

    As soon as practicable after the Distribution Date, Rights Certificates will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and, thereafter, the separate Rights Certificates alone will represent the Rights. Except as otherwise determined by the Board of Directors, only shares of Common Stock issued prior to the Distribution Date will be issued with Rights.

    Upon any Person becoming the beneficial owner of 15% or more of the then outstanding shares of Common Stock (except pursuant to an offer for all outstanding shares of Common Stock that is determined by the Board of Directors to be fair to and otherwise in the best interests of the Company and its stockholders [a "Qualifying Tender Offer"]), each holder of a Right thereafter will have the right to receive, upon exercise thereof, the number of shares of Common Stock as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of shares of Common Stock for which such Right was exercisable immediately prior to the occurrence of such event and (y) dividing that product by 50% of the market price per share of Common Stock. Notwithstanding any of the foregoing, following the occurrence of such event, all rights that are, or (under certain circumstances specified in the Rights Plan) were beneficially owned by any Acquiring Person, will be null and void. However, Rights are not exercisable following the occurrence of either of the events set forth above until such time as the Rights are no longer redeemable by the Company as set forth below.

2

    For example, assume that a stockholder holds Rights to purchase 100 shares of Common Stock at the $50 Purchase Price, and further assume that the Common Stock had a per share trading price of $20 at the time of an event set forth in the preceding paragraph. As a result, the holder would have the right to purchase 500 shares of Common Stock for the aggregate purchase price of $5,000, or $10 per share. The 500 share figure is determined by (x) multiplying the $50 Purchase Price by 100 (representing the number of shares of Common Stock the holder was entitled to purchase by virtue of the Rights), and (y) dividing that product by $10 (or 50% of the $20 market price of the Common Stock). The $5,000 aggregate purchase price for said 500 shares is determined by multiplying the 100 shares of Common Stock the holder was initially entitled to purchase by virtue of the Rights by the $50 Purchase Price per Right.

    In the event that, at any time following the Stock Acquisition Date, (i) the Company is acquired in a merger or other business combination transaction in which the Company is not the surviving corporation or (ii) 50% or more of the Company's assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth above) thereafter shall have the right, upon payment of the Purchase Price (without giving effect to the adjustment described in the immediately preceding paragraph), to buy such number of shares of common stock of the acquiring company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of shares of Common Stock for which such Rights were exercisable immediately prior to the occurrence of such event and (y) dividing that product by 50% of the market price per share of the common stock of the acquiring company. The event set forth in this paragraph and in the preceding paragraph are referred to as the "Triggering Events."

    The Purchase Price payable, and the number of shares of the Common Stock issuable, upon exercise of the Rights are subject to adjustment from time to time prevent to dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Common Stock, (ii) if holders of the Common Stock are granted certain rights or warrants to subscribe for the Common Stock or convertible securities at less than the current market price of the Common Stock, or (iii) upon the distribution to holders of the Common Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).

    With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price. No fractional shares of Common Stock will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Common Stock on the last trading date prior to the date of exercise.

    The Company is only obligated to maintain authorized but unissued shares of Common Stock for holders of Rights once a Distribution Event occurs. The Company is permitted, however, if sufficient shares of unissued but authorized Common Stock are not available to be purchased by holders of Rights, to distribute to such holders, in lieu of Common Stock, other securities of the Company with equivalent value to the Rights exercised, such as preferred stock, debt instruments, or reduction in Purchase Price.

    At any time until 10 days following the Stock Acquisition Date, the Company may redeem the Rights in whole, but not in part, at a price of $.001 per Right, payable in cash or shares of Common Stock. Under certain circumstances set forth in the Rights Plan, the decision to redeem shall require the concurrence of a majority of the Continuing Directors (as hereinafter defined). After the redemption period has expired, the Company's rights of redemption may be restated if an Acquiring Person reduces his or her beneficial ownership to 10% or less of the outstanding shares of Common Stock in a transaction or series of transactions not involving the Company. Immediately upon the action of the Board of Directors ordering redemption of the Rights, with, where required, the concurrence of

3

the Continuing Directors, the Rights will terminate and the only right which the holders of Rights will thereafter have will be to receive the $.001 redemption price.

    The term "Continuing Directors" means any member of the Board of Directors of the Company who was a member of the Board prior to the date of the Rights Plan, and any person who is subsequently elected to the Board if such person is recommended or approved by a majority of the Continuing Directors, but shall not include an Acquiring Person, or an affiliate or associate of an Acquiring Person, or any representative of the foregoing.

    Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for the Common Stock (or other consideration) of the Company or for common stock of the acquiring company as set forth.

    Any of the provisions of the Rights Plan may be amended by the Board of Directors of the Company as long as the Rights are then redeemable including, without limitation, the 15% threshold (but not, in general, below 10%), the purchase price (but not by more than 50%), or Final Expiration Date (but not by more than 3 additional years). When the Rights are not redeemable, the provisions of the Rights Plan may be amended by the Board in order to cure any ambiguity, to correct or supplement any provision which may be inconsistent with any other provision or to make changes which do not affect adversely the interests of holder of Rights; provided, however, that amendments proposed to be made after a person becomes an Acquiring Person (other than pursuant to a Qualifying Tender Offer) may be made only if approved by a majority of the Continuing Directors.

    The Company covenants in the Rights Plan to file a registration statement under the Securities Act of 1933 with respect to shares of Common Stock purchasable upon exercise of the Rights as soon as a Section 11(a)(ii) Event occurs, or as soon as required by law, and may temporarily suspend, for no more than 90 days, the exercisability of the Rights to permit the registration statement to become effective.

    A copy of the Rights Plan has been filed with the Securities and Exchange Commission as an Exhibit to a Proxy Statement dated May 12, 1995. A copy of the Rights Plan is available free of charge from the Rights Agent. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Plan, which is incorporated herein by reference.

4

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Exhibit 4.5
STOCKHOLDERS' RIGHTS PLAN
Exhibit A
RIGHTS CERTIFICATE STAAR SURGICAL COMPANY
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the Rights Certificate.)
Certificate
Notice
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the Rights Certificate.)
Certificate
Notice
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK

EX-10.5

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Exhibit 10.5

MODIFICATION OF PROMISSORY NOTE

    This Modification of Promissory Note ("Modification") is made this 15th day of September 2000 by and between William C. Huddleston ("Maker") and STAAR Surgical Company ("Holder") in reference to the following facts:

RECITALS

A.  On February 28, 1991, Maker executed a Promissory Note ("Note") in favor of Holder for the amount of $119,185.

B.  The current unpaid principal balance of the Note is $89,185.

C.  Maker and Holder have agreed to modify the terms of the Note.

AGREEMENT

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are acknowledged, Maker and Holder agree as follows:

    1.  Extension of Term. Paragraph 3 of the Note shall be modified to state, "Subject to paragraph 7 below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on September 4, 2003, provided, however, that if Maker's employment with Holder is terminated prior to September 4, 2003 (a) by Holder without cause or (b) by Maker for any reason, then Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on a date which is the later of September 4, 2003 or two years from the date of such termination. Irrespective of the foregoing, payment of this Note is subject to the terms of that certain Employment Agreement dated October 1, 1999 by and between Maker and Holder, as such Employment Agreement was modified on August 21, 2000, the terms of which are incorporated into this Note by reference."

    2.  Remaining Provisions Shall Remain. All other terms and provisions of the Note shall remain the same.

    3.  Attachment to Note Upon Execution. Upon execution, this Modification shall be attached by Holder to the Note and shall become a part of it.

WHEREAS, Maker and Holder have executed this Modification as of the date set forth above.

"MAKER"
	/s/ WILLIAM C. HUDDLESTON William C. Huddleston

"HOLDER" STARR Surgical Company, a Delaware corporation
By:	/s/ ANDREW F. POLLET

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Exhibit 10.5
MODIFICATION OF PROMISSORY NOTE
RECITALS
AGREEMENT

EX-10.10

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Exhibit 10.10

MODIFICATION OF PROMISSORY NOTE

    This Modification of Promissory Note ("Modification") is made this 21st day of August 2000 by and between William C. Huddleston ("Maker") and STAAR Surgical Company ("Holder") in reference to the following facts:

RECITALS

A.  On July 3, 1992, Maker executed a Promissory Note ("Note") in favor of Holder for the amount of $80,000.

B.  Maker and Holder have agreed to modify the terms of the Note.

AGREEMENT

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are acknowledged, Maker and Holder agree as follows:

1.Extension of Term.  Paragraph 3 of the Note shall be modified to state, "Subject to paragraph 10 below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on September 4, 2003, provided, however, that if Maker's employment with Holder is terminated prior to September 4, 2003 (a) by Holder without cause or (b) by Maker for any reason, then Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on a date which is the later of September 4, 2003 or two years from the date of such termination. Irrespective of the foregoing, payment of this Note is subject to the terms of that certain Employment Agreement dated October 1, 1999 by and between Maker and Holder, as such Employment Agreement was modified on August 21, 2000, the terms of which are incorporated into this Note by reference."

2.Remaining Provisions Shall Remain.  All other terms and provisions of the Note shall remain the same.

3.Attachment to Note Upon Execution.  Upon execution, this Modification shall be attached by Holder to the Note and shall become a part of it.

WHEREAS, Maker and Holder have executed this Modification as of the date set forth above.

"MAKER"
	/s/ WILLIAM C. HUDDLESTON William C. Huddleston
"HOLDER" STAAR Surgical Company, a Delaware corporation
By:	/s/ ANDREW F. POLLET

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Exhibit 10.10
MODIFICATION OF PROMISSORY NOTE
RECITALS
AGREEMENT

EX-10.13

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EXHIBIT 10.13

INDENTURE OF LEASE

    THIS INDENTURE OF LEASE is made at Monrovia, California, this 1st day of September, 1993, by and between FKT Associates, a General Partnership, as Lessor, and Staar Surgical Company, a California Corporation, as Lessee.

WITNESSETH THAT:

    IT IS MUTUALLY UNDERSTOOD AND AGREED by and between the parties hereto that this lease is made for the term and upon the conditions and agreements hereinafter expressed, each and all of which parties hereto acknowledge to have read, and with each and everyone of which the parties hereto agree to comply, to-wit:

    1.  PROPERTY OWNERSHIP:  Lessors do hereby warrant and covenant that they hold title to the real property described in Schedule ("A") attached hereto and that they have full capacity and ability to lease said property to the Lessee, including the building and improvements now in place or scheduled to be erected or installed on said premises in conformance with the plans and specifications and plot plan therefor that has been mutually agreed upon by the parties hereto.

    2.  DEFINITIONS:  A.  Whenever the words "demised premises", "demised property", "leased property", "premises", or words of similar import, are used in this Lease they are intended and shall be construed to mean and include both the real property and all the improvements thereon or provided to be constructed or installed thereon as described, set forth or provided for in Schedule "A", and as designated in the plans and specifications for said improvements, unless a different meaning is clearly required by the context.

    B.  LEASEHOLD IMPROVEMENTS:  Leasehold Improvements designation as used herein shall be construed to mean and include those special improvements constructed or installed, at Lessor's expense, on demised premises as a part thereof, at request of Lessee, that are described, set forth or provided for in Schedule "A" and/or the Lessee and Lessor approved plans and specifications or modifications thereto agreed to in writing by Lessee and Lessor.

    C.  LESSEE IMPROVEMENTS:  The words "Lessee Improvements" as used herein shall be construed to mean those improvements installed by either the Lessor or Lessee, at Lessee request and expense, that remain the property of Lessee and do not become a part of the demised premises.

    D.  SCHEDULES, EXHIBITS AND LEASE ADDITIONS:  All schedules, exhibits and lease additions attached hereto or referred to herein hereby are incorporated herein and made a part hereof.

    E.  HEAD NOTES:  The paragraph head notes are inserted merely for convenience and are not to be construed as part of this Lease or in any way affecting it.

    F.  GENDER:  As used herein the neuter gender includes both the masculine and feminine, and the singular number includes the plural and vice versa.

    3.  LEASE CONSIDERATION:  The Lessors, for and in consideration of the payment of the rents and payments in the nature of rent herein reserved and agreed to be made by the Lessee, and of the performance and observance by the Lessee of all and singular, the terms, convenants, conditions, provisions and agreements which are herein contained, and which are to be kept, performed, observed and fulfilled by the Lessee, and subject to the matters hereinafter set forth, has demised and leased, and by these presents does demise and lease unto the Lessee, and the Lessee has hired, and by these presents does hire and take from the Lessor, for the term hereinafter provided, certain real property located at 1900 South Myrtle Avenue in the City of Monrovia, County of Los Angeles, State of

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California, and all improvements now located thereon or provided to be constructed thereon, as particularly described, set forth or provided in Schedule "A" attached hereto, and in conformance with the plans and specifications and plot plan therefor, Exhibit "A", that has been mutually agreed to and approved by endorsement thereon by both parties hereto.

    4.  LEASE TERM:  The term of this lease shall be 60 months, commencing on September 1, 1993 and terminating at midnight August 31, 1998, provided construction or installation of improvements as specified or provided for herein to be provided by Lessor are substantially completed and ready for occupancy on commencement date herein stated.

    If, however, the demised premises shall not be ready for occupancy by Sept. 1, 1993, by reason of any delay or delays caused by a common carrier, or by order, decree, or judgement of any court or judge thereof, or by any contractor, or by fire or other casualty, or by reason of strikes, lockouts, acts of God, or by any other cause or causes beyond the control of Lessor, whether similar or dissimilar to any of the foregoing, then, and in such event, Lessor shall not be liable to Lessee for any loss or damage whatsoever occasioned thereby, directly or indirectly, nor shall this Lease be void or voidable on account of any such delay, or delays, but in that event there shall be no rental payments until commencement date has been established as herein provided. The term of this Lease shall be extended for a period equal to such delay or delays, as might be occasioned, provided, such resultant commencement date shall not be later than the date Lessor has substantially finished the construction and installation of improvements herein provided for and delivers or offers delivery of possession of same to Lessee.

    5.  RENTAL:  The Lessee convenants and agrees to pay the Lessor, as rent for said premises as described in Schedule "A", the sum of one hundred eighty thousand dollars ($180,000), payable in equal monthly installments of three thousand dollars ($3,000) during each and every month of the term of this Lease commencing on date as provided in Paragraph Four (4) hereof.

    Each installment of rent shall be paid to the Lessors by the Lessee in advance, on or before the 5th day of each and every calendar month during the term hereof. Should the commencement date of this Lease be on a day other than the 1st day of a calendar month, then the rental for the first month of the term hereof shall be prorated so as to make all other payments due on the 1st day of each month as herein provided.

    6.  TAXES AND ASSESSMENTS:  As additional rent the Lessee agrees to pay to proper authority or to reimburse Lessor for any such payments made by Lessor, as the Lessor may designate, promptly as the same become due and payable, all taxes and general and special assessments levied upon or assessed against the leased property or any part thereof which are assessed and are, or become, a lien during the term of this Lease. Unless and until the Lessor gives the Lessee written notice that it elects to have such payments made by the Lessee direct the Lessor shall itself first pay all such taxes and assessments and the Lessee shall, on written notice of the amount of any such payment, reimburse the Lessor therefor in full within ten (10) days after such notice. If and in the event the Lessor gives the Lessee written notice that it elects to have such payments made by the Lessee direct the Lessee shall make all such payments directly to the proper tax collecting authority prior to delinquency and forthwith thereafter shall deliver to the Lessee original or duplicate receipts evidencing such payments. If the Lessee fails to make any such payment within such time, the Lessor may, at its option, make the same and in such event the Lessee shall, on demand, repay to the Lessor within ten days the amount so paid by Lessor.

    The Lessee shall be entitled to protest or challenge any such tax or assessment or the validity thereof in the name of the Lessor or otherwise, but any such action shall be at its own cost and expense and without cost or expense to the Lessor or the demised premises, and no such action shall be taken or maintained without first delivering an indemnity agreement from a solvent licensed surety

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company in an appropriate sum guaranteeing to hold the Lessor and the demised premises free and harmless from loss, cost, expense or liability in connection with or arising out of any such action.

    If any special assessment made against the property covered by this Lease may, at option of the owner of the property, be paid in installments or covered by bond which is payable in installments, then the Lessee shall be entitled to require that the assessment be paid in installments or that the bond be issued, and in such case the Lessee shall be liable only for the payment of such installments, or the prorate thereof, as become payable during the term of this Lease.

    The first of such taxes and assessments to be paid by the Lessee, either directly or by reimbursement to Lessor shall be those payable for the fiscal tax year in which the term of this Lease begins and the last of such tax and assessments shall be those for the fiscal year in which the term of this Lease ends; provided however the amount of such payments for the first and last fiscal years shall be pro-rated to coincide with the beginning and the end of the term hereof.

    The Lessee shall pay and discharge before delinquency any and all taxes and assessments against property of any kind or nature belonging to Lessee or placed or kept upon or about the demised premises and agrees to save and hold the Lessor and the demised premises free and harmless from any liability therefor or in lien thereof.

    7.  SECURITY DEPOSIT:  As security for the faithful performance of the terms, conditions and covenants of this Lease, as well as to indemnify the Lessor for damages, costs, expenses and attorneys's fees to which Lessor may be put by reason of any default by Lessee, Lessee hereby agrees to deposit with the Lessor the sum of six thousand Dollars, ($6,000), at least one-half of said sum shall be paid at time of signing this Lease and any balance of said sum shall be paid prior to taking of possession of the premises hereby demised. In the event that Lessee shall be in default at any time prior to termination hereof, then Lessor may apply the security deposit in payment of its costs, expenses and attorney's fees in enforcing the terms hereof, and/or in payment of any damages or loss suffered by Lessor, provided that nothing herein contained shall be construed to mean that the recovery of damages by Lessor against Lessee shall be limited to the sum of the Security Deposit. In the event any portion or all of the Security Deposit is applied as aforesaid, then Lessee shall within thirty (30) days after notification of such expenditures from said Security Deposit deposit with Lessor additional sums so that the Security Deposit in the hands of Lessor shall at all times during the term of the Lease total six thousand Dollars ($6,000). Subject to application of the Security Deposit to the payment of sums due in accordance with the foregoing provisions, any moneys remaining in the hands of the Lessor as Security Deposit, upon termination of the Lease, shall be refunded to the Lessee:

    Lessor may transfer or deliver this Security Deposit, as such, to the purchaser of the reversion, in the event that the reversion be sold, and thereupon Lessor shall be discharged from any further liability in reference thereto.

    8.  CONSTRUCTION:  Lessor, at his own cost and expense, shall forthwith, after the delivery of this Lease executed by the parties hereto, begin and with all reasonable expedition thereafter proceed to erect and install upon the herein described premises any required improvements as may be set forth in Schedule "A" attached hereto and any such improvements shall be erected or installed in accordance with plans and specifications agreed to and approved by endorsement thereon by both parties. Said improvements shall conform to the applicable building codes, laws, ordinances, and regulations as attested to by the local authorized building inspector's initial or signature on building permit card designating satisfactory completion.

    9.  RESTRICTIONS AND RESERVATIONS:  This Lease is made and accepted and the demised premises leased subject to conditions, covenants, restrictions, reservations, easements and rights of way of record, and there is excepted and reserved unto the Lessor and to its successors and

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assigns all water, oil, gas and other hyrocarbons and other minerals in and under said demised property.

    10.ACCEPTANCE OF POSSESSION:  Lessee covenants and agrees that, prior to taking possession of the demised premises, it will inspect and examine the condition of the said demised premises and every part thereof and that such inspection and examination shall be made within five (5) days from date Lessor notifies Lessee that the demised premises are ready for occupancy and the Lessee will take and accept possession and occupancy of demised premises on date of said inspection, provided facilities are found to be in substantial conformance with specifications set forth in Schedule "A". Acceptance of possession of the herein demised premises by Lessee shall constitute an agreement by Lessee with Lessor that the demised premises are in good and tenantable condition and that Lessor has complied with each and every obligation on its part to be performed relating thereto, except Lessor shall and hereby agrees that any incomplete work or items not in conformance with specifications set forth in Schedule "A", at time of inspection, will without delay, and with reasonable expedition thereafter be repaired, completed or otherwise made to conform to said specifications, and thereafter, unless otherwise expressly provided for herein, Lessee shall have no claims or demands and shall not assert any claims or demands of any character based upon or arising out of the condition of the demised premises, or any alleged failure of the Lessor or provide demised property in the manner and within the time provided for in this Lease.

    If Lessee does not take possession as herein provided this Lease shall be, at Lessor's option, terminated by reason of default on the part of the Lessee and the Security Deposit, herein provided for, will be paid to and forfeited to the Lessor and in addition Lessee will reimburse Lessor for all expenditures made by Lessor in providing the Leasehold improvements for Lessee as specified in Schedule "A" and/or Lessee and Lessor approved plans and specifications or by written request of Lessee and Lessee shall also repay Lessor for any expenditures by Lessor for removal of any of said Leasehold Improvements not deemed to be an asset to the demised premises by the Lessor.

    11.RECORDATION:  This Lease shall not be recorded but the Lessor and the Lessee shall, at option of either party, when the construction herein provided for is completed, and the commencement date hereof has been determined execute a written memorandum in recordable form, fixing the commencing and termination dates of this Lease, and include therein Lessee's acceptance of the demised property and acknowledgement of compliance by Lessor with the provisions of Paragraph 8 hereof.

    12.PERSONAL INJURIES AND PROPERTY DAMAGES:  Lessee expressly agrees that Lessor shall not be liable to Lessee or any other person in privity with Lessee for any injury or damage to property that may occur on demised premises during term of this Lease. The Lessee shall and agrees to indemnify and forever save the Lessor and the demised premises free and harmless from and against (a) any and all liability, penalties, losses, damages, costs and expenses, causes of action, claims or judgements arising from or growing out of any injury or injuries suffered or claimed by any person or persons or any damage or damages to any property as a result of any accident or other occurrence during the term of this Lease occasioned by any latent or patent defect in construction or condition of demised premises, and any act or acts or omissions of the Lessee, its officers, employees, agents, servants, subtenants, concessionaires, licencees, contractors, invitees or permittees, or arising from or growing out of the maintenance, occupation, operation, or the use or misuse of the demised premises by any person or persons, during the term of this Lease, and (b) from and against all legal costs and charges, including reasonable attorneys' fees, incurred in and about any of such matters and the defense of any action arising out of the same or in discharging the demised premises or any part thereof from any and all liens, charges or judgements which may accrue or be placed thereon by reason of any claim or claims hereunder.

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    13.PUBLIC LIABILITY INSURANCE:  The Lessee shall and agrees, at its own cost and expense, to procure and maintain in force and effect at all times during the term hereof a policy or policies of public liability insurance issued by an insurance company or companies approved by Lessor, in which the Lessor shall be named as the insured or one of the insured covering all of the demised premises which are the subject of this Lease irrespective of the use and occupancy thereof, and insuring the Lessor against loss, damage or liability in minimum amounts of $50,000.00 - Property damage in any one occurrence; $250,000.00 for death or injury to any one person in any one occurrence $500,000.00 for death or injury to two or more persons in any one occurrence. The limits of said policy or policies shall not limit liability of Lessee hereunder.

    The Lessee shall and agrees to furnish to the Lessor from time to time, at its (the Lessee's) option, either a certificate or certificates or the actual insurance policy or policies of the insurance carrier or carriers, indicating insurance in compliance with the terms and provisions of this paragraph to be in full force and effect. In the event the Lessee shall at any time during the term hereof fail, neglect or refuse to procure, maintain or renew any such insurance the Lessor may procure or renew such insurance, but shall be under no obligation so to do, and any premium or premiums incurred or paid by the Lessor therefor shall be charged against the Lessee, as an item in the nature of rent, and shall be added to and deemed a part of and paid with the next installment of rental payable by the Lessee to the Lessor hereunder.

    14.FIRE AND COMPREHENSIVE INSURANCE:  Lessor or Lessee, at option of Lessor, shall obtain and keep in effect insurance on the demised premises covering fire and any peril included in the California standard form of extended coverage, in the amount of the stipulated replacement value of the demised premises, as established and agreed with the insurance carrier to be 100% of the cost of replacement, and also insurance against vandalism, malicious mischief and war damage, when available. In addition to the other coverage herein stipulated said insurance shall, in case of damage to or destruction of demised premises, provide for payment to Lessor of up to twelve (12) monthly rental installment payments payable by Lessee to Lessor during the time of repair or replacement of damage to or destruction of demised premises. Any premium or premiums incurred or paid by the Lessor therefor shall be charged against the Lessee, as an item in the nature of rent, and shall be added to and deemed a part of and paid with the next installment of rental payable by the Lessee to the Lessor hereunder. Should a loss occur the Lessee agrees to promptly endorse to the Lessor any checks that may be made payable to the Lessee by the insurance company in payment of such loss.

    It is understood and agreed between Lessee and Lessor that it is the responsibility of Lessee to insure Lessee Improvements and that they shall not be covered by the Fire and Comprehensive Insurance Policy covering the demised premises.

    Lessee agrees and shall not use or permit said premises or any part thereof to be used, nor acts to be done, which will increase existing rate of insurance upon adjacent property or cause a cancellation of any insurance policy covering said demised premises or adjacent property or any part thereof, nor shall Lessee sell or permit to be kept, used or sold in or about said premises any article which may be prohibited by the standard form of fire insurance policy. Lessee shall at his sole cost and expense comply with any and all requirements pertaining to said premises necessary for the maintenance of fire and extended coverage and public liability insurance, as herein provided.

    15.SUBROGATION:  Lessor and Lessee each shall procure forthwith after the execution of this Lease from each of the insurers appropriate policies of insurance issued to or carried by Lessor and Lessee, respectively, pertaining to the demised premises and to Lessee's business to be conducted thereon, a waiver in writing of subrogation which said insurer might have or thereafter acquire against Lessor and Lessee, respectively, and shall thereafter forthwith upon becoming insured or reinsured under any such policy or policies of insurance procure applicable waivers of subrogation as provided for herein.

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    16.USAGE:  Lessee may use said demised premises for the purposes of conducting the business of general office, sales, manufacturing and distribution of medical devices and any other allied or related line of business permitted in Zone M-1 locations as provided in the ordinances of Monrovia, California. Lessee shall and agrees that it will not use demised premises for any illegal or immoral purposes and that Lessee will keep, maintain and operate the demised premises in a clean, orderly and business-like condition and manner and in compliance with the best standards and practices, and in conformity with all mandates, laws, ordinances and regulations of all judicial, administrative and governmental bodies having jurisdiction. Lessee shall at all times indemnify and forever save the Lessor harmless from and against all fines, penalties, loss, damage, costs, expense, attorney's fees and other charges imposed for or resulting from any violation by any person or persons, at, in or about the demised premises, of any mandates, ordinances, regulation and laws of all judicial, administrative and governmental bodies having jurisdiction thereover. Lessee shall not use the Leased Premises or any part thereof so as to constitute a nuisance to or otherwise substantially interfere with owners or occupants of adjoining or neighboring property or so as to cause cancellation of or prevent the use of standard form fire insurance policy or insurance covering any peril included in the California standard form of extended coverage. Lessee may install or maintain any machinery or apparatus reasonable and necessary for the purpose of its business, but will use due precaution and available safeguards to prevent injury to demised premises. All damage or injury to the demised premises caused by the use or misuse during the term of this Lease, or in removal therefrom, shall be repaired and demised premises restored to original condition by the Lessee at his sole expense, provided Lessee shall not be required to restore items attributable to fair wear and tear. The parking area allocated to this building and included as a part of the demised premises shall not be used for production work, storage or other non-parking uses without the prior written consent of the Lessor.

    17.PUBLIC UTILITY CHARGES:  The Lessee shall pay and discharge all electric, gas, water, telephone, fuel and other public utility charges arising out of or in any manner connected with the furnishing of services to the premises herein demised or any part or portion thereof and shall hold said premises and all thereof and the Lessor harmless of and from any and all claims, demands or liabilities arising out of or in any manner connected with the failure of the Lessee to pay and discharge any such charge.

    18.REPAIRS AND MAINTENANCE:  During the entire term of this Lease the Lessee shall and agrees to, at its own cost and expense, make any and all proper or necessary repairs, alterations and replacements to the demised premises and keep and maintain all of the demised premises and every part thereof clean and in good order, condition and repair as they shall be upon commencement of the term hereof, reasonable wear and tear excepted, and in compliance with all applicable laws and regulations and orders of public authority, whether now in effect or hereafter adopted or issued; and the Lessor shall not be liable for or be called upon to make or do any repairs, alterations, replacements, painting or maintenance in or upon the demised premises or any part or portion thereof under any condition whatsoever except in accordance with the terms and provisions of Paragraph 20 hereof. Provided, however, that Lessor shall be required to repair any defects in or to the leased premises which appear, notification of which is given in writing by Lessee to Lessor, during the first year of the term of said Lease, and which are due to improper or faulty construction or installation. The obligation of the Lessee with respect to repairs, alterations, replacements and maintenance as set forth in this paragraph is intended and understood to and shall cover and include but not be limited to the following: all plumbing, heating, cooling, ventilating, lighting, fire-protection and utility installations, fixtures and apparatus; all roofs, walls and foundations; all painting, windows and glass; all stairways, doors, shades and shutters; all locks and hardware; all fences or enclosures; all ground surfacing, walks, aprons and curbs; and all planting and ornamentation. In the event the Lessee shall at any time during the term hereof fail, neglect or refuse to make or do any and all repairs, replacements or maintenance required to be made or done by it under the terms and provisions of this paragraph the Lessor, upon ten (10) days written notice and the failure of the Lessee to make or do required repairs, alterations,

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replacements or maintenance within such time, may make or do such repairs, alterations, replacements or maintenance for the account of the Lessee, but shall be under no obligation so to do, and any costs and expenses incurred or paid by the Lessor therefor shall be charged against the Lessee and shall be added to and deemed a part of and paid with the next installment of rental payable by the Lessee to the Lessor hereunder. The Lessee hereby waives the provisions of Section 1942 of the Civil Code of the State of California and any and all other statutes or laws, whether now in force or hereafter adopted, permitting a tenant to make repairs at the expense or for the account of the owner or to terminate a lease by reason of the condition of the premises. Lessee shall not be responsible for repair or replacement of any structural defects in the demised premises, that may appear, that are due to improper or faulty construction or installation. Lessee shall be responsible for the repair or replacement of Lessee Improvements, if and when needed.

    19.CHANGES, ALTERATIONS & RESTORATION:  Lessee shall have the right to make, at its own expense, such improvements to the leased premises as it deems necessary for its own use provided that none will be made affecting the structural components of the building leased hereby without Lessor's prior written approval. Title to improvements made at Lessee's expense shall remain in Lessee until the conclusion or sooner termination of this Lease. Lessee shall not remove any improvements made by it, except those improvements covered by prior written removal permission granted by Lessor, and upon the conclusion or sooner termination of this Lease title to said improvements shall forthwith vest in Lessor, and Lessee agrees to execute such documents as Lessor may request to effectuate such vesting. The improvements referred to are all improvements other than trade fixtures, machinery and equipment installed and used by Lessee in its business, and shall include, without limiting the generality of the foregoing, lighting fixtures, lighting, gas, water, power and other conduits, pipes, power installations, plumbing installations, air conditioning, heating, sprinkler systems, fencing and partitions, except that such improvements shall not include portable partitions or other portable installations.

    Signs, trade fixtures, machinery and equipment placed or installed upon or within the Leased Premises by Lessee shall remain the property of Lessee and may be removed by Lessee at any time prior to the last day of the term of this Lease, and all such property shall remain Lessee's personal property, however, any damage caused to the demised premises by reason of the installation, usage or removal thereof shall be repaired and paid for by Lessee. Provided, that should any such trade fixtures, machinery and equipment be left upon the demised premises by Lessee at the end of the term or prior termination of this Lease, such property shall be and become Lessor's property, at Lessor's option, if Lessee has not removed same within five (5) days after notice has been given to Lessee that such property remains upon the demised premises.

    Upon the termination of this Lease Lessee shall restore the Leased premises to Lessor in the same condition as when Lessee received same, excepting reasonable wear and tear, damage or destruction for which Lessee is not liable under provisions of this Lease, and improvements made by Lessee which under the provision of this Paragraph become the property of Lessor. Provided, however, that Lessor, in its discretion, may require Lessee to remove any improvements made by Lessee even though under the terms of this Paragraph such improvements would otherwise become the property of Lessor. Such restoration shall be completed by Lessee not later than the last day of the term or sooner termination of this Lease.

    20.  DAMAGE OR DESTRUCTION OF LEASED PREMISES:  Should the demised building or buildings become destroyed or damaged by fire or other insured loss or by calamity such as earthquake, flood, or similar or dissimilar violent actions of the elements, or by act of God, war, threats of war, bombing, insurrection, invasion, falling objects from without the premises, explosions occurring off the premises without the fault of Lessee or Sublessee and not resulting from the activities of Lessee or Sublessee, or other calamities of such nature, then:

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    (a) If the damage be so slight as not to interfere substantially with the use of said building or buildings by Lessee, Lessor shall repair the same to substantially the same condition as it was in immediately preceding the damage with due diligence, and there shall be no abatement of rent. If Lessor does not commence said repairs within thirty (30) days from the date of notification of such damage or after such commencement fails to proceed with due diligence to complete said repairs Lessee may obtain an appropriate reduction in rental for damaged space in accordance with Paragraph 41 hereof, from said date of such damage until such repairs have been completed.

    (b) If damage is substantial but renders the premises untenantable only in part and Lessee may nevertheless continue its operation therein, Lessor shall repair the same to substantially the same condition it was immediately preceding the damage if such work can be completed within ninety (90) days from the date of notification of such fire, loss or calamity, and there shall be an abatement of rent for damaged space, as provided in Paragraph 41 hereof, from said date of such damage until such repairs have been completed. If Lessor does not commence said repairs within thirty (30) days from the date of notification of such damage or after such commencement fails to proceed with due diligence to complete said repairs Lessee may cancel this Lease on ten (10) days written notice of intention to do so if said repairs are not commenced or proceeding as herein provided within said ten (10) days.

    (c) If the building or buildings are totally destroyed, Lessor may rebuild the building or buildings to substantially the condition in which it or they were immediately preceding the destruction if the work can be commenced within thirty (30) calendar days of notification of damage and completed within one-hundred-twenty (120) days after commencement. Within thirty (30) days after such notification of destruction, Lessor may by written notice to Lessee cancel this Lease. Lessee may cancel this Lease on ten (10) day written notice if, (1) within thirty (30) days after such notification of damage to Lessor if Lessor fails to notify Lessee in writing within said thirty (30) days that Lessor intends to rebuild and that work can be commenced within thirty (30) calendar days and completed within one hundred twenty (120) days from commencement, if not delayed by causes beyond control of Lessor, or (2) if the rebuilding is not in fact completed within such period due to the lack of diligence of Lessor. Any cancellation shall be effective as of the date of destruction. In the event of rebuilding, rent shall be abated, in accordance with provisions of Paragraph 41 hereof, from the date of destruction to completion of rebuilding, but said period shall be included as part of the term of this Lease unless it be mutually agreed by and between Lessee and Lessor that this Lease should be extended by said period.

    (d) In event of loss or damage of Leasehold Improvements through calamity such as earthquake, flood, Act of God, war, act of war or any other cause not covered by insurance Lessee hereby agrees to replace or repair all Leasehold Improvements, at his sole cost and expense, to as good or better condition as they were just prior to such loss or damage, unless the demised building is damaged at same time to the extent that the Lease is cancelled as provided for in this Lease Paragraph 20, in which event the total of all the unpaid monthly Leasehold Improvement payments, provided for in Paragraph 5 of this Lease, due Lessor from Lessee for said Leasehold Improvements for each and every unexpired month of the term of this Lease, as set forth in Paragraph 4 of this Lease shall be paid by Lessee to Lessor within thirty (30) days after such loss.

    (e) In the event Lease is not cancelled because of damage or destruction, as provided for in this Lease Paragraph 20, and Lessee desires Lessor to replace or repair said Leasehold Improvements Lessor agrees to make such repair or replacement at Lessee's expense.

    (f)  In the event of loss or damage of Leasehold Improvements that are covered by insurance Lessor hereby agrees to either replace or repair said Leasehold Improvements with insurance funds without cost to Lessee provided this Lease is not cancelled as provided for in this Paragraph 20 and Lessee continues making the monthly Leasehold Improvement payments provided for in

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Paragraph 5 of this Lease. If Lease is cancelled per terms of this Paragraph 20 the insurance funds received by Lessor for such insured loss will be accepted by Lessor as full payment of and will relieve Lessee from making any further monthly Leasehold Improvement payments provided for in Paragraph 5 of this lease.

    (g) In the event of loss or damage of Lessee Improvements, whether insured or not, Lessee shall have the option of determining whether to replace or repair or not to replace or repair such Lessee improvements. Any replacement or repair of Lessee Improvements shall be at the expense of Lessee.

    Any sums payable to Lessor by Lessee for repair, replacement or rebuilding, as provided for in this Paragraph 20, shall be due and payable in progressive payments as work is completed for major job and in any event all sums shall be due and payable ten (10) days after completion of such repair, replacement or rebuilding.

    Lessee shall not be entitled to collect from Lessor any compensation or damages on account of any inconvenience or annoyance of any work of repair or rebuilding or because of any injury, damage, or destruction of demised premises except that it shall be entitled to a pro rata reduction in rent payable during such period of repair as herein provided.

    Lessor shall not be entitled to collect from Lessee any compensation or damages on account of any damages or destruction to demised premises caused by calamity such as earthquake, flood, or similar violent action of the elements, war or act of war, or act of God, or covered by fire or extended coverage insurance, however, in the event the damages or destruction were caused directly or indirectly by the Lessee through the use or misuse of the demised premises Lessee shall not be entitled to Lease cancellation privileges or rent abatement as herein provided and shall pay Lessor for all repairs and rebuilding not covered and paid for by any insurance and in addition Lessee will pay Lessor reasonable compensation for supervising said repairs or rebuilding. Provided further that in the event Lessor does repairs or rebuilding as provided for in subparagraphs (a), (b) and (c) Lessor shall not thereby be deemed to have waived its right or be estopped to contend that it was not obligated to do so. In the event Lessor makes such repairs or rebuilding and it be thereafter determined that said repairs or rebuilding were the obligation of the Lessee then Lessor shall have the right to reasonable compensation and to reimbursement from Lessee of expenditures made in such repairs or rebuilding and for any reduction or abatement of rental taken by Lessee.

    21.  BANKRUPTCY OR INSOLVENCY OF LESSEE:  This Lease and the interest of Lessee hereunder shall not be subject to garnishment or sale under execution in any proceeding which may be brought against or by Lessee without the written consent of Lessor, and this Lease and all rights of Lessee hereunder shall, at the option of Lessor, cease and terminate upon Lessee, or any person or persons acting for or against Lessee, filing a petition in bankruptcy, which petition remains undismissed for a period of thirty (30) days, making an assignment for the benefit of creditors entering into a composition with creditors, entering into any reorganization proceeding under the terms of the Bankruptcy Act or being by any court adjudged bankrupt or insolvent. Not withstanding anything to the contrary herein provided, Lessor may, at its option, in either or any of such events, without notice to Lessee or any other person or persons, immediately re-enter and take possession of the demised premises and terminate this Lease with or without process of law, such process and/or notice being expressly waived by the Lessee. The option hereby given to Lessor to terminate may be exercised at any time or stage of any of the contingencies herein noted, and no delay in exercising the right to terminate shall constitute a waiver or release of such right. Under such termination all installments of rental earned to the date of termination and unpaid together with any other sums accrued to Lessor as herein provided shall at once become due and payable and, in addition thereto, Lessor shall have all rights provided by the bankruptcy laws relating to the proof of claims of an anticipatory breach of an

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executory contract. In no event shall this Lease or any interest of Lessee therein be considered as an asset of Lessee in any bankruptcy, receivership or other judicial proceeding.

    22.  LOSS THROUGH CONDEMNATION OR EMINENT DOMAIN:  In the event all the demised premises or more than ten (10) per cent of the floor area of the building or buildings on the leased premises or more than twenty five (25) per cent of the demised ground area not occupied by buildings shall be appropriated, condemned or taken by eminent domain this Lease may, at option of either Lessee or Lessor, be terminated. In the event this Lease is not terminated in total as provided in this paragraph and in the event less than ten (10) per cent of the demised floor area and twenty-five (25) per cent of the demised ground area be appropriated, condemned or taken by eminent domain this Lease shall terminate only as to the part appropriated, condemned or taken and the Lessor shall, without delay, do any remodeling or repairs necessary to put remaining portion of demised premises in good and operative condition and repair. Any and all award or compensation arising from such appropriation, condemnation or taking shall be paid and belong to Lessor except any award for damage or loss of use of fixtures, Lessee Improvements, machinery and equipment of Lessee, which later award shall belong to Lessee, and there shall be an abatement in rent payable after the actual taking and during the balance of the term hereof in accordance with Paragraph 41 hereof.

    23.  CONVEYANCE OR ENCUMBRANCE OF PREMISES:  In the event of a conveyance or transfer of the fee title to the demised premises or of the Lessor's interest in this Lease, and of the assumption in writing by the grantee or transferee of the provisions, covenants and conditions herein contained on the part of the Lessor to be kept and performed, then and in the event and upon there being delivered to the Lessee an executed copy of such assumption agreement, the Lessor shall be relieved and discharged of and from any and all further obligations or liability thereafter accruing hereunder. This Lease shall be at all times subject and subordinate to the lien or liens of mortgage or trust deeds now on or that Lessor may put on demised premises, and to all advances made or hereafter to be made upon the security thereof as well as any renewals or extensions of the same. The Lessee agrees at any time during term hereof, and from time to time upon written request of the Lessor to execute, acknowledge and deliver to the Lessor a statement in writing certifying that this Lease is in full force and effect, and if there have been modifications, stating the modifications, and the dates to which the rent and other charges in the nature of rent have been paid in advance, if any, and current financial condition of Lessee, it being intended that any such statements may be relied upon by any prospective purchaser of, or by the holder or prospective holder of any obligation secured by any lien upon the fee title to the demised premises. The Lessor agrees that the Lessee shall have the right at any time to redeem for the Lessor by payment, any mortgages, or other liens upon the demised property made or suffered by the Lessor and not agreed herein to be paid by the Lessee, in the event of default of payment by the Lessor, and to be subrogated in the event of such payment to the rights of the holder thereof.

    Lessor hereby warrants that demised premises are now free and clear or any lien or mortgage that might negate the terms of this Lease, as long as Lessee is not in default per terms of this Lease at any time during term of this Lease. Should Lessor, during the term of this Lease, place a lien or mortgage on said demised premises proper subrogation provisions shall be included in such lien or mortgage to protect Lessee's right to lease said demised premises for the term set forth in Paragraph 4 of this Lease, provided Lessee is not then in default and continues to fulfill all the obligations of Lessee per terms of this Lease.

    24.  DEFAULT OF LESSEE:  Should default be made and continue for ten (10) days after written notice from the Lessor specifying such default, either of vacating or abandonment of premises by Lessee or in the payment of any portion of the rent, or items in the nature of rent, or other charges, whether similar or dissimilar thereto, herein provided to be paid by the Lessee as and when the same come due, or should default be made and continue for thirty (30) days after written notice from the Lessor specifying such default, in the performance of any of the other covenants herein contained on

10

the part of the Lessee to be kept or performed, provided, that if the default complained of is of such a nature that the same cannot be rectified in such thirty (30) day period as aforesaid, then such default shall be deemed to be rectified if Lessee shall have within the said thirty (30) day period commenced and shall diligently continue to remedy any such default until the same shall have been fully rectified or performed, the Lessor or its agent or attorney shall have and at its option may exercise any one or more of the following rights and remedies each of which shall be cumulative and in addition to all other rights and remedies authorized by law:

    (a) It may, without terminating this Lease, bring and maintain an action for any amount due and unpaid.

    (b) It may re-enter and take possession of the premises, remove all persons and property therefrom and, at its option, declare this Lease and the leasehold estate hereby created to be, and thereupon shall be and become, terminated and ended. In this event such default shall be deemed to be a breach of this Lease in its entirety and the Lessor, at its option, shall thereupon be entitled to recover from the Lessee pursuant to the provisions of Section 3308 of the Civil Code of the State of California the worth at the time of such termination of the excess, if any, of the amount of the rent and charges or items equivalent to or in the nature of rent reserved in this Lease for the balance of the term hereof over the rental that can then be obtained for the premises for the same period.

    (c) It may re-enter and take possession of the premises and remove all persons therefrom and, at its option, without declaring this Lease or the leasehold estate created hereby terminated or ended, may re-let the premises herein demised or any portion thereof, for the account of the Lessee for such rent and upon such terms as it may deem proper, or it may operate said property itself. In this event if a sufficient sum shall not be thus realized, after paying the expenses of re-entry, reletting, collecting, or of operating said property, and all other damages or expenses sustained by Lessor, to satisfy the rent hereby reserved or items reserved or items equivalent to or in the nature of rent payable by the Lessee plus payments that may be herein reserved for leasehold improvements the Lessee agrees forthwith to satisfy and pay any such deficiency as and when the same arises and as and when demanded by the Lessor.

    In the event of any such reletting, as herein provided, the Lessee agrees that any and all of its furniture, furnishings, machinery, equipment, trade fixtures and all Lessee Improvements that are in, on or about the demised premises may be used by the Lessor or its tenant until the expiration of the natural term or any earlier termination of this Lease, without payment of or any liability for rent, compensation or other charge; but if, on the expiration of the natural term or any earlier termination of this Lease the total net amount so collected or received by the Lessor from and through any such reletting has exceeded the total amount accrued and due and unpaid from the Lessee then such excess shall be paid to the Lessee.

    In the event Lessor takes and operates property itself Lessor shall waive all payment of rent and items in the nature of rent during period of such operation and shall, each month, credit Lessee with an amount equivalent to fair rental for use of any of its furniture, furnishings, machinery, equipment and trade fixtures.

    In the event of any such reletting by the Lessor, as herein provided, the Lessor may execute any such lease either in the name of Lessor or in the name of Lessee, as Lessor may see fit, and the tenant therein named shall be under no obligation whatsoever to see to the application by the Lessor of any rent collected by Lessor from such tenant, nor shall Lessee have any right or authority whatever to collect any rent whatever from such tenant. Such reletting to another tenant may be for the unexpired term of this Lease, or any lesser part thereof or for a longer period of time, in which latter event the period of time in excess of the term of this Lease shall be for the sole account of Lessor. At Lessor's option this Lease may nevertheless be terminated by written notice to Lessee prior or subsequent to

11

such reletting. Nothing herein contained shall be construed as obligating Lessor to re-let or lease the whole or any part of the leased premises in case of default by Lessee.

    Any re-entry or repossession of said premises by the Lessor, or any notice served in connection therewith shall not operate to release the Lessee from any obligation under this Lease, except with the written consent of the Lessor.

    In the event of any such re-entry by the Lessor, the Lessor may, at its option, require the Lessee to remove from the premises any of the Lessee's property located thereon. If the Lessee fails to do so, within ten (10) days after written notice to do so, the Lessor shall not be responsible for the care or safekeeping thereof and may remove any of the same from the demised premises and place the same in storage in a public warehouse at the cost, expense and risk of the Lessee with authority to the warehouseman to sell the same in the event that the Lessee shall fail to pay the costs of transportation and storage all in accordance with the rules and regulations applicable to the operation of a public warehouseman's business. Any refusal by a public warehouseman to accept personal property upon such conditions shall be conclusive evidence that same is of no substantial value, and shall be an unconditional warrant to the Lessor for disposing of the same in any manner it sees fit and without accountability for any alleged value thereof. In any and all such cases of re-entry the Lessor may make any repairs in, to or upon the demised premises which may be necessary and the Lessee hereby waives any and all claims on account of any and all damage which may be caused or occasioned by such re-entry or any of the aforesaid acts of the Lessor or by reason of any loss or destruction or damage to any property in or about the demised premises or any part thereof.

    In addition to the foregoing rights and remedies the Lessor shall have and at its option may exercise all other rights and remedies, whether similar or dissimilar to the foregoing and whether now or hereafter authorized by law or equity, it being understood that each and all of the rights and remedies available to the Lessor shall be cumulative and none of them exclusive.

    Whenever a right of re-entry is given to the Lessor by the terms of this Lease, the Lessor may exercise the same by agent or attorney, and with or without legal process, such process and any demand for possession of said premises being expressly waived by the Lessee, and the Lessor may use all force necessary to make such entry and to hold the demised premises after such entry, and to remove the Lessee and any other person and property from the demised premises; and the Lessor shall be entitled, on application to a court of competent jurisdiction, to have a receiver appointed in aid of the enforcement of any remedy herein provided for.

    25.ASSIGNMENT AND SUBLETTING.  It is agreed that the Lessee's leasehold interest in the demised premises shall not, nor shall any part or portion thereof or any interest therein, be sold, assigned, sublet, transferred or encumbered, voluntarily, by operation of law or otherwise, without the written consent of the Lessor first had and obtained; and the Lessee agrees that it will not attempt to assign sell transfer, encumber or hypothecate this Lease or any part or portion thereof or interest therein without such written consent; provided however, such restriction shall not apply to the transfer to the personal representative or distributee of a deceased individual Lessee; and provided further, the Lessee may, if it is not in default and without release from liability hereunder, assign this Lease and leasehold estate or any interest therein or right thereto, to a subsidiary, affiliated, related or successor corporation, or any corporation with which Lessee may become merged and consolidated, for any use permitted in this Lease; provided, however, that no such assignment shall be effective until delivery to the Lessor of a written instrument or instruments executed by Lessee and such assignee, evidencing such assignment and such assignee's acceptance thereof and assumption of all further obligations of the Lessee hereunder.

    Any attempt to assign, transfer, encumber or hypothecate the Lessee's interest or any portion thereof, and any attempt to sublet the demised premises or any portion thereof, contrary to the terms of this Lease, shall be void and of no force or effect; provided however, the Lessor shall not and agrees

12

that it will not arbitrarily withhold its consent to the subletting of the premises or any part thereof to any subtenant of good character for the purpose of operating a business that will not be harmful to the premises or out of keeping with the general character of business conducted in and about the immediate neighborhood.

    Any consent given by the Lessor to the Lessee of any assignment of this Lease or any interest herein, or to any subletting hereunder, shall not be construed as a consent to any further or subsequent assignment or subletting or as a waiver of the right of the Lessor to object to any further or subsequent assignment or subletting, to which its consent has not been first had and obtained.

    The Lessee, together with all assignees, if the Lessor elects to treat such assignees as tenants, shall be held and hereby agree to be held jointly and severally responsible for the payment of rent and the faithful fulfillment of all the covenants, terms and conditions of this Lease.

    26.ENTRY AND RIGHT OF INSPECTION.  The right is reserved to Lessor to enter upon said premises at all reasonable times, and, at any time in an emergency, for the purpose of examination and inspection, and making repairs, alterations or improvements to the extent permitted herein or exercising any of the rights under this Lease or for posting notices required by law. Lessor, however, shall make any repairs, alterations or improvements at such times so as to inconvenience as little as possible Lessee in the operation of its business. During the last thirty (30) days of the term of this Lease, Lessor shall have the right to post or display on said premises such "For Rent" or "For Sale" signs as Lessor shall deem advisable and also to show said premises to prospective Lessees or purchasers.

    Lessee shall have the right to require Lessor to be escorted by an employee of Lessee during any entry by Lessor provided for herein.

    27.DELIVERY & PREMISE CONDITION ON TERMINATION.  Upon the expiration of the term hereof or upon the cancellation or earlier termination of this Lease by the Lessor or by operation of law for any cause whatsoever the Lessee shall deliver and yield up the premises herein demised to the Lessor in as good condition and repair as the same may be upon commencement of the term hereof, obsolescence, damage by earthquake or other casualty or act of God and reasonable wear and tear excepted.

    28.WAIVER OF BREACH.  No waiver of any rights and/or remedies by the Lessor of any breach or breaches of any provision, covenant, or condition of this Lease or provided by law shall be construed to be a waiver of any preceding or succeeding breach of such provision, covenant or condition or of any other provision, covenant or condition, and time is of the essence of each and every provision, covenant and condition herein contained and on the part of either the Lessor or on the part of the Lessee to be done and performed. Any forbearance in seeking a remedy for any breach shall not be deemed a waiver of any rights or remedies with respect to such breach.

    29.SIGNS.  Lessee agrees not to paint or install, or to allow to be installed, any sign on the exterior of the said demised buildings, except on the windows thereof, without the written consent of the Lessor first had and obtained; except the Lessee is hereby granted permission to erect the usual trade signs on the exterior of the demised building, on condition that the signs and designs of the said signs are first submitted for the written approval of the Lessor, and that the Lessee comply strictly with all applicable ordinances now in effect or which may hereafter become effective in connection with the size, style, maintenance and erection thereof provided, Lessee agrees to remove said signs, repair damage caused by sign installation and removal, and repaint building exterior as necessary to remove all trace of sign installation, upon termination of this Lease.

    30.PROVISIONS OF ENFORCEMENT.  This Lease contains all of the conditions, covenants, stipulations, agreements and provisions agreed upon between the parties hereto in relation to the demised premises; and this Lease supercedes and cancels each and every other agreement, promise

13

and/or negotiation between the parties with reference to the demised premises; and neither party shall be bound by any inducement, statement, representation promise or agreement not in conformity herewith.

    In the event any suit is brought by either party against the other to protect its rights hereunder or to enforce any of the terms and provisions of this Lease, or to collect any sum alleged to be due hereunder, then it is agreed that the successful party in such suit shall be entitled to attorney's fees and expenses in a reasonable amount to be fixed by the Court and included in any judgement rendered in such action if such action is prosecuted to judgement of a Court; if action is settled without being prosecuted to judgement the successful party shall be entitled to reasonable attorney's fees and expenses included in said settlement.

    If Lessor is made a party defendant to any litigation concerning this Lease or the leased premises or the occupancy thereof by Lessee, then Lessee shall hold harmless Lessor from all liability by reason of said litigation, including reasonable attorney's fees and expenses incurred by Lessor in any such litigation, whether or not any such litigation is prosecuted to judgement.

    The various rights, options, elections and remedies of the Lessor provided by law or contained in this Lease shall be construed as cumulative, and no one of them as exclusive of any of the others or of any right or priority allowed by law.

    It is agreed that this Lease shall be construed pursuant to the laws of the State of California and that the execution hereof be deemed to have taken place on the part of all signatories hereto within the County of Los Angeles, State of California.

    31.EXECUTION OF RECORD MAPS.  In the event the Lessor subdivides all or any part of the real property forming a part of the demised premises into a tract or tracts containing the same, and with or without adjacent property, the Lessee shall and agrees to, upon the request of the Lessor, join in the execution of such sub-division or record map or maps as may be prepared in connection therewith on the condition that no part of the demised premises shall be dedicated on said sub-division or record map or maps for any public purpose that will interfere with the use thereof by the Lessee in connection with its right of occupancy under the terms and provisions hereof.

    32.SUCCESSORS AND ASSIGNS.  Each of the provisions, covenants and conditions of this Lease shall, subject to the provisions as to assignment, extend to and bind and inure to the benefit of, as the case may be, not only the parties hereto but each and every of the personal representatives, successors and assigns of the respective parties, and whenever in this Lease a reference to either of the parties is made such reference shall be deemed to include, whenever applicable, also a reference to the personal representatives, successors and assigns of such party the same as if every case so expressed; and all of the conditions and covenants contained in this Lease shall be construed as covenants running with the land. No modification of this Lease agreed upon with any successor shall release the Lessee from liability under this Lease.

    33.HOLDING OVER.  In the event the Lessee holds over or remains in the possession or occupancy of the demised premises after the expiration of the term of this Lease by lapse of time without any written Lease of said premises being made or entered into between the Lessor and the Lessee, such holding over or continued possession or occupancy shall not be deemed or be held to operate as any renewal or extension of the term of this Lease and shall, as rent is paid by Lessee and accepted and acknowledged by Lessor for or during any period of time the Lessee so holds over or remains in possession or occupancy, only create a tenancy from month to month at the rental, including items or charges in the nature of rent, hereinbefore provided for and subject to all applicable terms and conditions herein provided, and such month to month tenancy may at any time be terminated by either the Lessor or the Lessee giving to the other thirty (30) days' written notice of intention to terminate the same.

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    34.LIENS.  Lessee will not permit any mechanics', laborers' or materialmen's lien to stand against premises for any labor or material furnished to Lessee or claimed to have been furnished to Lessee or to Lessee's agents' contractors or sub-lessees, in connection with work of any character performed or claimed to have been performed on said premises by or at the direction or sufferance of Lessee, provided, however, that the Lessee shall have the right to contest the validity or amount of any such lien or claimed lien provided Lessee shall give to the Lessor reasonable security as may be demanded by the Lessor to insure payment thereof and prevent any sale, foreclosure or forfeiture of the premises by reason of such non-payment provided such security need not exceed one and one-half times the amount of such lien or claimed lien. On final determination of the lien or claim for lien the Lessee will immediately pay any judgement rendered plus all costs and charges and shall have the lien released or judgement satisfied at Lessee's own expense.

    35.RIGHT OF TERMINATION.  This Lease shall not be terminable for any reason by either party hereto, except as expressly provided for in this instrument. Without limiting the generality of the foregoing, damage to or destruction of any portion or all of the building or buildings and fixtures upon the Leased Premises by fire, the elements or any other cause whatsoever, whether or not without fault on the part of the Lessee, shall not terminate this Lease or entitle the Lessee to surrender the Leased Premises, or entitle the Lessee to any abatement of or reduction in rent payable by the Lessee hereunder, except as specifically provided in this Lease, or otherwise affect the respective obligations of the parties hereto, any present or future law to the contrary notwithstanding.

    36.ARBITRATION.  In the event of any dispute between the Lessor and Lessee concerning any provision of this Lease, such dispute shall be settled by three (3) disinterested arbitrators, one of whom shall be chosen by each of the parties hereto and the third by the two so chosen, or any such dispute may be submitted for arbitration to the American Arbitration Association upon application of either party hereto. Such arbitration shall be conducted by said Association under its rules and regulations then prevailing and the determination of such arbitration shall be final and binding upon both parties hereto. Only one of the above methods of arbitration shall be used in resolving any one dispute unless, in the case of submission to the three man arbitration group, they can not agree on a decision, in which case, if parties hereto are still in disagreement, the dispute will be submitted to the above mentioned Association for arbitration. The cost of any such arbitration shall be borne equally between the parties.

    37.QUIET ENJOYMENT.  The Lessor covenants that the Lessee, on paying the rent and all other sums herein reserved, and performing all the other provisions hereof on the Lessee's part to be performed, shall and may at all times peaceably and quietly have, hold and enjoy the demised premises for the demised term, subject to the provisions of this Lease.

    38.EXPENDITURES BY LESSOR ON BEHALF OF LESSEE.  If the Lessor shall make any expenditure or incur any liability which the Lessee is required to make or pay under this Lease, the amount thereof may, at the option of the Lessor, be added to and be deemed a part of any installment of rent thereafter falling due.

    39.PLACE & METHOD OF NOTICE AND PAYMENT DELIVERY.  Lessor may from time to time designate some one person, firm or corporation, which may or may not be the Lessor, to receive notices, rental payments, tenders, documents, etc., which Lessee is required or permitted to deliver to or serve upon it respectively and will furnish Lessee the address of such designated receiver at least ten (10) days prior to effective date thereof. Any notice herein required or permitted to be given by Lessee to Lessor shall be deemed given if and when properly addressed and mailed by registered mail, postage prepaid, to Lessor or to receiver designated by Lessor.

    Any notice herein required or permitted to be given by Lessor to Lessee shall be deemed given if and when delivered or served personally or mailed in a sealed wrapper, by United States registered mail, postage prepaid, properly addressed to Lessee at the herein demised premises, whether or not

15

Lessee has departed from, abandoned or vacated the premises, and any further or additional notice is hereby waived by Lessee.

    Until changed as herein provided, notices, communications and rental payments from Lessee to the Lessor shall be addressed as follows: FKT Associates, Attn Ross Turner, 690 Wendover Rd., La Canada, CA 91011.

    40.LEASE IN DUPLICATE.  For the convenience of the parties hereto, this Lease has been executed in duplicate, which in all respects are identical. Each of them shall be deemed complete in itself.

    41.RENT ABATEMENT.  Should the Lessee be deprived of usage of all or any part of the demised premises herein provided, by reason of demised premises being appropriated, condemned or taken by eminent domain, destroyed or damaged by fire or other insured loss or by calamity such as earthquake, flood, tornado, or similar or dissimilar violent action of the elements, or by the act of God, war, bombing, insurrection, invasion, or other calamities of such nature, without the fault of Lessee and not resulting from the activities of Lessee, Lessee shall be entitled to abatement or reduction of rental, from date of such destruction, damage, appropriation, condemnation or taking of demised premises and for such period of time as such part or portion of demised premises remains unuseable by Lessee, in the proportion that the part or portion of the demised building and land area rendered unuseable by Lessee bears to the total useable building and ground area included in the demised premises immediately prior to said loss of usage of building and/or ground area, except that rental payable for any land herein reserved for future expansion of building or parking area shall not be included in rental so pro-rated unless such expansion area is a part of area lost by eminent domain.

    Under no circumstances will payments due Lessor from Lessee for any Leasehold improvements, as may be herein reserved, be subject to abatement or reduction, nor shall payments of taxes, assessments and insurance on demised premises, or other charges, whether similar or dissimilar thereto, herein provided to be paid by the Lessee, be subject to abatement, reduction or proration, except such as may be allowed or permitted by the Insurance Company providing Fire and Comprehensive Insurance coverage for demised property, taxing and/or assessing authority or by provisions of Paragraph 20 of this Lease.

    42.ABANDONMENT OF LEASED PREMISES.  Lessee shall not vacate or abandon the demised premises at any time during the term of this Lease, and shall not permit the demised premises to remain unoccupied except during and for the purpose of making such repairs or restoration as may become necessary under the provisions hereof. If Lessee shall abandon, vacate, or surrender said premises or be dispossessed by process of law or otherwise, any personal property belonging to Lessee and left on the premises shall, at the option of the Lessor, be deemed abandoned by Lessee and shall forthwith become the property of the Lessor.

    43.LEASE SURRENDER.  The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing subleases or subtenancies or may, at the option of Lessor, operate as an assignment to him of any or all of such subleases or subtenancies.

    44.INTEREST.  Any sums payable to Lessor by Lessee, as herein provided, that are not paid when due shall, at option of Lessor bear interest at the rate of ten (10) per cent per annum from due date of such payment to date such payment and accumulated interest is paid to Lessor.

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IN WITNESS WHEREOF, the Lessor and the Lessee have executed this instrument the day and year first above written.

FKT Associates		Staar Surgical
LESSOR		LESSEE
By	/s/ ROSS E. TURNER	By	/s/ WILLIAM C. HUDDLESTON
	General Partner
By		By

STATE OF CALIFORNIA	SS
COUNTY OF LOS ANGELES

    On                , 19    , before me, the undersigned, a Notary Public in and for said County and State, personally appeared                           known to me to be the        President and                     , known to me to be the            Secretary of                           , the Corporation that executed the within Lease between said Corporation, as Lessee, and                                , as Lessor, consisting of        pages including Schedule "A", numbered consecutively from 1 to     , and known to me to be the persons who executed the within Lease on behalf of the said Corporation, and acknowledged to me that said Corporation executed the same.

    WITNESS MY HAND AND OFFICIAL SEAL

Notary Public in and for said County and State

(NOTARIAL SEAL)

STATE OF CALIFORNIA	SS
COUNTY OF LOS ANGELES

    On           , 19      , before me, the undersigned, a Notary Public in and for said County and State, personally appeared                               , known to me to be the person (persons) who executed the within Lease between                               , Lessee, and                               , Lessor, consisting of         pages including Schedule "A", numbered consecutively from 1 to       , and acknowledged to me that he (they) executed the same.

    WITNESS MY HAND AND OFFICIAL SEAL

Notary Public in and for said County and State

(NOTARIAL SEAL)

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SCHEDULE "A"

    Attached to and made a part of Lease made 1st day of September, 1993, between FKT Associates, Lessor and Staar Surgical Company, a California Corporation, Lessee.

    The promises, covenants, agreements, statements, understandings and declarations made and set forth in this schedule "A" are intended to and shall have the same force and effect as if set forth at length in the body of said Lease.

    The real property herein described, together with the improvements thereon or herein provided to be constructed or installed thereon shall constitute the total property leased by this Lease.

1.

LEGAL DESCRIPTION:  Lot 1 of Tract 28379, as per map recorded in Book 717, pages 7 and 8 of maps, as recorded in the office of the County Recorder, County of Los Angeles, State of California, improved with a building of approximately seven thousand eight hundred (7,800) square feet in accordance with plans and specifications approved with the City of Monrovia.

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LEASE ADDITION

    This FIRST Lease Addition made in the CITY OF MONROVIA, State of California, as of the 1st day of September, 1993, to Lease by and between FKT Associates, Lessor, and Staar Surgical Company, a California Corporation, Lessee, dated the 1st of September, 1993, becomes a part thereof as though it were incorporated in and included as a part of the original.

WITNESSETH THAT

    In consideration of the mutual promises, agreements, and hereinafter contained, the parties hereto further agree as follows:

45.

LEASE TERM EXTENSION:  The five (5) year Lease Term established in Paragraph 4 of this Lease may be extended, at option of Lessee, for one additional term of five (5) years, provided Lessee exercises such option at least four (4) months prior to the then current expiration date established per terms of provisions of Lease Paragraph 4 and this Paragraph 1 of this First Lease Addition, further provided Lessee is then occupying said demised premises and is not then in default in the performance of any of the provisions of this Lease.



46.

RENTAL PAYMENTS:  The total rental sum and the monthly rental installments set forth in Paragraph 5 of Lease shall be subject to increase on September 1, 1998. If Lease Term Extension option is exercised by Lessee, at option of Lessor, the increase, if any, will equal the increase in the Consumer Price Index (All items Consumers Los Angeles, Anaheim, Riverside, Metropolitan Area, All Urban Consumers, 1970 equalling 100 from U. A. Department of Labor, Bureau of Labor Statistics, Washington, D.C.) over the latest and current Index figure of 149.7 issued for June, 1993. Such adjustment shall be in direct proportion to any increase in the Index figures released for the month of June immediately preceding the respective September 1st adjustment dates over the starting Index figure of 149.7.



47.

PUBLIC LIABILITY INSURANCE:  Insurance limits for death and injury set forth in Paragraph 13 of Lease shall be increased from $250,000.00 to any one person and $500,000.00 in any one occurrence respectively to a minimum of 500,000.00 to any one person and $500,000.00 for any one occurrence.



48.

SUBROGATION:  The provisions of Lease Paragraph 15 are hereby extended and clarified by way of additions as follows: Lessee and Lessor each hereby release the other and waive their right of recovery against the other for loss or damage insured against policies required by this Paragraph whether due to the negligence of Lessor or Lessee or their agents, employees, contractors or invitees. Lessee and Lessor shall inform their respective insurance carrier or carriers that this mutual waiver or subrogation is contained in this Lease.



49.

RESTORATION OR REBUILDING AFTER DAMAGE OR DESTRUCTION:  The provisions of Paragraph 20 of basic Lease are hereby amended by way of an addition as follows: The provisions that the starting time or time limitations to effect repairs restoration or rebuilding be based on date of notification of such damage, fire, or other loss or calamity as the starting point is hereby amended to date Lessee and Lessor and their respective insurance carriers, as their interest may be affected, have mutually agreed to extent of damage and their respective liabilities. In the event Lessor is unable, due to reasons beyond his control, to start necessary repairs and restoration, within prescribed time set forth in Subparagraphs 20 a and 20 b, Lessee shall have the option of proceeding with such repairs and restoration and to collect reasonable reimbursement from the responsible parties in proportion to their respective liabilities as determined by procedure herein set forth.



50.

PARKING:  Lessee shall be permitted to use 18 existing parking spaces in the yard area.

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51.

EXCULPATORY LANGUAGE:  If Lessor fails to perform its obligations in accordance with any of the provisions of this Lease, Lessor agrees that it shall, to the extent and under the conditions provided for in this Lease, be liable to Lessee on account of any damages caused thereby, but Lessee agrees that any money judgement resulting from such failure shall be satisfied only out of Lessor's interest in the building of which the Premises are a part, and no other real, personal, or other property of Lessor or of the partners comprising Lessor, or the officers, shareholders, directors, partners, or principals of such partners comprising Lessor, shall be subject to levy, attachments, or execution, or otherwise sued to satisfy any such judgement against Lessor except from Lessor's interest in the building of which the Premises are a part. The term, "Lessor" as used in this paragraph, shall mean only the owner of owners at the time in question of the fee title or interest in a ground lease of the Premises, and in the event of any transfer such title or interest, Lessor herein named (and in case of any subsequent transfers, the then grantor) shall be relieved from and after the date of such transfer of all liability as respects Lessor's obligations thereafter to be performed, provided that any funds in the hands of Landlord or the then grantor at the time of such transfer, in which Lessee has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Lessor shall, subject as aforesaid, be binding on Lessor's successors and assigns, only during their respective periods of ownership.



52.

MORTGAGE PROTECTION:  Lessee agrees to give mortgagees and/or Trust Deed Holder, by Registered Mail, a copy of any Notice of Default served upon Lessor provided that prior to such notice Lessor has been notified, in writing, (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such Mortgagees and/or Trust Deed Holders. Lessee further agrees that if Lessor shall have failed to cure such default within the term provided for in this Lease, then the Mortgagees and/or Trust Deed Holders shall have additional thirty (30) days within which to cure such default or, if necessary, if within such thirty (30) days any Mortgagee and/or Trust Deed Holder has commenced and is diligently pursuing the remedies necessary to cure such default, (including but not limited to commencement of foreclosure proceedings, if necessity to effect such cure), in which event this Lease shall not be terminated which such remedies are being so diligently pursued.



53.

ENVIRONMENTAL REQUIREMENTS:  During the term of the Lease, Lessee, at its sole cost and expense, shall comply with all then applicable laws relating to the storage, use and disposal of hazardous, toxic or radioactive matter or materials identified in Sections 66680 through 66685 of Title 22 of the California Administrative Code, Division 4, Chapter 30 ("Title 22"), as amended from time to time (collectively "Hazardous Materials"), which presence or storage is caused or permitted by actions of Lessee in or on the Property.

In the event Lessee does store, use or dispose of any Hazardous Materials in or on the Property, Lessee shall notify Lessor in writing within ten (10) days of Lessee's knowledge of their first placement on the Property, where these

Hazardous Materials substantially increase Lessee's potential liabilities under this section, and Lessee's failure to do so shall constitute a default under this Lease. Lessor may, at any time or from time to time, require Lessee to conduct monitoring activities with respect to Hazardous Materials at use or in storage at the Property, at Lessee's sole cost and expense. Any program related to the monitoring of Hazardous Materials on the Premises shall be reasonably satisfactory to Lessor or customary to industry standards.

Lessee shall be solely responsible for and shall defend, indemnify and hold Lessor and Lessor's agents and employees free and harmless from and against all claims, costs and liabilities, including attorney's fees and costs, arising out of or connected with the Lessee's storage, use or disposal of Hazardous Materials by Lessee on the Property. Lessee shall further be solely responsible for and

20

shall defend, indemnify and hold Lessor, Lessor's agents and employees, free and harmless from and against all claims, costs and liabilities, including attorney's fees and costs, arising out of or connected with the removal, clean-up and/or restoration work and materials necessary to return the Property, at Lessee's reasonable discretion, to either the conditions existing prior to the placement of the Hazardous Materials by the Lessee or at the direction of Lessee on the Property or to the conditions prescribed by law. Lessee's obligations hereunder shall survive the termination of this Lease.

Lessor shall be solely responsible for and shall defend, indemnify and hold Lessee and Lessee's agents and employees free and harmless against all claims, costs and liabilities, including attorney's fees and costs, arising out of or connected with the Lessor's or any previous or subsequent occupant's storage, use or disposal of Hazardous Materials on the Property. Lessor shall further be solely responsible for and shall defend, indemnify and hold Lessee, Lessee's agents and employees free and harmless from and against all claims, costs and liabilities, including attorney's fees and costs, arising out of or connected with the removal, clean-up and/or restoration work and materials necessary to return the Property to the conditions prescribed by law, when such arise out of or are connected with the Lessor's or any previous or subsequent occupant's storage, use or disposal of Hazardous Materials on the Property, Lessor's obligations hereunder shall survive the termination of this Lease.

54)

Lessee agrees to provide evidence of having performed or having had performed such regular service suggested for the proper maintenance of the air conditioning unit and such additional service providing for quarterly inspection by an HVAC service company of Lessor's choosing.

55)

Lessor will paint building (with at least two coats of paint) with the same color scheme as the 1911 Walker Avenue building currently occupied by STAAR Surgical Company (STAAR). STAAR will contribute up to $1,000 for the painting of the building. The color and color scheme must be approved by STAAR.

56)

Amendment to Paragraph 18 Repairs and Maintenance

Maintenance & Repairs

Lessee will not assume responsibility for maintenance of the roof of the subject premises until the roof has been replaced with at least a one (1) year warranty.

Lessee will not assume maintenance of the air conditioners until the air conditioners have been determined to be in good repair by an outside air conditioning specialist chosen by the lessee. It will be the responsibility of the lessor to do whatever it takes including the replacement of air conditioners to bring the the air conditioners to the acceptable repair state.

LEASE ADDITION

    This THIRD LEASE ADDITION made in the City of Monrovia, State of California, as of the second day of January, 1987, to Lease by and between Turner Trust, Dale E. Turner & Frances R. Turner, Trustees, Lessor, and Staar Surgical Company, A California Corporation, Lessee, dated the twentieth day of October, 1983, becomes a part thereof as though it were incorporated in and included as a part of the original.

WITNESSETH THAT.

    In consideration of the mutual promises, agreements, and covenants hereinafter contained, the parties hereto further agree as follows:

    1.  CHANGES, ALTERATIONS AND RESTORATION:  Lessor hereby grants permission to Lessee to cut up to a 6' wide by 8' high opening in rear wall of 1911 Walker Avenue building to

21

provide access to 1900 South Myrtle Avenue building through opening of same size cut in rear (East) wall of 1900 South Myrtle Avenue building, provided:

    A.  Opening is provided with necessary reinforcing to maintain the structural integrity of wall cut to provide said opening. Such opening reinforcing shall consist of a complete side and top frame made of T.S. (Tubular Steel) 5" x 2" x 0.1875 steel tube across the top, secured in place by two (2) each 5/8" x 6" redheads, and supported on each end by tubes of same size and secured in place by a minimum of three (3) each 5/8" x 6" redheads in each support.

    B.  Opening and space between buildings shall be provided with a water proof surround of heavy gauge metal or other Lessor approved material.

    C.  Opening shall be provided with a self closing Fire Underwriters approved fire door, either sliding or swinging, meeting current applicable code requirements for exterior wall on property line installation.

    D.  Lessee shall, at expense of Lessee, close said opening and shall leave floors and said affected wall in as near pre-opening condition as possible on or before termination or expiration date of this Lease or usage by Lessee of premises located at 1900 South Myrtle Avenue, Monrovia.

    2.  LEASE PROVISIONS:  All the terms and provisions set forth in the basic Lease as extended, amended or clarified by the First and Second Lease Additions shall remain in full force and effect except such terms and provisions that have been specifically amended, extended or clarified by this Third Lease Addition.

IN WITNESS WHEREOF, the Lessor and Lessee have executed this instrument on the day and year first above written.

TURNER TRUST		STAAR SURGICAL COMPANY
LESSOR		LESSEE
By:	/s/ Dale E. Turner, Trustee	By:	/s/ Tom Waggoner
	Dale E. Turner, Trustee		Thomas R. Waggoner, President
By:	/s/ Frances R. Turner, Trustee	By:	/s/ Donald F. Hardy
	Frances R. Turner, Trustee		Donald Hardy, Vice President

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EXHIBIT 10.13
INDENTURE OF LEASE
WITNESSETH THAT:
SCHEDULE "A"
LEASE ADDITION
WITNESSETH THAT
LEASE ADDITION
WITNESSETH THAT.

EX-10.14

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Exhibit 10.14

SECOND AMENDMENT TO INDENTURE OF LEASE

    This SECOND AMENDMENT TO INDENTURE OF LEASE ("Second Amendment") is made and entered into as of this 21st day of September 1998, by and between FKT ASSOCIATES, a California general partnership ("Lessor"), and STAAR SURGICAL COMPANY, a California corporation ("Lessee") with reference to the following recitals of fact:

RECITALS

    A.  Lessor and Lessee entered into that certain Indenture of Lease dated September 1, 1993 (the "Original Lease"), for the real property and improvements located thereon commonly known as 1900 South Myrtle Avenue, Monrovia, CA ("the Property"), all as more particularly described therein. Also on September 1, 1993, Lessor and Lessee entered into that certain Lease Addition ("First Addition") ratifying and amending the Original Lease. The Original Lease and the First Addition are hereinafter collectively referred to as the "Lease".

    B.  The term of the Lease was sixty (60) months commencing on September 1, 1993 and terminating on August 31, 1998.

    C.  Lessor and Lessee now desire to modify and amend the Lease as provided in this Second Amendment to, among other things, extend the term of the Lease, change the monthly rent to be paid by Lessee to Lessor and to provide for certain work to be done at the Property.

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

    1.  Incorporation of Recitals.  The above Recitals are hereby incorporated by reference and made a part of this Second Amendment.

    2.  Defined Terms.  Capitalized terms not otherwise defined herein shall have the same meaning as ascribed to them in the Lease.

    3.  Term of Lease.  The term of the Lease is changed so that the expiration date is 11:59 P.M. on August 31, 2003, unless terminated sooner in accordance with the provisions of the Lease, as amended by this Second Amendment.

    4.  Rental.  Monthly installments of rent are paid in advance and will be the sum of Three Thousand Five Hundred and no/100ths Dollars ($3,500.00) commencing on September 1, 1998, and the sum of Three Thousand Eight Hundred and no/100ths Dollars ($3,800.00) commencing on March 1, 2001.

    5.  Improvements to the Property.  Within sixty (60) days after written request from Lessee and mutual agreement as to a color, Lessor will cause the exterior walls of the premises to be painted in a color selected by Lessee and reasonably approved by Lessor. Lessor will pay for the painting and will select the painter. Lessor will only be required to have the exterior walls painted one time during the extended term of the Lease. During the extended term of the Lease, Lessor will, at Lessor's expense, cause any low-lying areas of the roof to be corrected to provide for adequate drainage of water off of the roof. A roofer selected by Lessor will perform this work. Lessee will cooperate with the painter and roofer to ensure that the work is performed as quickly as possible.

    6.  No Brokers.  Lessor and Lessee warrant and represent to the other that neither has engaged the services of a real estate broker in connection with this Second Amendment and that no real estate broker, finder or other party is entitled to a commission or other compensation as a result of this Second Amendment. Lessor and Lessee agree to defend, indemnity and hold harmless the other from any and all claims, compensation, liabilities, judgments and costs (including without limitation attorneys'

fees) arising out of or connected in any way with, directly or indirectly, a breach of the foregoing representations and warranties.

    7.  Lessor's Address For Notices.  As provided for in paragraph 39 of the Lease, Lessor's new address for notices is: Mr. Ross Turner, General Partner, FKT Associates, 1225 Descanso Drive, La Canada, CA. 91011.

    8.  No Further Modification.  Except as set forth in this Second Amendment, all terms and provisions of the Lease shall continue to apply and remain unmodified and in full force and effect. Should any inconsistency arise between this Second Amendment and the Lease as to the specific matters that are the subject of this Second Amendment, the terms and conditions of this Second Amendment shall control. This Second Amendment shall be considered to be part of the Lease and shall be deemed incorporated in the Lease by this reference.

    IN WITNESS WHEREOF, this Second Amendment has been executed as of the date and year first written above.

SIGNATURE PAGE FOLLOWS

Lessor:
FKT Associates, a California general partnership
By:	/s/ ROSS E. TURNER
	Ross E. Turner, General Partner
Lessee:
Staar Surgical Company a California Corporation
By:	/s/ JOHN R. WOLF
	President
By:	/s/ WILLIAM C. HUDDLESTON
	Secretary

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SECOND AMENDMENT TO INDENTURE OF LEASE
RECITALS

EX-10.15

                                                                  EXHIBIT 10.15


                                PROMISSORY NOTE

                        STOCK PLEDGE/SECURITY AGREEMENTS


$28,000.00                                                       March 18, 1993
                                                           Monrovia, California


     FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, BILL HUDDLESTON, A MARRIED MAN (hereinafter "MAKER"), hereby
promises to pay to STAAR SURGICAL COMPANY, A DELAWARE CORPORATION, or order
(hereinafter "HOLDER"), at the address hereinbelow designated on the
signature page of this Note, or such other place as Holder may designate by
written notice to Maker, the principal sum hereinbelow described (hereinafter
the "PRINCIPAL AMOUNT"), together with interest thereon, in the manner and at
the times hereinbelow provided and subject to the terms and conditions
hereinbelow described.

     1.   PRINCIPAL AMOUNT.

          The Principal Amount means the sum of Twenty Eight Thousand No/100
Dollars ($28,000.00)

     2.   INTEREST.

          Interest on the Principal Amount from time-to-time remaining unpaid
shall accrue from the date of this Note at the lesser of eight percent (8%)
or that fixed rate of interest (as of the date of this Note) which equals the
minimum applicable rate of simple interest (as of the date of this Note)
which will avoid the imputation of income to Maker.  Interest shall be
computed on the basis of a three hundred sixty (360) day year and a thirty
(30) day month.

     3.   PAYMENT OF PRINCIPAL AND INTEREST.

          Subject to Paragraph 7, the Principal Amount and accrued and unpaid
interest on the Principal Amount and all other indebtedness under this Note
shall be paid on February 28, 1994.  Until such date, all interest on this
Note shall accrue.



     4.   PREPAYMENTS.

          Maker shall have the right to prepay any portion of the Principal
Amount without prepayment penalty or premium or discount.

     5.   MANNER OF PAYMENTS/CREDITING OF PAYMENTS.

          Payments of any amount required hereunder shall be made solely in
lawful money of the United States, without deduction or offset, and shall be
credited first against accrued but unpaid interest, if any, and thereafter
against the unpaid balance of the Principal Amount.

     6.   SECURITY.

          The payment of this Note is secured by a Stock Pledge/Security
Agreement (hereinafter the "SECURITY AGREEMENT") executed by Maker in favor
of Holder of even date herewith with respect to certain common stock of
Holder owned by Maker.  The Security Agreement contains provisions for
acceleration of the maturity of this Note on the occurrence of certain
described events.

     7.   ACCELERATION UPON DEFAULT.

          At the option of Holder, all or any part of the indebtedness of
Maker hereunder shall immediately become due and payable, irrespective of any
agreed maturity, upon the happening of any of the following events of default
("EVENT OF DEFAULT"):

          (a)   Upon the occurrence of any event of default described under
the Security Agreement;

          (c)   If any of the following events constituting default occurs,
provided, however, that if any such event of default is reasonably
susceptible of being cured, Maker shall be entitled to a grace period of
thirty (30) days following written notice of such event of default to cure it,
and further provided, that if such event of default is of such character as
to reasonably require more than thirty (30) days to cure, Maker has promptly
commenced to cure said events of default within the thirty (30) day period
and uses reasonable diligence thereafter in curing such events of default,
the thirty (30) day period shall be reasonably extended (but not to exceed
one hundred twenty days (120)):




                (i)   If Maker shall breach any non-monetary condition or
obligation imposed on Maker pursuant to the terms of this Note;

                (ii)  If Maker shall make an assignment for the benefit of
creditors;

                (iii) If a custodian, trustee, receiver, or agent is
appointed or takes possession of substantially all of the property of Maker;

                (iv)  If Maker becomes insolvent as that terms is defined in
Section 101(26) of Title 11 of the United States Code;

                (v)   If maker shall (A) file a petition with the Bankruptcy
Court under the Bankruptcy Code, or (B) otherwise file any petition or apply
to any tribunal for appointment of a custodian, trustee, receiver, or agent
of Maker, or commence any proceeding related to Maker under any bankruptcy or
reorganization statute, or under any arrangement, insolvency, readjustment of
debt, dissolution, or liquidation law of any jurisdiction, whether now or
hereafter in effect;

                (vi)  If any petition is filed against Maker under the
Bankruptcy Code and either (A) the Bankruptcy Code orders relief against
Maker under the chapter of Bankruptcy Code under which the petition was
filed, or (B) such petition is not dismissed by the Bankruptcy Court within
thirty (30) days of the date of filing;

                (vii) If any petition or application of the type described in
Subparagraph (v)(A) above is filed against Maker, or any proceeding of the
type described in Subparagraphs (v)(A) or (v)(B) above is commenced, and
either (1) Maker, by any act, indicates his approval thereof, consent
thereto, or acquiescence therein, or (2) an order is entered appointing any
such custodian, trustee, receiver, or agent, adjudicating Maker bankrupt or
insolvent, or approving such petition or application in any such proceeding,
and any such order remains in effect for more than thirty (30) days;

               (viii) If any attachment, execution, or other writ is levied
on substantially all of the assets of Maker and remains in effect for more
than




fifteen (15) days.

     8.   COLLECTION COSTS AND ATTORNEYS' FEES.

          (a)   Maker agrees to pay Holder all costs and expenses, including
actual attorneys' fees, paid or incurred by Holder in connection with the
collection or enforcement of the Note or any instrument securing payment of
this Note, including defending the priority of such instrument or as a result
of foreclosure against, or conducting a trustee sale thereunder.

          (b)   In the event any party institutes or should the parties
otherwise become a party to any action or proceeding in connection with the
enforcement or interpretation or collection of this Note or any instrument
securing payment of this Note, or for damages by reason of any alleged breach
of this Note or any provision hereof or any alleged breach of any instrument
securing payment of this Note or any provision thereof, or for a declaration
of rights in connection with this Note or any instrument securing payment of
this Note, or for any other relief, including equitable relief, in connection
with this Note or any instrument securing payment of this Note, the
prevailing party in any such action or proceeding shall be entitled to
receive from the non-prevailing party all costs and expenses including,
without limitation, actual attorneys' and other fees incurred by the
prevailing party in connection with such action or proceeding.

     9.   NOTICE.

          Any notice to Maker provided for in this Note shall be given by
personal delivery or by express mail, Federal Express, DHL or similar
airborne/overnight delivery service, or by mailing such notice by first class
or certified mail, return receipt requested, addressed to Maker at the
address set forth below where this Note is executed, or to such other address
as Maker may designate by written notice to Holder.  Any notice to Holder
shall be given by personal delivery or by express mail, Federal Express, DHL
or similar airborne/overnight delivery service, or by mailing such notice by
first class or certified mail, return receipt requested, to Holder at the
address set forth below where this Note is executed, or at such other address
as may have been designated by written notice to Maker.  Mailed notices shall
be deemed delivered and received three (3) days after deposit in accordance
with this provision in the United States mail.





    10.   USURY COMPLIANCE.

          All agreements between Maker and Holder are expressly limited, so
that in no event or contingency whatsoever, whether by reason of the
consideration given with respect to this Note, the acceleration of maturity
of the unpaid Principal Amount and interest thereon, or otherwise, shall the
amount paid or agreed to be paid to Holder for the use, forbearance, or
detention of the indebtedness which is the subject of this Note exceed the
highest lawful rate permissible under the applicable usury laws. If, under
any circumstances whatsoever, fulfillment of any provision of this Note or
any agreement securing payment of this Note or executed in connection with
this Note after timely performance of such provision is due, shall involve
transcending the limit of validity prescribed by law which a court of
competent jurisdiction deems applicable, then the obligations to be fulfilled
shall be reduced to the limit of such validity, and if, under any
circumstances whatsoever, Holder shall ever receive as interest an amount
that exceeds the highest lawful rate, the amount that would be excessive
interest shall be applied to the reduction of the unpaid Principal Amount
and/or late charges under this Note and not to the payment of interest, or,
if such excessive interest exceeds the unpaid balance of the Principal Amount
and/or late charges under this Note, such excess shall be refunded to Maker.

    11.   GENERAL

          (a) No delay or omission on the part of Holder in exercising any
rights under this Note or under any instrument given to secure this Note, on
default by Maker, including, without limitation, Holder's right to
accelerate, nor reinstatement of this Note by Holder after such exercise,
shall operate as a waiver of Maker's right to exercise such right or of any
other right under this Note or the instruments given to secure this Note, for
the same default or any other default.

          (b) Except for the provision of written notice hereinabove set
forth, Maker hereby waives presentment for payment, demand, protest, notice
of protest and notice of dishonor, and all other notices to which Maker might
otherwise be entitled, and further waives the right to require Holder to
proceed against any security for this Note before proceeding against Maker,
and further waives all defenses based on release of security or extension of
time or other indulgence given in respect to payment of this Note.

          (c) Holder shall have the right to sell, assign, or otherwise
transfer, either in part or in its entirety, this Note, and any instrument
evidencing or securing the

                                      ^N




indebtedness of this Note (provided such instrument is transferred as
security for the portion of the Note which is conveyed), without the consent
of Maker. The assignment of this Note by Holder shall be ineffective until
actual notice of same is received by Maker. Maker shall have no right to
delegate its duties under this Note or any instrument securing this Note
without the written consent of Holder, which consent Holder shall not
unreasonably withhold, provided, however, no delegation of such duties or
obligations shall release Maker from any duty or obligation under this Note
or instrument securing payment of this Note.

          (d) Subject to the foregoing Subparagraph (c), this Note and all of
the covenants, promises, and agreements contained in it shall be binding on
and inure to the benefit of the respective legal and personal
representatives, devises, heirs, successors, and assigns of Maker and Holder.

          (e) This writing is intended by the parties to be an integrated and
final expression of this Note and also is intended to be a complete and
exclusive statement of the terms of that agreement. No course of prior
dealing between the parties, no usage of trade, and no parol or extrinsic
evidence of any nature shall be used to supplement, modify or vary any of the
terms hereof. There are no conditions to the full effectiveness of this Note
except as specifically provided herein.

          (f) If any provision of this Note, or the application of it to any
party or circumstance, is held to be invalid, the remainder of this Note,
and the application of such provision to other parties or circumstances,
shall not be affected thereby, the provisions of this Note being severable in
any such instance.

          (g) This Note shall be governed by, interpreted under and construed
and enforced in accordance with the laws of the State of California
applicable to contracts entered into in the State of California, by residents
of the State of California, and intended to be performed entirely within the
State of California. Any action to enforce payment of this Note shall be
filed and heard solely in the Municipal or Superior Court of Los Angeles
County, California.

          (h) Time is of the essence for each and every obligation under this
Note.

                                  MAKER:

                                      ^N




                                       /s/ Bill Huddleston
                                       ------------------------
                                       Bill Huddleston


                                       MAKER'S ADDRESS:

                                       Mr. William C. Huddleston
                                       c/o Staar Surgical Company
                                       1911 Walker Avenue
                                       Monrovia, CA 91016


                                       HOLDER'S ADDRESS:

                                       Staar Surgical Company
                                       1911 Walker Avenue
                                       Monrovia, CA 91016

                                      ^N





        DO NOT DESTROY THIS NOTE; WHEN PAID, THIS NOTE
         MUST BE SURRENDERED TO MAKER FOR CANCELLATION


                                      ^N

EX-10.16

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Exhibit 10.16

MODIFICATION OF PROMISSORY NOTE

    This Modification of Promissory Note ("Modification") is made this 21st day of August 2000 by and between William C. Huddleston ("Maker") and STAAR Surgical Company ("Holder") in reference to the following facts:

RECITALS

A.  On March 18, 1993, Maker executed a Promissory Note ("Note") in favor of Holder for the amount of $28,000.

B.  Maker and Holder have agreed to modify the terms of the Note.

AGREEMENT

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are acknowledged, Maker and Holder agree as follows:

1.  Extension of Term. Paragraph 3 of the Note shall be modified to state, "Subject to paragraph 7, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on September 4, 2003, provided, however, that if Maker's employment with Holder is terminated prior to September 4, 2003 (a) by Holder without cause or (b) by Maker for any reason, then Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on a date which is the later of September 4, 2003 or two years from the date of such termination. Irrespective of the foregoing, payment of this Note is subject to the terms of that certain Employment Agreement dated October 1, 1999 by and between Maker and Holder, as such Employment Agreement was modified on August 21, 2000, the terms of which are incorporated into this Note by reference."

2.  Remaining Provisions Shall Remain. All other terms and provisions of the Note shall remain the same.

3.  Attachment to Note Upon Execution. Upon execution, this Modification shall be attached by Holder to the Note and shall become a part of it.

WHEREAS, Maker and Holder have executed this Modification as of the date set forth above.

"MAKER"
	/s/ WILLIAM C. HUDDLESTON WILLIAM C. HUDDLESTON
"HOLDER" STAAR Surgical Company, a Delaware corporation
By:	/s/ ANDREW F. POLLET

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Exhibit 10.16
MODIFICATION OF PROMISSORY NOTE
RECITALS
AGREEMENT

EX-10.17

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Exhibit 10.17

EMPLOYMENT AGREEMENT

    This EMPLOYMENT AGREEMENT ("Agreement"), which is dated as of March 31, 1994, is made by and between STAAR SURGICAL COMPANY, a Delaware corporation, located at 1811 Walker Avenue, Monrovia, California, 91016 and hereinafter referred to as "Company", and STEVEN L. ZIEMBA, whose address is 20845 High Country Drive, Diamond Bar, California 91789, hereinafter referred to as "Executive", based upon the following:

RECITALS

WHEREAS, Company wishes to retain the services of Executive as its Vice President of Regulatory Affairs and to set forth in this Agreement the duties and responsibilities Executive has agreed to undertake on behalf of Company; and

WHEREAS, Executive wishes to render services to Company as its Vice President of Regulatory Affairs and to have set forth in this Agreement the duties and responsibilities he has agreed to undertake on behalf of Company.

THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, Company and Executive (who are sometimes individually referred to as a "party" and collectively referred to as the "parties") agree as follows:

AGREEMENT

    1.  "Company" DEFINED.

    The term "Company" as used in this Agreement shall mean STAAR Surgical Company, any surviving corporation into which it may be merged or any corporation resulting from its consolidation with any other corporation or corporations.

    2.  SPECIFIED PERIOD.

    Company hereby employs Executive pursuant to the terms of this Agreement and Executive hereby accepts employment with Company pursuant to the terms of this Agreement for the period beginning on March 31, 1994 and ending on March 31, 1997.

    3.  GENERAL DUTIES.

    Executive shall report only to Company's President. Executive shall devote his entire productive time, ability, and attention to Company's business during the term of this Agreement. Unless otherwise modified by the Board of Directors (the "Board"), Executive shall serve as the Vice President of Regulatory Affairs of the Company. In this capacity, Executive shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, including, but not limited to, establishing a relationship with government agencies, including the Food and Drug Administration, on behalf of Company and conveying to said agencies a positive image of Company, obtaining approvals required for marketing Company's products nationwide from the Food and Drug Administration and other regulatory agencies, obtaining approvals required for marketing Company's products worldwide from government agencies throughout the world, working with Company's manufacturing department toward establishing manufacturing practices which meet Good Manufacturing Practices and ISO 9000 standards, working with Company's manufacturing department in establishing quality control standards, and keeping abreast of all changes in governmental regulations and pricing which affect Company's products. Executive shall perform such other duties as are commonly performed by the Vice President of a publicly traded corporation or which may from time to

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time be prescribed by the Board. Furthermore, Executive agrees to cooperate with and work to the best of his ability with Company's management team, which includes the Board and the officers, to continually improve Company's reputation in its industry for quality products and performance.

    4.  NONCOMPETITION, NONSOLICITATION AND NONINTERFERENCE AND PROPRIETARY PROPERTY AND CONFIDENTIAL INFORMATION PROVISIONS.

    (a)  Noncompetition.

    (1)  "Applicable Definitions"  For purposes of this paragraph 4, the following capitalized terms shall have the definitions set forth below:

    i."Business Segments"—The term "Business Segments" is defined as each of Company's (or Company's affiliates') products or product lines.

    ii."Competitive Business"—The term "Competitive Business" is defined as any business that is or may be competitive with or similar to or adverse to any of Company's (or Company's affiliates') Business Segments, whether such business is conducted by a proprietorship, partnership, corporation or other entity or venture.

    iii."Territory"—The term "Territory" is defined as the geographic area (both within the United States and internationally) in which each Business Segment is carried on including, by way of example and not limitation, the entire geographic area in which Company conducts various phases of such Business Segment, including purchasing, production, distribution, promotional and marketing activities, sales, and location of plants and warehouses.

    (2)  Covenant Not To Compete.  Executive hereby covenants and agrees that during the term of this Agreement, and for a period of one (1) year from the date this Agreement is terminated or expires, Executive shall not, with respect to each Business Segment and within the boundaries of the Territory applicable to such Business Segment, without the prior written consent of Company (which consent may be withheld in the sole and absolute discretion of Company), directly or indirectly, either alone or in association or in connection with or on behalf of any person, firm, partnership, corporation or other entity or venture now existing or hereafter created: (i) be or become interested or engaged in, directly or indirectly, with any Competitive Business including, without limitation, being or becoming an organizer, investor, lender, partner, joint venture, stockholder, officer, director, employee, manager, independent sales representative, associate, consultant, agent, supplier, vendor, vendee, lessor, or lessee to any Competitive Business, or (ii) in any manner associate with, or aid or abet or give information or financial assistance to any Competitive Business, or (iii) use or permit the use of Executive's name or any part thereof to be used or employed in connection with any Competitive Business (collectively and severally, the "Noncompetition Covenants"). Notwithstanding the foregoing, the provisions of this paragraph 4(a)2, shall not be deemed to prevent the purchase or ownership by Executive as a passive investment of the outstanding capital shares of any publicly held corporation, so long as any other obligation or duty under the Noncompetition Covenants are not breached.

    (3)  Separate Covenants.  The Noncompetition Covenants shall be construed to be divided into separate and distinct Noncompetition Covenants with respect to (i) each Business Segment and (ii) each matter or type of conduct described therein. Each of such divided Noncompetition Covenants shall be separate and distinct from all such other Noncompetition Covenants with respect to the same or any other Business Segment.

    (4)  Acknowledgements.  Executive acknowledges that: (i) the covenants and the restrictions contained in the Noncompetition Covenants are necessary, fundamental, and required for the protection of Company's business; (ii) the Noncompetition Covenants relate to matters which are of a special, unique and extraordinary value; and (iii) a breach of any of the Noncompetition Covenants will result in irreparable harm and damages which cannot be adequately compensated by a monetary award.

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    (5)  Judicial Limitation.  Notwithstanding the foregoing, if at any time a court of competent jurisdiction holds that any portion of any Noncompetition Covenant is unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, such Noncompetition Covenant shall be interpreted to extend only over the maximum period of time, maximum geographical area, or maximum extent in all other respects, as the case may be, as to which it may be enforceable, all as determined by such court in such action.

    (b)  Nonsolicitation and Noninterference.

    (1)  Covenants.  Executive hereby covenants and agrees that during the terms of this Agreement, and for a period of one (1) year from the date this Agreement terminates or expires, Executive shall not, either for Executive's own account or directly or indirectly in conjunction with or on behalf of any person, partnership, corporation or other entity or venture:

      i. Solicit or employ or attempt to solicit or employ any person who is then or has, within twelve (12) months prior thereto, been an officer, partner, manager, agent or employee of Company or any affiliate of Company whether or not such a person would commit a breach of that person's contract of employment with Company or any affiliate of Company, if any, by reason of leaving the service of Company or any affiliate or Company (the "Nonsolicitation Covenant"); or

     ii. On behalf of, directly or indirectly, any Competitive Business (as such term is defined in paragraph 4 (a)l.ii.), or for the purpose of or with the reasonably foreseeable effect of harming the business of Company, solicit the business of any person, firm or company which is then, or has been at any time during the preceding twelve (12) months prior to such solicitation, a customer, client, contractor, supplier or vendor of Company or any affiliate of Company (the "Noninterference Covenant)".

    (2)  Acknowledgements.  Each of the parties acknowledges that: (i) the covenants and the restrictions contained in the Nonsolicitation and Noninterference Covenants are necessary, fundamental, and required for the protection of the business of Company; (ii) such Covenants relate to matters which are of a special, unique and extraordinary value; and (iii) a breach of either of such Covenants will result in irreparable harm and damages which cannot be adequately compensated by a monetary award.

    (3)  Judicial Limitation.  Notwithstanding the foregoing, if at any time, despite the express agreement of Company and Executive, a court of competent jurisdiction holds that any portion of any Nonsolicitation or Noninterference Covenant is unenforceable by reason of its extending for too great a period of time or by reason of its being too extensive in any other respect, such Covenant shall be interpreted to extend only over the maximum period of time or to the maximum extent in all other respects, as the case may be, as to which it may be enforceable, all as determined by such court in such action.

    (c)  Proprietary Property; Confidential Information.

    (1)  "Applicable Definitions"  For Purposes of this paragraph 4(c), the following capitalized terms shall have the definitions set forth below:

    i."Confidential Information"—The term "Confidential Information" is collectively and severally defined as any information, matter or thing of a secret, confidential or private nature, whether or not so labelled, which is connected with Company's business or methods of operation or concerning any of Company's suppliers, customers, licensors, licensees or others with whom Company has a business relationship, and which has current or potential value to Company or the unauthorized disclosure of which could be detrimental to Company. Confidential information shall be broadly defined and shall include, by way of example and not limitation: (i) matters of a

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business nature available only to management and owners of Company of which Executive may become aware (such as information concerning customers, vendors and suppliers, including their names, addresses, credit or financial status, buying or selling habits, practices, requirements, and any arrangements or contracts that Company may have with such parties, Company's marketing methods, plans and strategies, the costs of materials, the prices Company obtains or has obtained or at which Company sells or has sold its products or services, Company's manufacturing and sales costs, the amount of compensation paid to employees of Company and other terms of their employment, financial information such as financial statements, budgets and projections, and the terms of any contracts or agreements Company has entered into) and (ii) matters of a technical nature (such as product information, trade secrets, know-how, formulae, innovations, inventions, devices, discoveries, techniques, formats, processes, methods, specifications, designs, patterns, schematics, data, compilation of information, test results, and research and development projects). For purposes of the foregoing, the term "trade secrets" shall mean the broadest and most inclusive interpretation of trade secrets as defined by Section 3426.l(d) of the California Civil Code (the Uniform Trade Secrets Act) and cases interpreting the scope of said Section.

    ii.  "Proprietary Property"  The term "Proprietary Property" is collectively and severally defined as any written or tangible property owned or used by Company in connection with Company's business, whether or not such property also qualifies as Confidential Information. Proprietary Property shall be broadly defined and shall include, by the way example and not limitation, products, samples, equipment, files, lists, books, notebooks, records, documents, memoranda, reports, patterns, schematics, compilations, designs, drawings, data, test results, contracts, agreements, literature, correspondence, spread sheets, computer programs and software, computer print outs, other written and graphic records, and the like, whether originals, copies, duplicates or summaries thereof, affecting or relating to the business of Company, financial statements, budgets, projections, invoices.

    (2)  Ownership of Proprietary Property.  Executive acknowledges that all Proprietary Property which Executive may prepare, use, observe, come into possession of and/or control shall, at all times, remain the sole and exclusive property of Company. Executive shall upon demand by Company at any time, or upon the cessation of Executive's employment, irrespective of the time, manner, cause or lack of cause of such cessation, immediately deliver to Company or its designated agent, in good condition, ordinary wear and tear and damage by any cause beyond the reasonable control of Executive excepted, all items of the Proprietary Property which are or have been in Executive's possession or under his control, as well as a statement describing the disposition of all items of the Proprietary Property beyond Executive's possession or control in the event Executive has not previously returned such items of the Proprietary Property to Company.

    (3)  Agreement Not to Use or Divulge Confidential Information.  Executive agrees that he will not, in any fashion, form or manner, unless specifically consented to in writing by Company, either directly or indirectly use, divulge, transmit or otherwise disclose or cause to be used, divulged, transmitted or otherwise disclosed to any person firm or corporation, in any matter whatsoever (other than in Executive's performance of duties for Company or except as required by law) any Confidential Information of any kind, nature or description. The forgoing provisions shall not be construed to prevent Executive from making use of or disclosing information which is in the public domain through no fault of Executive, provided, however, specific information shall not be deemed to be in the public domain merely because it is encompassed by some general information that is published or in the public domain or in Executive's possession prior to Executive's employment with Company.

    (4)  Acknowledgement of Secrecy.  Executive acknowledges that the Confidential Information is not generally known to the public or to other persons who can obtain economic value from its disclosure or use and that the Confidential Information derives independent economic value thereby, and Executive agrees that he shall take all efforts reasonably necessary to maintain the secrecy and

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confidentiality of the Confidential Information and to otherwise comply with the terms of this Agreement.

    (5)  Inventions Discoveries.  Executive acknowledges that any inventions, discoveries or trade secrets, whether patentable or not, made or found by Executive in the scope of his employment which Company constitute property of Company and that any rights therein now held or hereafter acquired by Executive individually or in any capacity are hereby transferred and assigned to Company, and agrees to execute and deliver any confirmatory assignments, documents or instruments of any nature necessary to carry out the intent of this paragraph when requested by Company without further compensation therefor, whether or not Executive is at the time employed by Company. Provided, however, notwithstanding the foregoing, Executive shall not be required to assign his rights in any invention which qualifies fully under the provisions of Section 2870(a) of the California Labor Code, which provides, in pertinent part, that the requirement to assign "shall not apply to any invention that the employee developed entirely on his or her own time without using employer's equipment, supplies, facilities or trade secret information except for those inventions that either:

     (i) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

    (ii) Result from any work performed by the employee for the employer."

    Executive understands that he bears the full burden of proving to Company that an invention qualifies fully under Section 2870(a). By signing this Agreement, Executive acknowledges receipt of a copy of this Agreement and of written notification of the provisions of Section 2870.

    5.  COMPLIANCE WITH SECURITIES LAWS.  Executive acknowledges that Company and Executive will be subject to the provisions of Sections 10(b), 16 (a) and 16(b) of the Securities Exchange Act of 1934. Executive acknowledges that Section 16(a) of the Securities Exchange Act requires Executive to report the ownership or transfer of his stock or other securities in Company to the Securities and Exchange Commission and that Sections 10(b) and 16(b) can prohibit Executive from selling or transferring his stock or securities in Company. Executive agrees that he will comply with Company's policies, as stated from time to time, relating to selling or transferring his stock or securities in Company.

    6.  COMPENSATION.

    (a)  Salary.  During the term of this Agreement, Company shall pay to Executive a base salary of One Hundred Eighteen Thousand Eight Hundred Dollars ($118,000) per year. Executive's annual salary shall be reviewed periodically by Company for the purpose of determining whether Executive's salary shall be increased. In no event shall this review take place less frequently than annually. Executive shall also be entitled to receive such bonuses or other compensation from time to time as may be granted to him by Company's Board in its discretion.

    (b)  Employee Benefit Plans.  Except as otherwise herein provided, Executive shall by entitled, during the specified period of this Agreement, to participate in any retirement, pension, profit-sharing, insurance, or other plans which may now be effect or which may be adopted by Company. During the specified period of this Agreement, Company, at its sole cost and expense, shall provide to Executive: (i) medical and dental insurance through any insurer of Company's choice; (ii) disability insurance, the terms of which shall be determined in the sole discretion of the Board; and (iii) life insurance on the life of Executive in the face amount of Two Hundred Thousand Dollars ($200,000).

    (c)  Incentive Stock Option Plan.  Executive shall be included in an incentive stock option plan (the "Plan") adopted by Company and its shareholders. Pursuant to the terms of the Plan, Executive shall be entitled to purchase forty thousand (40,000) shares of Company's common stock, which options

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shall vest over a period of three (3) years, thirteen thousand three hundred thirty-three (13,333) shares each on January 1, 1995 and January 1, 1996 and thirteen thousand three hundred thirty-four (13,334) shares on January 1, 1997. The purchase price per share shall be $4.75. The method of paying for the exercised options shall be made according to the terms of the Plan which permit the Company, in its sole discretion, to accept cash, stock, or a promissory note in payment for the shares. Executive agrees that Company is under no obligation whatsoever to accept stock or a promissory note from Executive in payment for the exercised options. Upon: (i) termination of Executive's employment by Company without cause; (ii) termination of Executive's employment by Executive with cause; (iii) the sale or disposition by Company of substantially all of its business or assets; (iv) the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest in Company to a third party; (v) the merger or consolidation of Company with another corporation as a part of a sale or transfer of a controlling interest in Company to a third party; or (vi) the dissolution or liquidation of Company, all unvested options shall immediately vest. Stock issued pursuant to the Plan shall be restricted stock, although Company shall reserve the right to issue registered shares if it so decides. Executive agrees to be bound by the terms of the Plan as adopted.

    (d)  Severance Pay Upon Change of Control.  Upon the sale or disposition by Company of substantially all of its business or assets or the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest in Company to a third party or the merger or consolidation of Company with another corporation as part of a sale or transfer of a controlling interest in Company to a third party, Executive shall receive, as additional compensation and not in lieu of his rights under this Agreement, one (1) year's salary. "One (1) year's salary" shall be defined as only the cash compensation paid to Executive pursuant to subparagraph (a) above, as it may be modified from time to time, and shall not include employee benefits, incentive stock options, automobile allowance or debt forgiveness, if any. Executive shall be entitled to receive this additional compensation if Executive's employment is terminated as a result of the change of control described herein or if Executive, at Executive's election, terminates his employment as a result of such change of control.

    (c)  Loans Made to Executive.  If Company makes any loan to Executive, including any loan made to Executive by Company for the purpose of exercising the incentive stock options discussed in subparagraph (c) above, Executive shall be required to keep any such loan adequately secured throughout it term by transferring to Company collateral having a value which is not less than 110% of the unpaid principal and accrued and unpaid interest of the loan. If the value of the collateral is impaired or decreases, Executive shall transfer to Company additional collateral so that the collateral securing repayment of any loan will always equal or exceed 110% of the unpaid principal and accrued and unpaid interest of the loan.

    7.  REIMBURSEMENT OF BUSINESS EXPENSES.

    (a)  Reimbursement for Ordinary Expenses.  Company shall promptly reimburse Executive for all reasonable business expenses incurred by Executive in connection with the business of Company. However, each such expenditure shall be reimbursable only if Executive furnishes to Company adequate records and other documentary evidence required by federal and state states and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction.

    (b)  Reimbursement for Extraordinary Expenses.  Any single business expense with a cost in excess of Five Thousand Dollars ($5,000) shall be deemed to be an extraordinary business expense. Executive shall not incur any extraordinary business expense unless the expense has been approved by the President. If Executive fails to obtain the approval of the President, Company may refuse to reimburse Executive for that expense.

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    8.  ANNUAL VACATION/SICK LEAVE.

    Executive shall be entitled to at least three (3) weeks vacation time each year without loss of compensation. Executive shall be entitled to sick leave in accordance with Company's general policy for its employees.

    9.  INDEMNIFICATION OF LOSSES.

    So long as Executive's actions were taken in good faith and in furtherance of Company's business and within the scope of Executive's duties and authority, Company shall indemnify and hold Executive harmless to the full extent of the law from any and all claims, losses and expenses sustained by Executive as a result of any action taken by him to discharge his duties under this Agreement, and Company shall defend Executive, at Company's expense, in connection with any and all claims by stockholders or third parties which are based upon actions taken by Executive to discharge his duties under this Agreement.

    10.  TERMINATION FOR CAUSE.

    (a)  Termination by Company.  Company reserves the right to declare Executive in default of this Agreement if Executive willfully breaches or habitually neglects the duties which he is required to perform under the terms of this Agreement, or if Executive commits such acts of dishonesty, fraud, or misrepresentation as would prevent the effective performance of his duties and results in material harm to Company's business, taken as a whole. Company may terminate this Agreement for cause by giving written notice of termination to Executive. With the exception of the covenants included in paragraph 4 above, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. Such termination shall be without prejudice to any other remedy to which Company may be entitled either at law, in equity, or under this Agreement. If Executive's employment is terminated pursuant to this paragraph, Company shall pay to Executive, within two (2) business days of such termination, any deferred or unpaid compensation to which Executive is entitled at the time of such termination.

    (b)  Termination by Executive.  Executive may, in his sole but reasonable judgment, determine that Company has: (i) breached or failed to fulfill any of the representations, warranties, or covenants in any agreements entered into between Company and Executive; (ii) demoted Executive; (iii) required Executive to participate in any felony or other serious crime; (iv) committed any act which may adversely reflect upon the name and reputation of Executive; (v) effectuated any of the following actions (unless Executive voted, in any of his capacities as a director or shareholder of Company, in favor of such action); (A) authorized the future sale or disposition by Company of substantially all of the business or assets of Company, (B) authorized the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest to a third party or parties and its/their affiliates who are not presently affiliated with the present stockholders of Company, (C) authorized the merger or consolidation of Company with another corporation as part of a sale or transfer of a controlling interest in Company to a third party or parties and its/their affiliates who are not presently affiliated with the present stockholders of Company, or (D) authorized the dissolution or liquidation of Company; and/or (vi) engaged in other conduct constituting legal cause for termination.

    11.  TERMINATION WITHOUT CAUSE.

    (a)  Death.  Executive's employment shall terminate upon the death of Executive. Upon such termination, the obligations of Executive and Company under this Agreement shall immediately cease.

    (b)  Disability.  Company reserves the right to terminate Executive's employment upon ten (10) days written notice if, for a period of sixty (60) days, Executive is prevented from discharging

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his duties under this Agreement due to any physical or mental disability. With the exception of the covenants included in paragraph 4 above, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

    (c)  Election.  Executive's employment may be terminated at any time by Executive upon not less than one hundred eighty (180) days written notice by Executive to the Board. With the exception of the covenants included in paragraph 4 above, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

    12.  MISCELLANEOUS.

    (a)  Preparation of Agreement.  It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement.

    (b)  Cooperation.  Each party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may from time to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense.

    (c)  Interpretation.

    (i)  Entire Agreement/No Collateral Representations.  Each party expressly acknowledges and agrees that this Agreement, including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the parties with respect to the subject matter hereof; (2) supersedes any prior or contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally, the "Prior Agreements"), and that any such prior agreements are of no force or effect except as expressly set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent oral agreements. Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the modification or supplement is sought.

    (ii)  Waiver.  No breach of any agreement or provision herein contained, or of any obligation under this Agreement, may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except by written instrument signed by the party to be charged or as otherwise expressly authorized herein. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or a waiver or relinquishment of any other agreement or provision or right or power herein contained.

    (iii)  Remedies Cumulative.  The remedies of each party under this Agreement are cumulative and shall not exclude any other remedies to which such party may be lawfully entitled.

    (iv)  Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then

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and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law.

    (v)  Time is of the Essence.  It is expressly understood and agreed that time of performance is strictly of the essence with respect to each and every term, condition, obligation and provision hereof and that the failure to timely perform any of the terms, conditions, obligations or provisions hereof by any party shall constitute a material breach and a noncurable (but waivable) default under this Agreement by the party so failing to perform.

    (vi)  No Third Party Beneficiary.  Notwithstanding anything else herein to the contrary, the parties specifically disavow any desire or intention to create any third party beneficiary obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights hereunder or any right of enforcement hereof.

    (vii)  No Reliance Upon Prior Representation.  The parties acknowledge that no other party has made any oral representation or promise which would induce them prior to executing this Agreement to change their position to their detriment, partially perform, or part with value in reliance upon such representation or promise; the parties acknowledge that they have taken such action at their own risk; and the parties represent that they have not so changed their position, performed or parted with value prior to the time of their execution of this Agreement.

    (viii)  Headings; References; Incorporation; Gender.  The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals thereof. All cross-references in this Agreement, unless specifically directed to another agreement or document shall be construed only to refer to provisions within this Agreement, and shall not be construed to be referenced to the overall transaction or to any other agreement or document. Any exhibit referenced in this Agreement shall be construed to be incorporated in this Agreement. As used in this Agreement, each gender shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires.

    (d)  Enforcement.

    (i)  Applicable Law.  This Agreement and the rights and remedies of each party arising out of or relating to this Agreement (including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of California, as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California.

    (ii)  Consent to Jurisdiction; Service of Process.  Any action or proceeding arising out of or relating to this Agreement shall be filed in and heard and litigated solely before the state courts of California located within the County of Los Angeles. Each party generally and unconditionally accepts the exclusive jurisdiction of such courts and to venue therein, consents to the service of process in any such action or proceeding by certified or registered mailing of

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the summons and complaint in accordance with the notice provisions of this Agreement, and waives any defense or right to object to venue in said courts based upon the doctrine of "Forum Non Coveniens". Each party irrevocably agrees to be bound by any judgement rendered thereby in connection with this Agreement.

    (iii)  Waiver of Right to Jury Trial.  Each party hereby waives such party's respective right to a jury trial of any claim or cause of action based upon or arising out of this Agreement. Each party acknowledges that this waiver is a material inducement to each other party hereto to enter into the transaction contemplated hereby, that each other party has already relied upon this waiver in entering into this Agreement, and that each other party will continue to rely on this waiver in their future dealings. Each party warrants and represents that such party has reviewed this waiver with such party's legal counsel, and that such party has knowingly and voluntarily waived its jury trial rights following consultation with legal counsel.

    (iv)  Consent to Specific Performance and Injunctive Relief and Waiver of Bond or Security.  Each party acknowledges that Company may, as a result of Executive's breach of the covenants and obligations included in paragraph 4 of the Agreement, sustain immediate and long term substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Each party agrees that in the event of Executive's breach or threatened breach of the covenants and obligations included in paragraph 4, Company shall be entitled to obtain from a court of competent jurisdiction or arbitration, as the case may be under this Agreement, equitable relief, including, without limitation, enforcement of all of the provisions of this Agreement by specific performance and/or temporary, preliminary and/or permanent injunctions enforcing any of Company's rights requiring performance by Executive, or enjoining any breach by Executive, all without proof of any actual damages that have been or may be caused to Company by such breach or threatened breach and without the posting of bond or other security in connection therewith. Executive waives the claim or defense that Company has an adequate remedy at law and Executive shall not allege or otherwise assert the legal position that any such remedy at law exists. Each party agrees and acknowledges: (1) that the terms of this paragraph are fair, reasonable and necessary to protect the legitimate interests of the other party; (2) that this waiver is a material inducement to the other party to enter into the transaction contemplated hereby, (3) that the other party has already relied upon this waiver in entering into this Agreement; and (4) that each party will continue to rely on this waiver in their future dealings. Each party warrants and represents that such party has reviewed this provision with such party's legal counsel, and that such party has knowingly and voluntarily waived its rights following consultation with legal counsel.

    (v)  Attorneys' Fees and Costs.  If any party institutes or should the parties otherwise become a party to any Action Or Proceeding (as defined below) based upon or arising out of this Agreement including, without limitation, to enforce or interpret this Agreement or any provision hereof, or for damages by reason of any alleged breach of this Agreement or any provision hereof, or for a declaration of rights in connection herewith, or for any other relief, including equitable relief, in connection herewith, the Prevailing Party in any such Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final judgement or determination, shall be entitled to receive from the non-Prevailing Party as a cost of suit, and not as damages, all Costs And Expenses (as defined below) of prosecuting or defending the Action Or Proceeding, as the case may be, including, without limitation, reasonable Attorneys' And Other Fees.

    (vi)  Definitions.  The term "Action Or Proceeding" is defined as any and all claims, suits, actions, notices, inquiries, proceedings, hearings; arbitrations or other similar

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proceedings, including appeals and petitions therefrom, whether formal or informal, governmental or non-governmental, or civil or criminal. The term "Prevailing Party" is defined as the party who is determined to prevail by the Court after its consideration of all damages and equities in the Action Or Proceeding, whether or not the Action Or Proceeding proceeds to final judgment. The Court shall retain the discretion to determine that no party is the Prevailing Party in which case no party shall be entitled to recover its Costs And Expenses under this subparagraph 12(d). The term "Attorneys' And Other Fees" is defined as attorneys' fees, accountants' fees, fees of other professionals, witness fees (including experts engaged by the parties, but excluding shareholders, officers, employees or partners of the parties), and any and all other similar fees incurred in the prosecution or defense of the Action Or Proceeding. The term "Costs And Expenses" is defined as the cost to take depositions, the cost to arbitrate this dispute, if applicable, and the costs and expenses of travel and lodging incurred with respect to the Action Or Proceeding, provided, however, the party incurring said travel and lodging expense must ordinarily travel over one hundred (100) miles, one way, from his or her residence in incurring such expense.

    (e)  No Assignment of Rights or Delegation of Duties by Executive.  Executive's rights and benefits under this Agreement are personal to him and therefore (i) no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; and (ii) Executive may not delegate his duties or obligations hereunder.

    (f)  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (C) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (D) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth (5th) business day following the date mailed). Each party, and their respective counsel, hereby agree that if Notice is to be given hereunder by such party's counsel, such counsel may communicate directly with all principals, as required to comply with the foregoing notice provisions. Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such other address as the receiving party shall have specified most recently by like Notice, with a copy to the other parties hereto. Any Notice given to the estate of a party shall be sufficient if addressed to the party as provided in this subparagraph.

    (g)  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, binding on all parties hereto. Any signature page of this Agreement may be detached from any counterpart of this Agreement and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional signature pages.

    (h)  Execution by All Parties Required to be Binding Electronically Transmitted Documents.  This Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all parties hereto. If a copy or counterpart of this Agreement is originally executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually signed by the party whose facsimile signature appears.

11

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

Company:
STAAR SURGICAL COMPANY, a Delaware corporation
By:	/s/ JOHN R. WOLF
Executive:
/s/ STEVEN L. ZIEMBA Steven L. Ziemba

12

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Exhibit 10.17
EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.18

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Exhibit 10.18

MODIFICATION TO EMPLOYMENT AGREEMENT

    This Modification to Employment Agreement ("Modification") is dated for identification purposes only as of the 20th day of September 1996 and is made by and between STAAR Surgical Company, a Delaware corporation, located at 1911 Walker Avenue, Monrovia, California 91016 (the "Company") and Steven L. Ziemba, whose address is 20845 High Country Drive, Diamond Bar, California 91789 (the "Executive") based on the following:

RECITALS

    A.  On January 1, 1994 the Executive agreed to render services to the Company through December 31, 1996 on the terms and subject to the conditions set forth in that certain "Employment Agreement" signed by the Executive and by the Company.

    B.  Pursuant to paragraph 12(c)(i) of the Employment Agreement, the Company and the Executive wish to modify its terms and conditions.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Modification, the Company and the Executive agree as follows:

AGREEMENT

    1.  Modification of Employment Term.  Paragraph 2 of the Employment Agreement shall be modified to state:

    Company hereby employs Executive pursuant to the terms of this Agreement and Executive hereby accepts employment with the Company pursuant to the terms of this Agreement for the period beginning on January 1, 1994 and ending on December 31, 2001.

    2.  Grant of Additional Stock Options.  There shall be added to Paragraph 6(c) of the Employment Agreement a second paragraph which shall state the following:

Executive shall be included in the 1996 STAAR Surgical Company Employee Non-Qualified Stock Option Plan (the "Plan") adopted by Company. Pursuant to the terms of the Plan, Executive shall be entitled to purchase fifty thousand (50,000) shares of Company's common stock, which options shall vest over a period of five (5) years, ten thousand (10,000) shares each on January 1, 1997, January 1, 1998, January 1, 1999, January 1, 2000 and January 1, 2001. The purchase price per share shall be $12.50. Stock issued pursuant to the Plan shall be restricted stock, although Company shall reserve the right to issue registered shares if it so decides. Executive agrees to be bound by the terms of the Plan as adopted. These options shall be non-qualified stock options.

    3.  Severance Pay Upon Change of Control.  Paragraph 6(d) of the Employment Agreement shall be modified to state:

Upon the sale or disposition by Company of substantially all of its business or assets or the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest in Company to a third party or the merger or consolidation of Company with another corporation as part of a sale or transfer of a controlling interest in Company to a third party, Executive shall receive, as additional compensation and not in lieu of his rights under this Agreement, two (2) years' salary. "A controlling interest" shall be defined as 50% or more of the common stock of the Company. "Two (2) years' salary" shall be defined as only the cash compensation paid to Executive pursuant to subparagraph (a) above, as it may be modified from time to time, and shall not include employee benefits, incentive stock options, automobile allowance or debt forgiveness, if any. Executive shall be entitled to receive this additional compensation if Executive's employment is terminated as a result of the change of control described herein or, if Executive, at Executive's election, terminates his employment as a result of such change of control.

    4.  Modification to Termination Provision.  The first sentence of paragraph 10(b) shall be modified to state: "Executive may, in his sole but reasonable judgment, terminate this Agreement if Executive determines that Company has . . . ."

    5.  All Other Terms and Conditions to Remain the Same.  The Company and the Executive agree that all other terms and conditions of the Employment Agreement shall remain the same.

IN WITNESS WHEREOF, the parties have executed this Modification on the 25th day of September, 1996.

"Company"
STAAR Surgical Company
By:	/s/ JOHN R. WOLF John R. Wolf
"Executive"
	/s/ STEVEN L. ZIEMBA Steven L. Ziemba

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Exhibit 10.18
MODIFICATION TO EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.19

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SECOND MODIFICATION TO EMPLOYMENT AGREEMENT

    This Second Modification to Employment Agreement ("Modification") is dated as of the 6th day of October 2000 and is made by and between STAAR Surgical Company, a Delaware corporation, (the "Company") and Steven L. Ziemba (the "Executive") based on the following:

RECITALS

A.  On January 1, 1994 the Executive agreed to render services to the Company on the terms and subject to the conditions set forth in that certain "Employment Agreement" signed by the Executive and by the Company.

B.  Pursuant to paragraph 12(c)(i) of the Employment Agreement, the Company and the Executive wish to modify its terms and conditions.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Modification and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the Company and the Executive agree as follows:

AGREEMENT

    1.  Modification to Paragraph 6(d).  Paragraph 6(d) shall be deleted in its entirety and the following shall appear in its place:

Election by Company due to a Change of Control. If Executive's employment is terminated by Company due to the sale or disposition by Company of substantially all of its business or assets or the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest in Company to a third party or the merger or consolidation of Company with another corporation as part of a sale or transfer of a controlling interest in Company to a third party, Executive shall receive, in lieu of any other rights or benefits under this Agreement, one (1) year's salary, and any option held by Executive which is unvested on the date of termination shall immediately vest. "A controlling interest" shall be defined as 50% or more of the common stock of the Company. "One (1) year's salary" shall be defined as only the cash compensation paid to Executive pursuant to subparagraph 4(a), as it may be modified from time to time, and shall not include employee benefits, stock options, automobile allowance or debt forgiveness, if any.

    2.  All Other Terms and Conditions to Remain the Same.  The Company and the Executive agree that all other terms and conditions of the Employment Agreement, as amended, shall remain the same.

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

"Company" STAAR Surgical Company
By:	/s/ ANDREW F. POLLET Andrew F. Pollet, Chairman of the Board
"Executive"
	/s/ STEVEN L. ZIEMBA Steven L. Ziemba

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SECOND MODIFICATION TO EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.21

                           Patent license agreement.

     The Eye Microsurgery Entersectoral Research and Technology Complex,
Moscow, Russia, represented by General Director Mr. Fedorov S.N., from here
an referred to as the "Licenser", and STAAR Surgical AG, a Swise corporation,
Hidau, Switzerland represented by President Mr. Vladimir Feingold and
Director Mr. John R. Wolf, from here an referred to as the "Licensiate",
taking into account that the Licenser possesses the "Technology for Producing
Collagen-Based Cross-Linked Drain", and the Licensiate wants to acquired the
license on this technology.

     The Licenser and Licensiate agree as follow undestndings, which shall
become in force since 1.1.96.

                                   Article 1.

DEFENITIONS:  For the purposed of this Agreement the following expressions
have the meanings indicated below:

     1.1  "Product" is the product described in Appendix 1.

     1.2.  "Patent" is the patent whose detailed description is given in
Appendix 2 and also future inventions are given in Appendix 3.

     1.3.  "Technical knowledge" stands for technical information, know-haw,
manufacturing technology, technical data, material specifications, and other
information used by the Licenser during the manufacture of the product
(or which is necessary and sufficient for the Licensiate to make the Product
according to the standart and quality of the product made by the Licenser),
(including any improvements obtained during the validity period of this
Agreement).

     1.4  "Territory" covers all countries listed in Appendix 5.

     1.5  "Exclusive territory" covers the countries listed in part 1 of
Appendix 4.

     1.6. "Non-exclusive territory" covers the countries listed



                                      -2-

in part 2 of Appendix 4.

     1.7  "Year" means any period of time of 12 months starting from the date
of executing the Agreement.

                                       Article 2.

     The Licenser is an owner of Patents listed in Appendix 2, and has the
right of disposal of the said Patents.

     No prior transfers occurred.  No share or total property covered by the
Patents have been transfered, yielded or alienated to any person except for
the Licensiate according to this Agreement.

     The Licenser has not given any license under listed in Appendix 2
patents yet.  The Licenser's rights are free from the right of detension,
pledge, backing interest or other proprietary burdans.  The Licenser
disclosed to any third legal or phisical person no confidential information,
production secrets or know-how, relating to the technical aspects of the
Patents, exept claim 3 in Appendix 1, on which Licenser conduct the joint
measures only with Licensiate.

     Furthermore, the Licenser has production secrets and experience
(know-how) concerning the subject matter of this license.

                                   Article 3.

       Transference of rights on the Patents and patent applications.

     For valuable consideration, the receipt and sufficient of which are
confirmed by the Licensiate, the Licenser assigns to the Licensiate its
entire and exclusive rights, title, interest, and material right relating to
the "Patent" described in Appendix 2, and also the future Patents described
in Appendix 3 to this Agreement.  The Licensiate shall acquire the entire and
exclusive right belonging to the Licenser to the Licensiates benefit for the
whole term of validity of the Patent.




                                      -3-

                                  Article 4.

     I.  Technical field of application.

     The license for the "Technology for Producing Collagen-Based
Cross-Linked Drains" relates to the entire sphere of application of the
inventions mentioned in the patents and listed in the Appendix 2 and 3, as
well as everything that definitively stems from these inventions.

     The Parties shall infirm each other openly and without any reservations
on the possible fields of application of the inventions, that were unknown to
the Parties at the day of conclusion of the Agreement, and, as proved later,
can be carried by the Parties into effect and/or can be wanted for
realization.

     II.  License type.

     The Patent deals with an exclusive license:

     (a)  In so doing, however, the Licenser keeps the right of manufacturing
the products covered by the license, to use them or sell on a non-exclusive
territory specified in part 2 of Appendix 4.

     (b)  Furthermore, the Licenser reserves a right of realizing the product
by the license in its branches and joint ventures, existing or to be created,
on the exclusive specified in part 1 of Appendix 4, without right of salling
to any another third person on the exclusive territory.  This thesis in force
only for cases when operation in medical branches and joint ventures is
realized surgeons, these surgeons works in Eye Microsurgery Intersectoral
Research and Technology Complex and officially sents on the contract with the
Licenser.

     (c)  This license is intended for manufacture, use and sale.


                                 Article 5.



                                      -4-


                             Territory covered by the Agreement.

     The license was granted for use on the exclusive territiry (see Appendix
4).

     The Licensiate has the right of production on other countries including
those where the Licenser has no protective rights.

     The Licenser shall prevent export to the countries which belongs to
non-exclusive territory.

     If, in spite of this, the export shall be effected, the Licensiate shall
have the right of cancelling the Agreement by means of a simple written
message.

     The Licenser shall pay conventional penalty equal to 20-fold price of
the export delivery, which is inadmissible by virtue of the above statements.

     In the equivalent manner the Licenser shall put on its customers an
obligation to avoid export of the subject matter of this license, because it
is inadmissible according to the above statements, and to pay to it a
conventional penalty in an amount of 20-fold price of the exported goods in
every case of infringement.  This sum the Licenser shall transfer to
Licensiate.

                                  Article 6.

                                  License registration.

     Each Party shall have the right of registering the license in the Patent
Office provided that such registration of the country or countries, with
respect to which the license is given.  The Licenser shall transfer to the
licensiate the authority and approval swich is necessary for this purpose.
The registration fee shall be covered by the licensiate.

                                  Article 7.



                       Drawings and descriptive documents.



                                      -5-

     The Licenser shall give to the Licensiate all existing drawings, plans,
quality inspection system, and other technical documents required for the
manufacture under license.  These documents may be dublicated.  The
Licensiate shall treat these drawings and documents as secret materials
during the entire term of action of this Agreement and after it will be
expired.

                                  Article 8.

                                  Mastering.

     The Licenser is released from responsibility for the risk associated
with the industrial-scale mastering of the manufacture under license, for
which the Licensiate is responsible.

     The Licenser is released from responsibility for the risk of the
commercial realization of the invention.  The realisation risk is taken
solely by the Licensiate.

                                        Article 9.

     I.  Quality of products manufactured under license.

     The Licesiate shall manufacture the products under license whose quality
is the same as those manufactured by Licenser.  The licenser provides all
necessary consultations and information accumulated from its own experience.

     II.  Consequences of poor quality of products manufactured under license.

     The Licenser has the right of quality monitoring so as to check of the
products manufactured under license correspond to the quality established by
the Agreement.

     III.  Sublicenses.

     1.  The Licensiate has the right to offer sublicenses.




                                      -6-

     2.  In case of selling of sublicense the earning is distributed between
the Licenser and Licensiate of this Agreement in equal parts.

                                  Article 10.

                               Confidentiality.

     The parties concluding this Agreement agree that they consider as secret
all technical and technological information relating to the Production under
license and made available to the Licensiate.

     The information obtained from the Licenser is kept in secret during the
entire validity period of the Agreement and after the validity period of this
Agreement is expired.

     The Licensiate has the right to use free of charge the entire technical
information after the validity period of this Agreement is expired.

                                  Article 11.

             Improvements and amedments of the subject of license.

     The Licenser is obliged to inform the Licensiate about all modifications
and improvements, that shall be made during the validity period of this
Agreement and concerning the subject matter of the license.

     If the amendments and improvements shall lead to a patentable invention,
it must be transferred to the Licensiate free of charge with simultaneous
prolongation of the period validity under definite conditions.

                                 Article 12.

                              Technical assistance.

     The Licenser submits to the Licensiate scrupulously and unconditionally
all technical assistance and necessary advisiment.



                                      -7-

     The Licenser, at the expense of the Licensiate, shall sent specialists
under the following conditions:

     - the skill of the sent personnel must be sufficient for solving the
technical problems that may arise with respect to the Agreement;

     - the period of working shall be agreed later;

     - the Licensiate shall cover the expenses associated with the
accommodation, transportation and insurance of the expartiate personnel.

     The Licensiate shall pay the personnel wages in US dollars in an amount
twice the sum they have in their own country.

                                  Article 13.

            Amendments and improvements to be made by Licensiate.

     The amendments and improvements that shall be made by the Licensiate
with respect to the subject of the license may be made without special
permission of the Licenser.  The Licensiate has the right to perform the
amendments and improvements without Licenser's permission provided that the
Licensiate alone shall be responsible for these amendments and improvements.

                                  Article 14.

                   Payment with conclusion of the Agreement.

     14.1  The Licensiate shall pay to the Licenser on the corresponding
account of Russian "Vneshtorgbank" No 608-205-524 in the National Republican
Bank of New-York, USA, with an order to credit for the above sum account No
67087105/001 of the Eye Microsurgery Intersectoral Research and Technology
Complex in the "Vneshtorgbank" Moscow the sum of the three hundred fifty
thousand US dollars (350.000 USD) as a single payment within 10 days when
this Agreement come into force and before transference of documents and
draughts.  Documentation shall be transferred to the Licensiate when said sum
comes to the specified bank.



                                      -8-

     14.2.  The sum of two hundred fifty thousand US dollars (250.000 USD)
shall be payed by the Licensiate on the before specified account within 10
dais after receipt if the signed by the Licenser acts about full concession
of the patent rights.

     14.3.  The sum of one hundred fifty thousand US dollars (150.000 USD)
shall be payed by the Licensiate on the before specified account within 10
days after receipt of the official decision of the US Patent Office about
registration of full concession on the Licensiate name.

                                  Article 15.

                                   Royalty.

     The Licensiate pays to the Licenser royalty depending on the volume of
year sales and as compensation of license price.  Royalty pays as a
percentages of sums paid by its buyers for the products made under conditions
of free plant without packing, as well as the sums obtained from learning the
technology used in ophthalmosurgery with deduction of trade taxes.

     Then the volume of sales:

                     to 25.000 pieces...................5.0%
                from 25.000 to 50.000 pieces............4.5%
                from 50.000 to 75.000 pieces............4.0%
                from 75.000 to 100.000 pieces...........3.5%
                     more then 100.000 pieces...........3.0%

                                  Article 16.

                   Appearance of the right for license payment.

     The right for license payment arises as soon as the Licensiate gets
payment from the buyer.

                                  Article 17.



                                      -9-


                                Taxes and duties.

     If direct sales taxes is taken in the Licensiates country, or in the
country on non-exclusive territory, they are paid by the Licensiate.

                                  Article 18.

                             Accounting and reports.

     The Licensiate is obliged to keep account in special books, in which it
shall put the accurate number of the products manufactured under license
according to this Agreement, original numbers applied onto the machines and
all other data needed for calculation of the license prise.  The Licenser has
the right to give an order to audit these books and their correspondence with
the general accounting of the Licensiate through an auditor by the Licensiate.

     The Licensiate shall bear the expenses associated with such an audit.

                                    Article 19.

                         Calculation on license payments.

     The calculations on the license payments are performed at the end of
each quarter of a calendar year.  The Licensiate shall send the complete data
on these calculations within a month following the day of their performance
and to remit the calculated sum within the same period.

     If the Licensiate exceeds a time limit for payment, the Licenser may
take annual interest of 6% within 60 days each quarter.

                                   Article 20.

                         Obligation on using the license.

     The Licensiate is obliged to use the license.




                                      -10-

                                   Article 21.

                          Affaire on patent applications.

     The Licenser pledges oneself to continue affair in Russia and other
countries on applications, patents on witch are not given by Patient Offices.

     The Licensiate pledges oneself to give to the Licenser the copies of
decision of Patient Offices about full transference of patient rights on
inventions, within 10 days since the moment of receipt by the Licensiate.

                                  Article 22.

                                Patent support.

     The Licensiate shall support the Patent that is put as a base of
this license Agreement.

                                  Article 23.

                            Patent rights protection.

     If the Patent is infringed by a third party and the Licenser becomes
aware such infringement, the Licenser shall promptly notify the Licensiate in
writing of such infringement or unfair competition. The Licensiate, in its
sole discretion, shall determine if it shall defend the Patent infringement
or unfair competition, it shall so notify the Licenser.  The Licenser agrees
to cooperate and assist in prosecution of any action in the nature of unfair
competition or patent infringement prosecuted by the Licensiate.

     The Licenser shall support the Licensiate, first of all, if such a
support is provided by the property right of the respective country.  The
Licenser shall give the Licensiate all necessary authority and documents that
shall enable the Licensiate to bring a suit and to present witnesses or



                                     -11-

coauthors and also to take an active part in infringement proceeding.

     The party making a decision to suit the third party bears possible
expenses in preparation and conduction of legal proceedings.

                                  ARTICLE 24.

             Licensiates obligation to defence the patent rights.

     The Licensiates commit itself that neither it personally nor its
authorized person shall dispute the patent rights put in the base of this
Agreement except the cases.


                                  ARTICLE 25.

             Cancellation of Patent:  its effect on the Agreement.

     If the protective rights setting up the base of this Agreement are
cancelled by the claim of a third party, the paid license payments in no case
shall be reimbursed, however, if the term of their payment does not yet come,
they shall not be taken.


                                  ARTICLE 26.

                               Agreement Validity

      The Agreement validity period is equal to that of the patent validity.

     The Agreement shall come into force from the moment of its signing.


                                  ARTICLE 27.

                                 Force Majeure.

     Either party is relieved from liability for partial or complete
non-performance of their obligations under present


                                     -12-

Agreement is some circumstances that aroused independent of their will.

     The circumstances caused by events that were independent of the will of
the parties of this Agreement so that the fair party could not avoid or
eliminate, are considered as cases realising this party from its obligations,
if they take place after signing the Agreement and prevent its fulfillment
completely of partially.

     The cases of unsurmountable force are reduced to the following events:
war, military actions, revolts, mobilization, road accidents and natural
disasters, legal acts of authorities affecting the fulfillment of the
obligations, and all other events which are considered as circumstances of
unsurmountable force by a competent arbitration court.


                                  ARTICLE 28.

                            Applicable Legislation.

     This Agreement is applicable to the Swiss Law.


                                  ARTICLE 29.

                        Legal Protection and Arbitration

     If any dispute or difference shall arise between the parties to this
Agreement as to any matter or thing arising in connection with the Agreement
then the aggrieved party shall give to the other party a notice in writing
setting out in full detailed particulars of the dispute or difference.  Upon
receipt of the notice the parties shall agree to appoint the International
Chamber of Commerce shall appoint a date, time and venue (unless the parties
agree to a date, time and venue) for mediation proceedings to be held to
discuss in detail the dispute or difference.  The parties shall not be legally
represented at the mediation proceedings but shall present, in their own
manner, with the assistance or witnesses and documentary evidence, the


                                     -13-

details of their respective cases.  If, at the conclusion of the mediation
proceedings the parties fail to resolve the dispute or difference, either
party may give to the other party, within 14 days, a notice stating that at
the expiration of 30 days it will proceed to have the dispute of differents
referred to a court of competent jurisdiction in Switzerland (or another
country as the parties agree) and at the expiration of such 30 days may so
proceed.


                                  ARTICLE 30.

                                 Miscellaneous

     1.   This Agreement covers all agreed provisions and aspects of the
License Agreement.  It has no any additional promises or terms as a condition
of execution of the License Agreement, along with other terms except those
stated above.  All preliminary agreements, promises, negotiations or
presentations, which are not included into this License Agreement shall not
be valid from the moment of its singing.  Any subsequent agreement, which
shall lead to a change or cancellation of this License Agreement, shall be
valid solely if it is made in writing and signed by the authorized
representatives of both parties.

     2.   Successors and Assigns.

     This Agreement and all of its provisions shall be binding and inure to
the benefit of the successors and assigns of the parties.

     If not states specially in this Agreement, all requested notices,
requirements, questions, agreed statements, approvals, or other
communications between the partners shall be made in writing and delivered:
(A) by a messenger (such a message is delivered personally), (B) by telegraph
or air express mail (in so doing the messages are sent by R-mail), (C)
electronic mail, fax or telephone provided that the recipient has a
compatible device or confirms the receipt of the message (in this case it is
assumed that the



                                     -14-

transmission or reception of the message will be confirmed), or (D) by
mailing a registered or valuable letter (in this case it is assumed that the
letter shall be delivered at the 14th day after dispatching).  The messages
are sent to the following addresses:

     Licensiate:  STAAR Surgical AG
                  Hauptstrasse 104
                  CH 2560 Hidau
                  Switzerland
                  Attn:  President
                  A copy to address:
                  STAAR Surgical Company
                  1911 Walker Avenue
                  Monrovia, California  91016
                  Attn:  President - Chief Executive Officer

     Licenser:    Eye Microsurgery Intersectoral Research and Technology
                  Complex, Moscow, Russia, 127486, Beskudnikovsky bulvar, 59-a

     The above addresses may be changed by notifying the other party about
this action, as mentioned above.

     3.   The right of signing the document.

     Each party states that it has all necessary authority to sign this
License Agreement.  All individual signings of this Agreement for the party
that is a corporation, company or another legal counsel, or a signature of a
proxy or another authorized person, is accompanied by confirmation of the
fact that this person has the right of putting his signature under the given
document on behalf of a respective organization or its manager.

     4.   Counterpart Copies.

     This Agreement may be signed in counterpart or duplicate copies, and any
signed counterpart or duplicate copy shall

                                     -15-

be equivalent to a signed original for all purposes.

     5.   Completeness of the Agreement.

     This is the entire agreement between the parties covering everything
agreed upon or understood between the parties covering everything agreed upon
or understood with respect to the subject matter of it.  There are no
promises, conditions, representations or terms of any kind as conditions or
inducements to the execution hereby or in effect between the parties other
than as herein set forth.  Any prior agreement, promises, negotiations or
representations not expressly set forth in this Agreement are of no force or
effect.  Any agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of this Agreement in whole or in part
unless such agreement is in writing and signed by the party against whim
enforcement of the change, modification, discharge or abandonment is sought.

     6.   Preparation of Agreement.

     It is acknowledged that each party hereto either bad separate and
independent advice of counsel or the opportunity to avail itself of same.
This Agreement was prepared by the parties to it in conjunction with
counseling from their respective attorneys, or the opportunity to obtain such
counseling.  In light of these facts it is acknowledged that no party to this
Agreement shall be construed to be solely responsible for the drafting of it,
and therefore any ambiguity shall not be construed against any party as the
alleged draftsman of this Agreement.

     7.   Gender and Number.

     As used in this Agreement, the masculine, feminine, or neuter gender,
and the singular or plural number, shall include the others whenever the
context so indicate.




                                     -16-

     8.   Headings.

     The titles and headings of the various sections of the Agreement are
intended solely for convenience of reference and are not intended solely for
convenience and are not intended to explain, modify, or place any
construction on any of the provisions of this Agreement.

     9.   No Waiver.

     The failure of a party to insist on the strict performance of any
covenant or duty required by this Agreement, or to pursue any remedy under
the Agreement, shall not constitute a waiver of the breach or the remedy.

     10.  Severability.

     If any part or provision of this Agreement shall be determined to be
invalid, illegal or unenforceable, then the remaining part of this Agreement
which can be separated from the invalid, illegal or unenforceable provision
shall continue in full force and effect, and the invalid, illegal or
unenforceable provision shall be construed as if they had never been
incorporated into this Agreement.

     This Agreement and all of its provisions shall be binding on and inure to
the benefit of the successors of the parties.

     11.  Counterparts and Facsimiles.

     For the convenience of the parties to this Agreement, this document may
be executed by facsimile signatures and in counterparts which shall together
constitute the agreement of the parties as one and the same instrument.

     This License Agreement is concluded in four authentic copies, two of
which are in English and in Russian, all copies has an equal juridical force.

     IN WITNESS WHEREOF, the parties thereto have executed this Assignment
Agreement on the day and year set forth opposite their respective signatures
below:



                                     -17-

     "Licenser":    Eye Microsurgery Intersectoral Research
                    and Technology Complex
                    General Director, academician

                    /s/ [illegible]  S.N. Federov

     "Lecensiate":  STAAR Surgical AG
                    President and Director

                    _____________________Vladimir Feingold

                    Director

                    _____________________John R. Wolf



                                     -18-


                                  APPENDIX N 1.

               Technology of production intraocular lenses from
                              collagen co-polimers

     Nowadays, intraocular correction is one of the basic medical treatment
method of vision body disease.

     Artifical eye linses are used not only when cataract, but also for
removal of refraction anomalies.

     Artifical eye lenses, which are implantated through small sizes, are
most perspective.  Several requirements are produced to artifical eye lenses
like elasticity, biocompatibility, low specific density and high solidity on
rupture.  Artifical eye lenses from collagen co-polimers corresponds to these
principles.

     Hight elasticity, hight solidity on rupture are the main quality of these
products.  It allows to make implantation as tool-making method so method of
injection also.

     Lenses, which are maked an special technology, passed experimental and
hospital tests successfully and inculcated in wide surgical practice as in
Eye Microsurgery Intersectoral Research and Technology Complex so in the
other Russian and CIS hospitals.


                                     -19-

                                  APPENDIX N 2.

                                List of patents.

     1.   US patent N 5.286.829 (Russian application N 4745668)
"Biocompatible polymer material and a process for producing same", inventors
S.N. Fedorov, S.N. Bagrov, A.V. Osipov, E.A. Linnik, I.A. Maklakova, A.N.
Kosmynin, E.V. Larionov, priority 13.10.89, patentee - Eye Microsurgery
Intersectoral Research and Technology Complex.

     2.   Russian patent N 2033165 (Russian application N 4745668) "Process
for producing plastic material from collagen", inventors S.N. Fedorov, S.N.
Bagrov, A.V. Osipov, E.A. Linnik, I.A. Maklakova, A.N. Kosmynin, E.V.
Larionov, priority 13.10.89, patentee - Eye Microsurgery Intersectoral
Research and Technology Complex.

     3.   USSR Inventors Certificate N 1823178 (Russian application N
4881670) "Artificial eye lens and process of its implantation in back eye
camera", inventors S.N. Fedorov, V.K. Zuev, B.M. Aznabaev, priority 21.11.80.

     4.   USA patent N 5258025 (Russian application N 4881670) "Correctional
intraocular lens", inventors S.N. Fedorov, V.K. Zuev, B.M. Aznabaev, priority
21.11.80, patentee - Eye Microsurgery Intersectoral Research and Technology
Complex.

     5.   Germany laid-open application (Russian application N 4881670)
"Correctional intraocular lens", inventors S.N. Fedorov, B.M Aznabaev, V.K.
Zuev, priority 22.04.93, patentee - Eye Microsurgery Intersectoral Research
and Technology Complex.

     6.   Russian patent N 2033114 (Russian application


                                     -20-

9302177), "Artificial eye lens", inventors S.N. Fedorov, V.K. Zuev, priority
22.04.93, patentee - Eye Microsurgery Intersectoral Research and Technology
Complex.

     7.   Notice of allowance in USA, application N 08.231.549 in USA
(Russian application N 93021277) from 27.06.95, "Correctional artificial eye
lens", inventors S.N. Fedorov, V.K. Zuev, priority 27.06.95, patentee - Eye
Microsurgery Intersectoral Research and Technology Complex.

EX-10.33

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Exhibit 10.33

MODIFICATION TO EMPLOYMENT AGREEMENT

    This Modification to Employment Agreement ("Modification") is dated as of the 31st day of May 2000 and is made by and between STAAR Surgical Company, a Delaware corporation, (the "Company") and John Santos (the "Employee") based on the following:

RECITALS

A. On April 28, 1999 the Employee agreed to render services to the Company as its Vice President Controller through April 27, 2002 on the terms and subject to the conditions set forth in that certain "Employment Agreement" signed by the Employee and by the Company.

B. Pursuant to paragraph 12(c)(i) of the Employment Agreement, the Company and the Employee wish to modify its terms and conditions.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Modification, the Company and the Employee agree as follows:

AGREEMENT

    1.  Change of Title.  Wherever in the Employment Agreement the Employee is referred to as "Vice President Controller", that term shall be replaced by the term "Chief Financial Officer."

    2.  Change to Paragraph 2.  Paragraph 2 of the Employment Agreement shall be modified to state, "Employee shall report to Company's Chief Executive Officer or his designee. Employee shall devote his entire productive time, ability, and attention to Company's business during the term of this Agreement. In his capacity as Chief Financial Officer, Employee shall do and perform all services, acts, or things as are commonly performed by an employee of his rank in a publicly traded corporation or which may, from time to time, be prescribed by the Company through its Board of Directors (the "Board") or its Chief Executive Officer. Furthermore, Employee agrees to cooperate with and work to the best of his ability with Company's management team, which includes the Board and the officers and other employees, to continually improve Company's reputation in its industry for quality products and performance."

    3.  Modification to Compensation.  The first sentence of paragraph 5(a) of the Employment Agreement shall be modified to state, "As of June 1, 2000, Company shall pay to Employee a base salary of One Hundred Fifty-five Thousand Dollars ($155,000) per year."

    4.  All Other Terms and Conditions to Remain the Same.  The Company and the Employee agree that all other terms and conditions of the Employment Agreement shall remain the same.

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

"Company"
STAAR Surgical Company
By:	/s/ WILLIAM C. HUDDLESTON

"Employee"

/s/ JOHN SANTOS John Santos

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Exhibit 10.33
MODIFICATION TO EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.34

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Exhibit 10.34

SECOND MODIFICATION TO EMPLOYMENT AGREEMENT

    This Second Modification to Employment Agreement ("Modification") is dated as of the 5th day of September 2000 and is made by and between STAAR Surgical Company, a Delaware corporation, (the "Company") and John Santos (the "Employee") based on the following:

RECITALS

A. On April 28, 1999 the Employee agreed to render services to the Company on the terms and subject to the conditions set forth in that certain "Employment Agreement" signed by the Employee and by the Company.

B. Pursuant to paragraph 12(c)(i) of the Employment Agreement, the Company and the Employee wish to modify its terms and conditions.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Modification, the Company and the Employee agree as follows:

AGREEMENT

    1.  Modification to Paragraph 11(e).  Paragraph 11(e) shall be deleted in its entirety and the following shall appear in its place:

Election by Company due to a Change of Control. If Employee's employment is terminated by Company due to the sale or disposition by Company of substantially all of its business or assets or the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest in Company to a third party or the merger or consolidation of Company with another corporation as part of a sale or transfer of a controlling interest in Company to a third party, Employee shall receive, in lieu of any other rights or benefits under this Agreement, (i) the greater of (A) compensation equal to the balance of Employee's unpaid base salary through the expiration date of the term, or (B) one (1) year's salary, and (ii) any option held by Employee which is unvested on the date of termination shall immediately vest, and (iii) the principal amount and all accrued interest of any loan made by Company to Employee, as of the date of this Modification, shall be forgiven. "A controlling interest" shall be defined as 50% or more of the common stock of the Company. The terms "unpaid base salary" and "one (1) year's salary" shall be defined as only the cash compensation paid to Employee pursuant to subparagraph 5(a), as it may be modified from time to time, and shall not include employee benefits, stock options, automobile allowance or debt forgiveness, if any.

    2.  All Other Terms and Conditions to Remain the Same.  The Company and the Employee agree that all other terms and conditions of the Employment Agreement, as amended, shall remain the same.

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

"Company"
STAAR Surgical Company
By:	/s/ ANDREW F. POLLET Andrew F. Pollet, Chairman of the Board

"Employee"
By:	/s/ JOHN SANTOS John Santos

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Exhibit 10.34
SECOND MODIFICATION TO EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.37

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[CIBC WORLD MARKETS LETTERHEAD]

Exhibit 10.37

     July 14, 1999

PERSONAL AND CONFIDENTIAL

STAAR Surgical Company
1911 Walker Avenue
Monrovia, CA 91016

Attention:  John R. Wolf
    Chairman and Chief Executive Officer

Dear Mr. Wolf:

    This letter agreement confirms the engagement of CIBC World Markets Corp. ("CIBC World Markets") by STAAR Surgical Company (together with its subsidiaries and affiliates, the "Company") to act as an advisor to the Company and periodically provide advice and assistance to the Company.

    In consideration for CIBC World Markets providing advice and assistance to the Company, the Company agrees that if, during the term of this engagement or within six (6) months thereafter, the Company is interested in pursuing an offering of debt or equity securities (whether public or private) or other financing, and requires the assistance of an investment banker, then CIBC World Markets will have a right of first refusal (to be exercised within thirty days following the notification by the Company in writing) to act as lead underwriter, placement agent or arranger, as the case may be, in connection with such financing. In addition, if during the term of this engagement or within six (6) months thereafter, the Company is interested in pursuing or assessing a possible acquisition, sale, recapitalization, restructuring or other extraordinary corporate transaction, or general financial consulting services, then CIBC World Markets will have a right of first refusal (to be exercised within thirty days following the notification by the Company in writing) to act as the Company's exclusive financial advisor in connection with such activities. CIBC World Markets' participation in any activity referenced in this paragraph will be on commercially reasonable terms then-applicable in the marketplace and subject to the approval of the appropriate internal CIBC World Markets' Committees and other conditions customary for such an undertaking. Attached to this letter agreement as Annex B is a copy of CIBC World Markets' standard advisory fee schedule covering an acquisition or sale assignment.

    If the Company requires the services of CIBC World Markets in connection with a possible transaction or requests CIBC World Markets to provide additional services not otherwise contemplated by this letter agreement, the Company and CIBC World Markets will enter into an additional letter agreement which will set forth the nature and scope of the services, appropriate compensation and other customary matters, as mutually agreed upon by the Company and CIBC World Markets.

    The Company also agrees to periodically reimburse CIBC World Markets promptly when invoiced for all of its reasonable out-of-pocket expenses (including reasonable fees and expenses of its legal counsel) in connection with the performance of its services hereunder. Such expenses will not exceed $25,000 on an annual basis without the approval of the Company (which shall not be unreasonably withheld). Upon termination or expiration of this letter agreement, the Company agrees to pay promptly in cash any outstanding expenses that have accrued as of such date.

    The term of this engagement will initially be for twelve (12) months; provided that, either party may terminate this letter agreement by giving the other party at least thirty (30) days prior written notice to that effect. The Company agrees that the provisions relating to the payment of fees, reimbursement of expenses, indemnification and contribution, confidentiality and waiver of the right to trial by jury will survive any such termination.

    As CIBC World Markets will be acting on your behalf, the Company agrees to indemnify CIBC World Markets and certain related parties in the manner set forth in Annex A which is attached and incorporated by reference in its entirety to this letter agreement.

    The Company will furnish to CIBC World Markets such information as CIBC World Markets believes appropriate to its assignment (the "Information"). The Company hereby agrees and represents that all information relating to the Company furnished to CIBC World Markets will be accurate and complete in all material respects at the time provided, and that, if the Company is aware of any information becoming materially inaccurate, incomplete or misleading during the term of CIBC World Markets, engagement hereunder, the Company will promptly advise CIBC World Markets. The Company recognizes and confirms that CIBC World Markets assumes no responsibility for the accuracy and completeness of, and will be using and relying upon, the information (and information available from generally recognized public sources and information and other materials provided by others) without assuming responsibility for independent verification or independent evaluation of any of the assets or liabilities of the Company.

    This letter agreement will be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law. The Company irrevocably submits to the jurisdiction of any court of the State of New York for the purpose of any suit, action or other proceeding arising out of this letter agreement or the engagement of CIBC World Markets hereunder. Each of the Company and CIBC World Markets hereby waives any right it may have to a trial by jury in respect of any claim brought by or on behalf of either party based upon, arising out of or in connection with this letter agreement, the engagement of CIBC World Markets hereunder or the transactions contemplated hereby.

    This letter agreement may not be amended or modified except in writing signed by the Company and CIBC World Markets and may be executed in two or more counterparts, each of will be deemed to be an original, but all of which will constitute one and the same agreement. All rights, liabilities and obligations hereunder will be binding upon and inure to the benefit of the Company, CIBC World Markets, each Indemnified Party (as defined in Annex A) and their respective successors and assigns.

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    Please confirm our mutual understanding of this engagement by signing and returning to us the enclosed duplicate copy of this letter agreement. We are pleased that you have engaged us to act as your financial advisor and are looking forward to working with you on this assignment.

Very truly yours,
CIBC WORLD MARKETS CORP.
By:	/s/ MICHAEL FEKETE Michael Fekete Managing Director

Agreed to and accepted as of the above date.
STAAR SURGICAL COMPANY
By:	/s/ JOHN R. WOLF John R. Wolf Chairman, Chief Executive Officer and President

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ANNEX A

    The Company agrees to indemnify CIBC World Markets, its employees, directors, officers, agents, affiliates and each person, if any, who controls it within the meaning of either Section 20 of the Securities Exchange Act of 1934 or Section 15 of the Securities Act of 1933 (each such person, including CIBC World Markets, is referred to as "Indemnified Party") from and against any losses, claims, damages and liabilities, joint or several (including all legal or other expenses reasonably incurred by any Indemnified Party in connection with the preparation for or defense of any threatened or pending claim, action or proceeding, whether or not resulting in any liability) ("Damages"), to which such Indemnified Party, in connection with its services or arising out of its engagement hereunder, may become subject under any applicable Federal or state law or otherwise, including but not limited to liability (i) caused by or arising out of an untrue statement or an alleged untrue statement of a material fact or the omission or the alleged omission to state a material fact necessary in order to make a statement not misleading in light of the circumstances under which it was made, (ii) caused by or arising out of any act or failure to act or (iii) arising out of CIBC World Market's engagement or the rendering by any Indemnified Party of its services under this Agreement; provided, however, that the Company will not be liable to the Indemnified Party hereunder to the extent that any Damages are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of the Indemnified Party seeking indemnification hereunder.

    These indemnification provisions shall be in addition to any liability which the Company may otherwise have to any Indemnified Party.

    If for any reason, other than a final non-appealable judgment finding an Indemnified Party liable for Damages for its gross negligence, bad faith or willful misconduct the foregoing indemnity is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless, then the Company shall contribute to the amount paid or payable by an Indemnified Party as a result of such Damages in such proportion as is appropriate to reflect not only the relative benefits received by the Company and its shareholders on the one hand and CIBC World Markets on the other, but also the relative fault of the Company and the Indemnified Party as well as any relevant equitable considerations, subject to the limitation that in no event shall the total contribution of all Indemnified Parties to all such Damages exceed the total amount of fees actually received and retained by CIBC World Markets hereunder.

    Promptly after receipt by the Indemnified Party of notice of any claim or of the commencement of any action in respect of which indemnity may be sought, the Indemnified Party will notify the Company in writing of the receipt or commencement thereof and the Company shall have the right to assume the defense of such claim or action (including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of fees and expenses of such counsel), provided that the Indemnified Party shall have the right to control its defense if, in the opinion of its counsel, the Indemnified Party's defense is unique or separate to it as the case may be, as opposed to a defense pertaining to the Company. In any event, the Indemnified Party shall have the right to retain counsel reasonably satisfactory to the Company, at the Company's expense, to represent the Indemnified Party in any claim or action in respect of which indemnity may be sought and agrees to cooperate with the Company and the Company's counsel in the defense of such claim or action, it being understood, however, that the Company shall not, in connection with any one such claim or action or separate but, substantially similar or related claims or action in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys, for all the Indemnified Parties unless the defense of one Indemnified Party is unique or separate from that of another Indemnified Party subject to the same claim or action. In the event

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that the Company does not promptly assume the defense of a claim or action, the Indemnified Party shall have the right to employ counsel reasonably satisfactory to the Company, at the Company's expense, to defend such claim or action. The omission by an Indemnified Party to promptly notify the Company of the receipt or commencement of any claim or action in respect of which indemnity may be sought will relieve the Company from any liability the Company may have to such Indemnified Party only to the extent that such a delay in notification materially prejudices the Company's defense of such claim or action. The Company shall not be liable for any settlement of any such claim or action effected without its written consent, which shall not be unreasonably withheld or delayed. Any obligation pursuant to this Annex A shall survive the termination or expiration of this Agreement.

ANNEX B
CIBC WORLD MARKETS CORP.
STANDARD M&A FEE SCHEDULE

    The Transaction Fee will be calculated by multiplying the applicable Transaction Fee Percentage and the Transaction Value. For Transaction Value of $25 million or less, the Transaction Fee will be a minimum of $500,000; for Transaction Value in excess of $10 billion, the Transaction Fee will be 0.20% of the Transaction Value; and for all other Transaction Values, the Transaction Fee Percentage will be calculated in accordance with the following table, where the Transaction Fee Percentage is prorated between the intervals of the Transaction Value Markers.

Transaction Value Marker		Transaction Fee Percentage	Transaction Fee
($000s)
$	25,000	2.00%	$	500,000
$	50,000	1.50%	$	750,000
$	100,000	1.20%	$	1,200,000
$	200,000	1.00%	$	2,000,000
$	500,000	0.70%	$	3,500,000
$	1,000,000	0.50%	$	5,000,000
$	2,000,000	0.40%	$	8,000,000
$	5,000,000	0.30%	$	15,000,000
$	10,000,000	0.20%	$	20,000,000

    As used in this letter agreement, "Transaction Value" means the total value of all consideration (including cash, securities or other property) paid or received or to be paid or received, directly or indirectly, in connection with a Transaction in respect of assets or outstanding securities on a fully diluted basis (treating any securities issuable upon the exercise of options, warrants or other convertible securities and any securities to be redeemed as outstanding), plus the amount of any debt (including capitalized leases) and any other liabilities outstanding or assumed, refinanced or extinguished in connection with a Transaction, and amounts payable in connection with a Transaction in respect of employment of consulting agreements, agreements not to compete or similar arrangements. If the Transaction takes the form of a recapitalization or similar transaction, "Transaction Value" will also include the value of all shares retained by the shareholders of the acquired company. If any portion of Transaction Value is payable in the form of securities, the value of such securities, for purposes of calculating our transaction fee, will be determined based on the average closing price for such securities for the 20 trading days prior to the closing of the Transaction. In the case of securities that do not have an existing public market, our Transaction Fee will be determined based on the fair market value of such securities as mutually agreed upon in good faith by the Company and CIBC World Markets prior to the closing of the Transaction. Fees on amounts paid into escrow will be payable upon the establishment of such escrow. Fees relating to contingent payments other than escrowed amounts will

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be calculated based on the present value of the reasonably expected maximum amount of such contingent payments as determined in good faith by the Company and CIBC World Markets prior to the closing of the Transaction, utilizing a discount rate equal to the prime rate published in The Wall Street Journal on the last business day preceding the closing of the Transaction.

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Exhibit 10.37
ANNEX A
ANNEX B CIBC WORLD MARKETS CORP. STANDARD M&A FEE SCHEDULE

EX-10.38

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Exhibit 10.38

EMPLOYMENT AGREEMENT

    This EMPLOYMENT AGREEMENT ("Agreement"), which is dated as of October 1, 1999, is made by and between STAAR Surgical Company, a Delaware corporation, located at 1911 Walker Avenue, Monrovia, California 91016 and hereinafter referred to as "Company", and John Wolf, whose address is 1496 Bedford Road, San Marino, California 91108, hereinafter referred to as "Executive", based upon the following:

RECITALS

    WHEREAS, Company wishes to retain the services of Executive, and Executive wishes to render services to Company, as its Chief Executive Officer and President;

    WHEREAS, Company and Executive wish to set forth in this Agreement the duties and responsibilities that Executive has agreed to undertake on behalf of Company;

    WHEREAS, Company and Executive intend that this Agreement will supersede and replace any and all other employment agreements or arrangements for employment entered into by and between Company and Executive, particularly that certain Employment Agreement entered into by and between Executive and Company dated July 1, 1990, as amended by that certain Modification to Employment Agreement dated December 20, 1994, and that, upon execution of this Agreement, any such employment agreements or arrangements shall have no further force or effect.

    THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, Company and Executive (who are sometimes individually referred to as a "party" and collectively referred to as the "parties") agree as follows:

AGREEMENT

    1.  SPECIFIED PERIOD.

    Company hereby employs Executive pursuant to the terms of this Agreement and Executive hereby accepts employment with Company pursuant to the terms of this Agreement for the period beginning on October 1, 1999 and ending on September 30, 2005.

    Subject to paragraphs 10 and 11, this Agreement will be automatically be renewed for successive periods of one year after September 30, 2005 unless either party gives notice to the other, at least sixty (60) days prior to the expiration of the specific period, that the party desires to renegotiate this Agreement. Thereafter, the terms and conditions of this Agreement shall apply until the parties reach an agreement modifying them. If an agreement is not reduced to writing and executed by the parties within sixty (60) days of the end of the specified period, then this Agreement shall continue on a month to month basis until terminated by written notice given by either party at least one hundred eighty (180) days prior to the end of any monthly period.

    2.  GENERAL DUTIES.

    Executive shall report to Company's Board of Directors. Executive shall devote his entire productive time, ability, and attention to Company's business during the term of this Agreement. In his capacity as Chief Executive Officer and President, Executive shall be primarily responsible for the day-to-day supervision and control of the business and the employees of the Company. Executive shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, and such other duties as are commonly performed by an employee of his rank in a publicly

1

traded corporation or which may, from time to time, be prescribed by the Company through its Board of Directors. Furthermore, Executive agrees to cooperate with and work to the best of his ability with Company's management team, which includes the Board of Directors and the officers and other employees, to continually improve Company's reputation in its industry for quality products and performance.

    3.  NONSOLICITATION AND NONINTERFERENCE AND PROPRIETARY PROPERTY AND CONFIDENTIAL INFORMATION PROVISIONS.

(a) Applicable Definitions.

    For purposes of this paragraph 3, the following capitalized terms shall have the definitions set forth below:

    (i)  "Business Segments"—The term "Business Segments" is defined as each of Company's (or Company's affiliates') products or product lines.

    (ii) "Competitive Business"—The term "Competitive Business" is defined as any business that is or may be competitive with or similar to or adverse to any of Company's (or Company's affiliates') Business Segments, whether such business is conducted by a proprietorship, partnership, corporation or other entity or venture.

(b) Nonsolicitation and Noninterference.

    (1) Covenants. Executive hereby covenants and agrees that Executive shall not, either for Executive's own account or directly or indirectly in conjunction with or on behalf of any person, partnership, corporation or other entity or venture:

    (i)  During the term of this Agreement and for a period of one (1) year from the date this Agreement terminates or expires, solicit or employ or attempt to solicit or employ any person who is then or has, within twelve (12) months prior thereto, been an officer, partner, agent or employee of Company or any affiliate of Company whether or not such a person would commit a breach of that person's contract of employment with Company or any affiliate of Company, if any, by reason of leaving the service of Company or any affiliate of Company (the "Nonsolicitation Covenant"); or

    (ii) During the term of this Agreement and for a period of one (1) year from the date of the Agreement, on behalf of, directly or indirectly, any Competitive Business, or for the purpose of or with the reasonably foreseeable effect of harming the business of Company, solicit the business of any person, firm or company which is then, or has been at any time during the preceding twelve (12) months prior to such solicitation, a customer, client, contractor, supplier or vendor of Company or any affiliate of Company (the "Noninterference Covenant)".

    (2) Acknowledgments. Each of the parties acknowledges that (i) the covenants and the restrictions contained in the Nonsolicitation and Noninterference Covenants are necessary, fundamental, and required for the protection of the business of Company; (ii) such Covenants relate to matters which are of a special, unique and extraordinary value; and (iii) a breach of either of such Covenants will result in irreparable harm and damages which cannot be adequately compensated by a monetary award.

    (3) Judicial Limitation. Notwithstanding the foregoing, if at any time, despite the express agreement of Company and Executive, a court of competent jurisdiction holds that any portion of this Nonsolicitation and/or Noninterference Covenant is unenforceable by reason of its extending for too great a period of time or by reason of its being too extensive in any other respect, such Covenant shall be interpreted to extend only over the maximum period of time or to the maximum

2

extent in all other respects, as the case may be, as to which it may be enforceable, all as determined by such court in such action.

    (4) Termination of Agreement. The covenants and agreements contained in the Nonsolicitation and Noninterference Covenant shall terminate and be of no effect if this Agreement is terminated by Company without Cause or by Executive for Cause.

(c) Proprietary Property; Confidential Information.

    (1) "Applicable Definitions" For purposes of this paragraph 3(c), the following capitalized terms shall have the definitions set forth below:

    (i)  "Confidential Information"—The term "Confidential Information" is collectively and severally defined as any information, matter or thing of a secret, confidential or private nature, whether or not so labeled, which is connected with Company's business or methods of operation or concerning any of Company's suppliers, customers, licensors, licensees or others with whom Company has a business relationship, and which has current or potential value to Company or the unauthorized disclosure of which could be detrimental to Company. Confidential Information shall be broadly defined and shall include, by way of example and not limitation: (i) matters of a business nature available only to management and owners of Company of which Executive may become aware (such as information concerning customers, vendors and suppliers, including their names, addresses, credit or financial status, buying or selling habits, practices, requirements, and any arrangements or contracts that Company may have with such parties, Company's marketing methods, plans and strategies, the costs of materials, the prices Company obtains or has obtained or at which Company sells or has sold its products or services, Company's manufacturing and sales costs, the amount of compensation paid to employees of Company and other terms of their employment, financial information such as financial statements, budgets and projections, and the terms of any contracts or agreements Company has entered into) and (ii) matters of a technical nature (such as product information, trade secrets, know-how, formulae, innovations, inventions, devices, discoveries, techniques, formats, processes, methods, specifications, designs, patterns, schematics, data, compilation of information, test results, and research and development projects). For purposes of the foregoing, the term "trade secrets" shall mean the broadest and most inclusive interpretation of trade secrets as defined by Section 3426.1(d) of the California Civil Code (the Uniform Trade Secrets Act) and cases interpreting the scope of said Section.

    ii.  "Proprietary Property"—The term "Proprietary Property" is collectively and severally defined as any written or tangible property owned or used by Company in connection with Company's business, whether or not such property also qualifies as Confidential Information. Proprietary Property shall be broadly defined and shall include, by way of example and not limitation, products, samples, equipment, files, lists, books, notebooks, records, documents, memoranda, reports, patterns, schematics, compilations, designs, drawings, data, test results, contracts, agreements, literature, correspondence, spread sheets, computer programs and software, computer print outs, other written and graphic records, and the like, whether originals, copies, duplicates or summaries thereof, affecting or relating to the business of Company, financial statements, budgets, projections, invoices.

    (2) Ownership of Proprietary Property. Executive acknowledges that all Proprietary Property which Executive may prepare, use, observe, come into possession of and/or control shall, at all times, remain the sole and exclusive property of Company. Executive shall, upon demand by Company at any time, or upon the cessation of Executive's employment, irrespective of the time, manner, cause or lack of cause of such cessation, immediately deliver to Company or its designated agent, in good condition, ordinary wear and tear and damage by any cause beyond the reasonable control of Executive excepted, all items of the Proprietary Property which are or have

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been in Executive's possession or under his control, as well as a statement describing the disposition of all items of the Proprietary Property beyond Executive's possession or control in the event Executive has not previously returned such items of the Proprietary Property to Company.

    (3) Agreement Not to Use or Divulge Confidential Information. Executive agrees that he will not, in any fashion, form or manner, unless specifically consented to in writing by Company, either directly or indirectly use, divulge, transmit or otherwise disclose or cause to be used, divulged, transmitted or otherwise disclosed to any person, firm or corporation, in any manner whatsoever (other than in Executive's performance of duties for Company or except as required by law) any Confidential Information of any kind, nature or description. The foregoing provisions shall not be construed to prevent Executive from making use of or disclosing information which is in the public domain through no fault of Executive, provided, however, specific information shall not be deemed to be in the public domain merely because it is encompassed by some general information that is published or in the public domain or in Executive's possession prior to Executive's employment with Company.

    (4) Acknowledgement of Secrecy. Executive acknowledges that the Confidential Information is not generally known to the public or to other persons who can obtain economic value from its disclosure or use and that the Confidential Information derives independent economic value thereby, and Executive agrees that he shall take all efforts reasonably necessary to maintain the secrecy and confidentiality of the Confidential Information and to otherwise comply with the terms of this Agreement.

    (5) Inventions, Discoveries. Executive acknowledges that any inventions, discoveries or trade secrets, whether patentable or not, made or found by Executive in the scope of his employment with Company constitute property of Company and that any rights therein now held or hereafter acquired by Executive individually or in any capacity are hereby transferred and assigned to Company, and agrees to execute and deliver any confirmatory assignments, documents or instruments of any nature necessary to carry out the intent of this paragraph when requested by Company without further compensation therefor, whether or not Executive is at the time employed by Company. Provided, however, notwithstanding the foregoing, Executive shall not be required to assign his rights in any invention which qualifies fully under the provisions of Section 2870(a) of the California Labor Code, which provides, in pertinent part, that the requirement to assign "shall not apply to any invention that the employee developed entirely on his or her own time without using employer's equipment, supplies, facilities or trade secret information except for those inventions that either.

    (i)  Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

    (ii) Result from any work performed by the employee for the employer."

    Executive understands that he bears the full burden or proving to Company that an invention qualifies fully under Section 2870(a). By signing this Agreement, Executive acknowledges receipt of a copy of this Agreement and of written notification of the provisions of Section 2870.

    4.  COMPLIANCE WITH SECURITIES LAWS.  Executive acknowledges that Executive will be subject to the provisions of Section 10(b) and 16 of the Securities Exchange Act of 1934. Executive acknowledges that Section 10(b) can prohibit Executive from selling or transferring his stock or securities in Company. Executive agrees that he will comply with Company's policies, as stated from time to time, relating to selling or transferring his stock or securities in Company.

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    5.  COMPENSATION.

(a) Annual Salary. During the term of this Agreement, Company shall pay to Executive an annual base salary in the amount of four hundred thousand dollars ($400,000) (the "Annual Salary"). The Annual Salary shall be subject to any tax withholdings and/or employee deductions that are applicable. The Annual Salary shall be paid to Executive in equal installments in accordance with the periodic payroll practices of the Company for executive employees.

(b) Annual Bonus. Executive and the Compensation Committee of the Board of Directors shall meet to establish performance standards and goals to be met by Executive, which standards and goals shall be based upon earnings, cash flows, EBITDA and other objectives that are mutually agreed to by Executive and the Compensation Committee. Company shall pay to Executive, no later than thirty (30) days after the completion of the fiscal year, a cash bonus (the "Annual Bonus") in an amount to be recommended by the Compensation Committee to the Board, for each year in which the performance standards and goals are met or exceeded by Executive. Nothing in this paragraph shall prevent Executive and the Compensation Committee from mutually agreeing to an alternative computation of the Annual Bonus, which may be implemented and paid to Executive in place of the Annual Bonus described herein. The Annual Bonus shall be subject to any applicable tax withholdings and/or employee deductions.

(c) Cost of Living Adjustment. Commencing as of January 1, 2000, and on each January 1st thereafter, the then effective Annual Salary shall be increased (but not decreased) by an mount: (i) which shall reflect the increase, if any, in the cost of living during the previous 12 months by adding to the Annual Salary an amount computed by multiplying the Annual Salary by the percentage by which the level of the Consumer Price Index for the Los Angeles, California Metropolitan Area, as reported on January 1st of the new year by the Bureau of Labor Statistics of the United States Department of Labor has increased over its level as of January 1st of the prior year; and (ii) which will maintain Executive's compensation at a level consistent with the compensation paid to executive officers holding similar positions in the medical technology industries. Additionally, the Board shall periodically review Executive's Annual Salary to determine whether to otherwise increase Executive's compensation, without any obligation by the Board to authorize such increase.

(d) Participation In Employee Benefit Plans. Executive shall have the same rights, privileges, benefit and opportunities to participate in any of Company's employee benefit plans which may now or hereafter be in effect on a general basis for executive officers or employees, including its qualified retirement plans and its non-qualified defered compensation plans. Company may delete benefits and otherwise amend and change the type and quantity of benefits it provides in its sole discretion. In the event Executive receives payments from a disability plan maintained by Company, Company shall have the rights to offset such payments against the Annual Salary otherwise payable to Executive during the period for which payments are made by such disability plan. During the term of this Agreement, Company shall pay the premium for a term life insurance policy for the benefit of Executive's survivors which shall insure the life of Executive in the amount of $1,000,000.

(e) Forgiveness of Loans. Company shall forgive the payment of any and all loans made to Executive by Company in the event of: (i) a termination of Executive as a result of a Change in Control, (ii) a termination by Executive for good reason, (iii) a termination by Company without cause; or (iv) Executive's death or disability. Company shall pay, or shall pay to Executive, an amount equal to any and all taxes, of any kind or nature, that are incurred by Executive as a result of the forgiveness of the loans. For purposes of this Agreement, a "Change in Control" shall be defined as any of the following transactions: (i) the sale or disposition by Company of substantially all of its business or assets, or (ii) the acquisition of Company's capital stock by a third party in

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connection with the transfer of a controlling interest of Company's capital stock to such party, or (iii) the merger or consolidation of Company with another corporation as part of a transfer of a controlling interest of Company's capital stock to a third party. A "controlling interest of Company's capital stock" shall be defined as a transfer or acquisition by a third party of at least thirty percent (30%) of Company's capital stock in one or a series of transactions. A "third party" shall not include any employee benefit plan maintained by Company or any corporation or entity in which Company holds fifty percent (50%) of more of the voting securities.

(f)  Automobile Allowance. Company shall provide a late model luxury automobile to Executive for his use during the term of this Agreement, and shall pay all purchase-installment and/or lease payments to acquire such automobile, as well as the cost to insure the automobile. If Company fails to provide the automobile during any portion of the term of this Agreement, Company shall pay to Executive the sum of one thousand dollars ($1,000) for each month an automobile is not provided, to reimburse Executive for the cost of an automobile and for the payment of insurance in connection therewith. Payment and/or provision of the aforesaid allowance shall be subject to any applicable tax withholdings and/or employee deductions. Executive shall be responsible for all income taxes imposed on Executive by reason of the automobile allowance.

(g) Additional Compensation. Nothing included herein shall prevent the Compensation Committee from increasing or adding to Executive's compensation.

    6.  REIMBURSEMENT OF BUSINESS EXPENSES.

    Company shall promptly reimburse Executive for all reasonable business expenses incurred by Executive in connection with the business of Company. However, each such expenditure shall be reimbursable only if Executive furnishes to Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction.

    7.  ANNUAL VACATION/SICK LEAVE.

    Executive shall be entitled to at least six (6) weeks vacation time each year without loss of compensation. Executive shall be entitled to sick leave in accordance with Company's general policy for its employees.

    8.  INDEMNIFICATION OF LOSSES.

    So long as Executive's actions were taken in good faith and in furtherance of Company's business and within the scope of Executive's duties and authority, Company shall indemnify and hold Executive harmless to the full extent of the law from any and all claims, losses and expenses sustained by Executive as a result of any action taken by him to discharge his duties under this Agreement, and Company shall defend Executive, at Company's expense, in connection with any and all claims by stockholders or third parties which are based upon actions taken by Executive to discharge his duties under this Agreement.

    9.  PERSONAL CONDUCT.

    Executive agrees to comply with all present and future policies, requirements, directions, requests and rules and regulations of Company in connection with Company's business. Executive further agrees that he will not intentionally at any time commit any act or become involved in any situation or occurrence tending to bring Company into public scandal, ridicule or which will reflect unfavorably on the reputation of Company.

    10.  TERMINATION BY COMPANY FOR CAUSE.

    Company reserves the right to declare Executive in default of this Agreement if Executive willfully breaches or habitually neglects the duties which he is required to perform under the terms of this

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Agreement, or if Executive commits such acts of dishonesty, fraud, gross negligence or willful misconduct, which acts were not taken in good faith and were not in furtherance of Company's business, and which acts result in material harm to Company or its business. Company may terminate this Agreement for cause by giving written notice of termination to Executive. With the exception of the covenants included in paragraph 3 above and as otherwise set forth in this paragraph 10, upon such termination the obligations of Executive and Company under Agreement shall immediately cease. Such termination shall be without prejudice to any other remedy to which Company may be entitled either at law, in equity, or under this Agreement. If Executive's employment is terminated pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    11.  TERMINATION BY COMPANY OR EXECUTIVE WITHOUT CAUSE.

(a) Death. Executive's employment shall terminate upon the death of Executive. With the exception of the covenant included in paragraph 12 below, upon such termination, the obligations of Executive and Company under this Agreement shall immediately cease.

(b) Disability. Company reserves the right to terminate Executive's employment upon ninety (90) days written notice if, for a period of sixty (60) days, Executive is prevented from discharging his duties under this Agreement due to any physical or mental disability. With the exception of the covenants included in paragraph 3 above and paragraph 12 below, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

(c) Election By Executive. Executive's employment may be terminated at any time by Executive upon not less than ninety (90) days written notice by Executive to the Board. With the exception of the covenants included in paragraph 3 above and as otherwise set forth is this subparagraph (c), upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

(d) Election By Company. Company may terminate Executive's employment upon not less than ninety (90) days written notice by Company to Executive. With the exception of the covenants included in paragraph 13 below, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

(e) Termination by Executive For Good Reason. Executive may terminate this Agreement immediately based on his reasonable determination that one of the following events has occurred:

    (i)  Company intentionally and continually breaches or wrongfully fails to fulfill or perform (A) its obligations, promises or covenants under this Agreement; or (B) any warranties, obligations, promises or covenants in any agreement (other than this Agreement) entered into between Company and Executive, without cure, if any, as provided in such agreement;

    (ii) Without the consent of Executive, Company: (A) substantially alters or materially diminishes the position, nature, status, prestige or responsibilities of Executive from those in effect by mutual agreement of the parties from time-to-time; (B) assigns additional duties or responsibilities to Executive which are wholly and clearly inconsistent with the position,

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nature, status, prestige or responsibilities of Executive then in effect, (C) removes or fails to reappoint or re-elect Executive to Executive's offices under this Agreement (as they may be changed or augmented from time-to-time with the consent of Executive), unless Executive is deceased or disabled, or such removal or failure is attributable to an event which would constitute termination for cause; or (D) Company moves its place of business to a location which is more than thirty (30) miles from Executive's home;

    (iii) Without the ratification of Executive, Executive is removed from the Board without his consent; or Company fails to nominate or reappoint Executive to the Board (unless Executive is deceased or disabled, or such removal or failure is attributable to an event which would constitute termination for cause), or if Executive is so nominated, the stockholders of the Company fail to re-elect Executive to the Board;

    (iv) Company intentionally requires Executive to commit or participate in any felony or other serious crime; and/or

    (v) Company engages in other conduct constituting legal cause for termination.

    With the exception of the covenants included in paragraph 13 below, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

    12.  EFFECT OF TERMINATION ATTRIBUTABLE TO DEATH OR DISABILITY.

    In the event Executive's employment is terminated due to Executive's death or disability, then:

    (a) Company shall pay Executive's accrued but unpaid Annual Salary and vacation time through the effective date of the termination, provided, however, that Company shall also pay to Executive or his estate one (1) years salary at the Executive's then effective Annual Salary as set forth in paragraph 5(a);

    (b) Company shall pay to the Executive an Annual Bonus which shall be computed as the greater of the accrued but unpaid Annual Bonus, if any, or an amount which equals the average of Executive's Annual Bonus during the three (3) calendar years prior to the termination date;

    (c) Company shall reimburse Executive for any business expenses incurred prior to the effective date of the termination;

    (d) Executive (including Executive's heirs) shall be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    (e) Pursuant to paragraph 5(e), Company shall forgive the payment of any and all loans made by Company to Executive. Company shall pay, or shall pay to Executive, an amount equal to any and all taxes, of any kind or nature, that are incurred by Executive as a result of the forgiveness of the loans.

    (f)  Unless otherwise provided in the agreement memorializing them, the vesting conditions imposed on any stock options, warrants or other rights subject to vesting shall be accelerated and shall vest on the date of Executive's termination.

    13.  EFFECT OF TERMINATION ATTRIBUTABLE TO A CHANGE IN CONTROL, A TERMINATION BY EXECUTIVE FOR GOOD REASON, OR A TERMINATION BY COMPANY WITHOUT CAUSE.

    If Executive's employment is terminated before the expiration of the term, and such termination is attributable to (i) a Change in Control; (ii) a termination by Executive for good reason; or (iii) Company's election to terminate, then:

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    (a) Company shall pay to Executive, in a lump sum and without discount to present value, an amount equal to the Annual Salary, as set forth in paragraph 5(a), due to Executive for the balance of the term, but in no event shall such payment total less than one million dollars ($1,000,000);

    (b) Company shall pay to Executive, in a lump sum and without discount to present value, Executive's declared but unpaid Annual Bonus, if such Annual Bonus has been declared, but if not declared then Company shall pay to Executive an amount which equals the average of Executive's Annual Bonus during the three (3) calendar years prior to the termination date;

    (c) At the election of Executive, Company shall (i) provide to Executive and his spouse and dependents, for a period of twelve (12) months, medical benefits which shall be comparable to the benefits received by Executive at the time of termination of his employment; or (ii) provide to Executive additional compensation, payable on a monthly basis, which would approximate the cost to Executive to obtain such comparable benefits;

    (d) Company shall reimburse Executive for Executive's business expenses incurred through the effective date of the termination.

    (e) Pursuant to paragraph 5(e), Company shall forgive the payment of any and all loans made by the Company to Executive. Company shall pay, or shall pay to Executive, an amount equal to any and all taxes, of any kind or nature, that are incurred by Executive as a result of the forgiveness of the loans; and

    (f)  Unless otherwise provided in the agreement memorializing them, the vesting conditions imposed on any stock options, warrants or other rights subject to vesting shall be accelerated and shall vest on the date of Executive's termination.

    Executive shall not be required to mitigate the amount of any payment made pursuant to this paragraph 13 by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Executive in any subsequent employment.

    14.  MISCELLANEOUS.

(a) Preparation of Agreement. It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement.

(b) Cooperation. Each party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may from time to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense.

(c) Interpretation.

    (i)  Entire Agreement/No Collateral Representations. Each party expressly acknowledges and agrees that this Agreement, including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the parties with respect to the subject matter hereof; (2) supersedes any prior or contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally, the "Prior Agreements"), and that any such prior agreements are of no force or

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effect except as expressly set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent oral agreements. Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the modification or supplement is sought.

    (ii) Waiver. No breach of any agreement of provision herein contained, or of any obligation under this Agreement , may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except by written instrument signed by the party to be charged or as otherwise expressly authorized herein. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceeding or succeeding breach thereof, or a waiver or relinquishment of any other agreement or provision or right or power herein contained.

    (iii) Remedies Cumulative. The remedies of each party under this Agreement are cumulative and shall not exclude any other remedies to which such party may be lawfully entitled.

    (iv) Severability. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law.

    (v) No Third Party Beneficiary. Norwithstanding anything else herein to the contrary, the parties specifically disavow any desire or intention to create any third party beneficiary obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights hereunder or any right of enforcement hereof.

    (vi) Heading: References; Incorporation: Gender. The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals thereof. Any exhibit referenced in this Agreement shall be construed to be incorporated in this Agreement. As used in this Agreement, each gender shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires.

(d) Enforcement

    (i)  Applicable Law. This Agreement and the rights and remedies of each party arising out of or relating to this Agreement (including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of California, as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California.

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    (ii) Consent to Jurisdiction: Service of Process. Any action or proceeding arising out of or relating to this Agreement shall be filed in and heard and litigated solely before the state courts of California located within the County of Los Angeles.

    (iii) Consent to Specific Performance and Injunctive Relief and Waiver of Bond Security. Each party acknowledges that Company may, as a result of Executive's breach of the covenants and obligations included in paragraph 3 of this Agreement, sustain immediate and long-term substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Each party agrees that in the event of Executive's breach or threatened breach of the covenants and obligations included in paragraph 3, Company shall be entitled to obtain equitable relief from a court of competent jurisdiction or arbitration without proof of any actual damages that have been or may be caused to Company by such breach or threatened breach and without the posting of bond or other security in connection therewith.

(e) No Assignment of Rights or Delegation of Duties by Executive. Executive's rights and benefits under this Agreement are personal to him and therefore (i) no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer, and (ii) Executive may not delegate his duties or obligations hereunder.

(f)  Notices. Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consent, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (C) by electronic or facsimile or telephone transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (D) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth {5th} business day following the date mailed). Each party, and their respective counsel, hereby agree that if Notice is to be given hereunder by such party's counsel, such counsel may communicate directly with all principals, as required to comply with the foregoing notice provisions. Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such other address as the receiving party shall have specified most recently by like Notice, with a copy to the other parties hereto. Any Notice given to the estate of a party shall be sufficient if addressed to the party as provided in this subparagraph.

(g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, binding on all parties hereto. Any signature page of this Agreement may be detached from any counterpart of this Agreement and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional signature pages.

(h) Execution by All Parties Required to be Binding: Electronically Transmitted Documents. This Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all parties hereto. If a copy or counterpart of this Agreement is originally executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually signed by the party whose facsimile signature appears.

IN WITNESS WHEREOF, the parties have executed this Agreement.

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COMPANY:
STAAR Surgical Company a Delaware corporation
By:	/s/ ANDREW F. POLLET
EXECUTIVE:
	/s/ JOHN R. WOLF John R. Wolf

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Exhibit 10.38
EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.39

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Exhibit 10.39

EMPLOYMENT AGREEMENT

    This EMPLOYMENT AGREEMENT ("Agreement"), which is dated as of October 1, 1999, is made by and between STAAR Surgical Company, a Delaware corporation, located at 1911 Walker Avenue, Monrovia, California 91016 and hereinafter referred to as "Company", and William C. Huddelston, whose address is 363 Timkin Road, Anaheim, California 92808, hereinafter referred to as "Executive", based upon the following:

RECITALS

WHEREAS, Company wishes to retain the services of Executive, and Executive wishes to render services to Company, as its Executive Vice President and Chief Operating Officer;

WHEREAS, Company and Executive wish to set forth in this Agreement the duties and responsibilities that Executive has agreed to undertake on behalf of Company;

WHEREAS, Company and Executive intend that this Agreement will supersede and replace any and all other employment agreements or arrangements for employment entered into by and between Company and Executive and that, upon execution of this Agreement, any such employment agreements or arrangements shall have no further force or effect.

THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, Company and Executive (who are sometimes individually referred to as a "party" and collectively referred to as the "parties") agree as follows:

AGREEMENT

    1.  SPECIFIED PERIOD.

    Company hereby employs Executive pursuant to the terms of this Agreement and Executive hereby accepts employment with Company pursuant to the terms of this Agreement for the period beginning on October 1, 1999 and ending on September 30, 2005.

    Subject to paragraphs 10 and 11, this Agreement will be automatically be renewed for successive periods of one year after September 30, 2005 unless either party gives notice to the other, at least sixty (60) days prior to the expiration of the specified period, that the party desires to renegotiate this Agreement. Thereafter, the terms and conditions of this Agreement shall apply until the parties reach an agreement modifying them. If an agreement is not reduced to writing and executed by the parties within sixty (60) sixty days of the end of the specified period, then this Agreement shall continue on a month to month basis until terminated by written notice given by either party at least one hundred eighty (180) days prior to the end of any monthly period.

    2.  GENERAL DUTIES.

    Executive shall report to Company's Chief Executive Officer. Executive shall devote his entire productive time, ability, and attention to Company's business during the term of this Agreement. In his capacity as Executive Vice President and Chief Operating Officer, Executive shall be responsible for the day-to-day supervision and control of the business and the employees of Company in the absence of the Chief Executive Officer, and shall supervise Company's daily business operations. Executive shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, and such other duties as are commonly performed by an employee of his rank in a publicly traded corporation or which may, from time to time, be prescribed by the Company through its Chief Executive Officer or Board of Directors. Furthermore, Executive agrees to cooperate with and work to

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the best of his ability with Company's management team, which includes the Board of Directors and the officers and other employees, to continually improve Company's reputation in its industry for quality products and performance.

    3.  NONSOLICITATION AND NONINTERFERENCE AND PROPRIETARY PROPERTY AND CONFIDENTIAL INFORMATION PROVISIONS.

    (a)  Applicable Definitions.

    For purposes of this paragraph 3, the following capitalized terms shall have the definitions set forth below:

      i. "Business Segments"—The term "Business Segments" is defined as each of Company's (or Company's affiliates') products or product lines.

     ii. "Competitive Business"—The term "Competitive Business" is defined as any business that is or may be competitive with or similar to or adverse to any of Company's (or Company's affiliates') Business Segments, whether such business is conducted by a proprietorship, partnership, corporation or other entity or venture.

    (b)  Nonsolicitation and Noninterference.

    (1)  Covenants.  Executive hereby covenants and agrees that Executive shall not, either for Executive's own account or directly or indirectly in conjunction with or on behalf of any person, partnership, corporation or other entity or venture:

      i. During the term of this Agreement and for a period of one (1) year from the date this Agreement terminates or expires, solicit or employ or attempt to solicit or employ any person who is then or has, within twelve (12) months prior thereto, been an officer, partner, manager, agent or employee of Company or any affiliate of Company whether or not such a person would commit a breach of that person's contract of employment with Company or any affiliate of Company, if any, by reason of leaving the service of Company or any affiliate of Company (the "Nonsolicitation Covenant"); or

     ii. During the term of this Agreement and for a period of one (1) year from the date of the Agreement, on behalf of, directly or indirectly, any Competitive Business, or for the purpose of or with the reasonably foreseeable effect of harming the business of Company, solicit the business of any person, firm or company which is then, or has been at any time during the preceding twelve (12) months prior to such solicitation, a customer, client, contractor, supplier or vendor of Company or any affiliate of Company (the "Noninterference Covenant").

    (2)  Acknowledgements.  Each of the parties acknowledges that: (i) the covenants and the restrictions contained in the Nonsolicitation and Noninterference Covenants are necessary, fundamental, and required for the protection of the business of Company; (ii) such Covenants relate to matters which are of a special, unique and extraordinary value; and (iii) a breach of either of such Covenants will result in irreparable harm and damages which cannot be adequately compensated by a monetary award.

    (3)  Judicial Limitation.  Notwithstanding the foregoing, if at any time, despite the express agreement of Company and Executive, a court of competent jurisdiction holds that any portion of this Nonsolicitation and/or Noninterference Covenant is unenforceable by reason of its extending for too great a period of time or by reason of its being too extensive in any other respect, such Covenant shall be interpreted to extend only over the maximum period of time or to the maximum extent in all other respects, as the case may be, as to which it may be enforceable, all as determined by such court in such action.

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    (4)  Termination of Agreement.  The covenants and agreements contained in the Nonsolicitation and Noninterference Covenant shall terminate and be of no effect if this Agreement is terminated by Company without Cause or by Executive for Cause.

    (c)  Proprietary Property; Confidential Information.

    (1)  "Applicable Definitions"  For purposes of this paragraph 3(c), the following capitalized terms shall have the definitions set forth below:

      i. "Confidential Information"—The term "Confidential Information" is collectively and severally defined as any information, matter or thing of a secret, confidential or private nature, whether or not so labeled, which is connected with Company's business or methods of operation or concerning any of Company's suppliers, customers, licensors, licensees or others with whom Company has a business relationship, and which has current or potential value to Company or the unauthorized disclosure of which could be detrimental to Company. Confidential Information shall be broadly defined and shall include, by way of example and not limitation: (i) matters of a business nature available only to management and owners of Company of which Executive may become aware (such as information concerning customers, vendors and suppliers, including their names, addresses, credit or financial status, buying or selling habits, practices, requirements, and any arrangements or contracts that Company may have with such parties, Company's marketing methods, plans and strategies, the costs of materials, the prices Company obtains or has obtained or at which Company sells or has sold its products or services, Company's manufacturing and sales costs, the amount of compensation paid to employees of Company and other terms of their employment, financial information such as financial statements, budgets and projections, and the terms of any contracts or agreements Company has entered into) and (ii) matters of a technical nature (such as product information, trade secrets, know-how, formulae, innovations, inventions, devices, discoveries, techniques, formats, processes, methods, specifications, designs, patterns, schematics, data, compilation of information, test results, and research and development projects). For purposes of the foregoing, the term "trade secrets" shall mean the broadest and most inclusive interpretation of trade secrets as defined by Section 3426.1(d) of the California Civil Code (the Uniform Trade Secrets Act) and cases interpreting the scope of said Section.

     ii. "Proprietary Property"—The term "Proprietary Property" is collectively and severally defined as any written or tangible property owned or used by Company in connection with Company's business, whether or not such property also qualifies as Confidential Information. Proprietary Property shall be broadly defined and shall include, by way of example and not limitation, products, samples, equipment, files, lists, books, notebooks, records, documents, memoranda, reports, patterns, schematics, compilations, designs, drawings, data, test results, contracts, agreements, literature, correspondence, spread sheets, computer programs and software, computer print outs, other written and graphic records, and the like, whether originals, copies, duplicates or summaries thereof, affecting or relating to the business of Company, financial statements, budgets, projections, invoices.

    (2)  Ownership of Proprietary Property.  Executive acknowledges that all Proprietary Property which Executive may prepare, use, observe, come into possession of and/or control shall, at all times, remain the sole and exclusive property of Company. Executive shall, upon demand by Company at any time, or upon the cessation of Executive's employment, irrespective of the time, manner, cause or lack of cause of such cessation, immediately deliver to Company or its designated agent, in good condition, ordinary wear and tear and damage by any cause beyond the reasonable control of Executive excepted, all items of the Proprietary Property which are or have been in Executive's possession or under his control, as well as a statement describing the disposition of all items of the Proprietary Property beyond Executive's possession or control in the event Executive has not previously returned such items of the Proprietary Property to Company.

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    (3)  Agreement not to Use or Divulge Confidential Information.  Executive agrees that he will not, in any fashion, form or manner, unless specifically consented to in writing by Company, either directly or indirectly use, divulge, transmit or otherwise disclose or cause to be used, divulged, transmitted or otherwise disclosed to any person, firm or corporation, in any manner whatsoever (other than in Executive's performance of duties for Company or except as required by law) any Confidential Information of any kind, nature or description. The foregoing provisions shall not be construed to prevent Executive from making use of or disclosing information which is in the public domain through no fault of Executive, provided, however, specific information shall not be deemed to be in the public domain merely because it is encompassed by some general information that is published or in the public domain or in Executive's possession prior to Executive's employment with Company.

    (4)  Acknowledgement of Secrecy.  Executive acknowledges that the Confidential Information is not generally known to the public or to other persons who can obtain economic value from its disclosure or use and that the Confidential Information derives independent economic value thereby, and Executive agrees that he shall take all efforts reasonably necessary to maintain the secrecy and confidentiality of the Confidential Information and to otherwise comply with the terms of this Agreement.

    (5)  Inventions, Discoveries.  Executive acknowledges that any inventions, discoveries or trade secrets, whether patentable or not, made or found by Executive in the scope of his employment with Company constitute property of Company and that any rights therein now held or hereafter acquired by Executive individually or in any capacity are hereby transferred and assigned to Company, and agrees to execute and deliver any confirmatory assignments, documents or instruments of any nature necessary to carry out the intent of this paragraph when requested by Company without further compensation therefor, whether or not Executive is at the time employed by Company. Provided, however, notwithstanding the foregoing, Executive shall not be required to assign his rights in any invention which qualifies fully under the provisions of Section 2870(a) of the California Labor Code, which provides, in pertinent part, that the requirement to assign "shall not apply to any invention that the employee developed entirely on his or her own time without using employer's equipment, supplies, facilities or trade secret information except for those inventions that either:

     (i) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

    (ii) Result from any work performed by the employee for the employer."

    Executive understands that he bears the full burden of proving to Company that an invention qualifies fully under Section 2870(a). By signing this Agreement, Executive acknowledges receipt of a copy of this Agreement and of written notification of the provisions of Section 2870.

    4.  COMPLIANCE WITH SECURITIES LAWS.  Executive acknowledges that Executive will be subject to the provisions of Sections 10(b) and 16 of the Securities Exchange Act of 1934. Executive acknowledges that Section 10(b) can prohibit Executive from selling or transferring his stock or securities in Company. Executive agrees that he will comply with Company's policies, as stated from time to time, relating to selling or transferring his stock or securities in Company.

    5.  COMPENSATION.

    (a)  Annual Salary.  During the term of this Agreement, Company shall pay to Executive an annual base salary in the amount of two hundred thousand dollars ($200,000) (the "Annual Salary"). The Annual Salary shall be subject to any tax withholdings and/or employee deductions that are applicable. The Annual Salary shall be paid to Executive in equal installments in accordance with the periodic payroll practices of the Company for executive employees.

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    (b)  Annual Bonus.  Executive and the Compensation Committee of the Board of Directors shall meet to establish performance standards and goals to be met by Executive, which standards and goals shall be based upon earnings, cash flows, EBITDA and other objectives that are mutually agreed to by Executive and the Compensation Committee. Company shall pay to Executive, not later than thirty (30) days after the completion of the fiscal year, a cash bonus (the "Annual Bonus") in an amount to be recommended by the Compensation Committee to the Board, for each year in which the performance standards and goals are met or exceeded by Executive. Nothing in this paragraph shall prevent Executive and the Compensation Committee from mutually agreeing to an alternative computation of the Annual Bonus, which may be implemented and paid to Executive in place of the Annual Bonus described herein. The Annual Bonus shall be subject to any applicable tax withholdings and/or employee deductions.

    (c)  Cost of Living Adjustment.  Commencing as of January 1, 2000, and on each January 1st thereafter, the then effective Annual Salary shall be increased (but not decreased) by an amount: (i) which shall reflect the increase, if any, in the cost of living during the previous 12 months by adding to the Annual Salary an amount computed by multiplying the Annual Salary by the percentage by which the level of the Consumer Price Index for the Los Angeles, California Metropolitan Area, as reported on January 1st of the new year by the Bureau of Labor Statistics of the United States Department of Labor has increased over its level as of January 1st of the prior year; and (ii) which will maintain Executive's compensation at a level consistent with the compensation paid to executive officers holding similar positions in the medical technology industries. Additionally, the Board shall periodically review Executive's Annual Salary to determine whether to otherwise increase Executive's compensation, without any obligation by the Board to authorize such increase.

    (d)  Participation in Employee Benefit Plans.  Executive shall have the same rights, privileges, benefits and opportunities to participate in any of Company's employee benefit plans, including payment of medical and dental insurance premiums for family, which may now or hereafter be in effect on a general basis for executive officers or employees, including its qualified retirement plans and its non-qualified deferred compensation plans. Company may delete benefits and otherwise amend and change the type and quantity of benefits it provides in its sole discretion. In the event Executive receives payments from a disability plan maintained by Company, Company shall have the right to offset such payments against the Annual Salary otherwise payable to Executive during the period for which payments are made by such disability plan. During the term of this Agreement, Company shall pay the premium for a term life insurance policy for the benefit of Executive's survivors which shall insure the life of Executive in the amount of $1,000,000.

    (e)  Forgiveness of Loans.  Company shall forgive the payment of any and all loans made to Executive by Company in the event of: (i) a termination of Executive as a result of a Change in Control, (ii) a termination by Executive for good reason, (iii) a termination by Company without cause; or (iv) Executive's death or disability. Company shall pay, or shall pay to Executive, an amount equal to any and all taxes, of any kind or nature, that are incurred by Executive as a result of the forgiveness of the loans. For purposes of this Agreement, a "Change in Control" shall be defined as any of the following transactions: (i) the sale or disposition by Company of substantially all of its business or assets, or (ii) the acquisition of Company's capital stock by a third party in connection with the transfer of a controlling interest of Company's capital stock to such party, or (iii) the merger or consolidation of Company with another corporation as part of a transfer of a controlling interest of Company's capital stock to a third party. A "controlling interest of Company's capital stock" shall be defined as a transfer or acquisition by a third party of at least thirty percent (30%) of Company's capital stock in one or a series of transactions. A "third party" shall not include any employee benefit plan maintained by Company or any corporation or entity in which Company holds fifty percent (50%) of more of the voting securities.

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    (f)  Automobile Allowance.  Company shall provide a late model luxury automobile to Executive for his use during the term of this Agreement, and shall pay all purchase-installment and/or lease payments to acquire such automobile, as well as the cost to insure the automobile. If Company fails to provide the automobile during any portion of the term of this Agreement, Company shall pay to Executive the sum of seven hundred fifty dollars ($750) for each month an automobile is not provided, to reimburse Executive for the cost of an automobile and for the payment of insurance in connection therewith. Payment and/or provision of the aforesaid allowance shall be subject to any applicable tax withholdings and/or employee deductions. Executive shall be responsible for all income taxes imposed on Executive by reason of the automobile allowance.

    (g)  Additional Compensation.  Nothing included herein shall prevent the Compensation Committee from increasing or adding to Executive's compensation.

    6.  REIMBURSEMENT OF BUSINESS EXPENSES.

    Company shall promptly reimburse Executive for all reasonable business expenses incurred by Executive in connection with the business of Company. However, each such expenditure shall be reimbursable only if Executive furnishes to Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction.

    7.  ANNUAL VACATION/SICK LEAVE.

    Executive shall be entitled to at least five (5) weeks vacation time each year without loss of compensation. Executive shall be entitled to sick leave in accordance with Company's general policy for its employees.

    8.  INDEMNIFICATION OF LOSSES.

    So long as Executive's actions were taken in good faith and in furtherance of Company's business and within the scope of Executive's duties and authority, Company shall indemnify and hold Executive harmless to the full extent of the law from any and all claims, losses and expenses sustained by Executive as a result of any action taken by him to discharge his duties under this Agreement, and Company shall defend Executive, at Company's expense, in connection with any and all claims by stockholders or third parties which are based upon actions taken by Executive to discharge his duties under this Agreement.

    9.  PERSONAL CONDUCT.

    Executive agrees promptly and faithfully to comply with all present and future policies, requirements, directions, requests and rules and regulations of Company in connection with Company's business. Executive further agrees that he will not intentionally at any time commit any act or become involved in any situation or occurrence tending to bring Company into public scandal, ridicule or which will reflect unfavorably on the reputation of Company.

    10.  TERMINATION BY COMPANY FOR CAUSE.

    Company reserves the right to declare Executive in default of this Agreement if Executive willfully breaches or habitually neglects the duties which he is required to perform under the terms of this Agreement, or if Executive commits such acts of dishonesty, fraud, gross negligence or willful misconduct, which acts were not taken in good faith and were not in furtherance of Company's business, and which acts result in material harm to Company or its business. Company may terminate this Agreement for cause by giving written notice of termination to Executive. With the exception of the covenants included in paragraph 3 above and as otherwise set forth in this paragraph 10, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. Such termination shall be without prejudice to any other remedy to which Company may be entitled

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either at law, in equity, or under this Agreement for (i) the recovery of property, such as embezzled funds, or (ii) for the enforcement of the covenants included in paragraph 3 above. If Executive's employment is terminated pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    11.  TERMINATION BY COMPANY OR EXECUTIVE WITHOUT CAUSE.

    (a)  Death.  Executive's employment shall terminate upon the death of Executive. With the exception of the covenants included in paragraph 12 below, upon such termination, the obligations of Executive and Company under this Agreement shall immediately cease.

    (b)  Disability.  Company reserves the right to terminate Executive's employment upon ninety (90) days written notice if, for a period of sixty (60) days, Executive is prevented from discharging his duties under this Agreement due to any physical or mental disability. With the exception of the covenants included in paragraph 3 above and paragraph 12 below, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

    (c)  Election By Executive.  Executive's employment may be terminated at any time by Executive upon not less than ninety (90) days written notice by Executive to the Board. With the exception of the covenants included in paragraph 3 above and as otherwise set forth in this sub-paragraph (c), upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    (d)  Election By Company.  Company may terminate Executive's employment upon not less than ninety (90) days written notice by Company to Executive. With the exception of the covenants included in paragraph 13 below, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

    (e)  Termination By Executive For Good Reason.  Executive may terminate this Agreement immediately based on his reasonable determination that one of the following events has occurred:

    (i)  Company intentionally and continually breaches or wrongfully fails to fulfill or perform (A) its obligations, promises or covenants under this Agreement; or (B) any warranties, obligations, promises or covenants in any agreement (other than this Agreement) entered into between Company and Executive, without cure, if any, as provided in such agreement;

    (ii) Without the consent of Executive, Company: (A) substantially alters or materially diminishes the position, nature, status, prestige or responsibilities of Executive from those in effect by mutual agreement of the parties from time-to-time; (B) assigns additional duties or responsibilities to Executive which are wholly and clearly inconsistent with the position, nature, status, prestige or responsibilities of Executive then in effect; (C) removes or fails to reappoint or re-elect Executive to Executive's offices under this Agreement (as they may be changed or augmented from time-to-time with the consent of Executive), unless Executive is deceased or disabled, or such removal or failure is attributable to an event which would

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constitute termination for cause; or (D) Company moves its place of business to a location which is more than thirty (30) miles from Executive's home;

    (iii) Without the ratification of Executive, Executive is removed from the Board without his consent; or Company fails to nominate or reappoint Executive to the Board (unless Executive is deceased or disabled, or such removal or failure is attributable to an event which would constitute termination for cause), or if Executive is so nominated, the stockholders of the Company fail to re-elect Executive to the Board;

    (iv) Company intentionally requires Executive to commit or participate in any felony or other serious crime; and/or

    (v) Company engages in other conduct constituting legal cause for termination.

With the exception of the covenants included in paragraph 13 below, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease.

    12.  EFFECT OF TERMINATION ATTRIBUTABLE TO DEATH OR DISABILITY.

    In the event Executive's employment is terminated due to Executive's death or disability, then:

    (a) Company shall pay Executive's accrued but unpaid Annual Salary and vacation time through the effective date of the termination, provided, however, that Company shall also pay to Executive or his estate one (1) years Salary at the Executive's then effective Annual Salary as set forth in paragraph 5(a);

    (b) Company shall pay to the Executive an Annual Bonus which shall be computed as the greater of the accrued but unpaid Annual Bonus, if any, or an amount which equals the average of Executive's Annual Bonus during the three (3) calendar years prior to the termination date;

    (c) Company shall reimburse Executive for any business expenses incurred prior to the effective date of the termination;

    (d) Executive (including Executive's heirs) shall be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    (e) Pursuant to paragraph 5(e), Company shall forgive the payment of any and all loans made by Company to Executive. Company shall pay, or shall pay to Executive, an amount equal to any and all taxes, of any kind or nature, that are incurred by Executive as a result of the forgiveness of the loans.

    (f)  Unless otherwise provided in the agreement memorializing them, the vesting conditions imposed on any stock options, warrants or other rights subject to vesting shall be accelerated and shall vest on the date of Executive's termination.

    13.  EFFECT OF TERMINATION ATTRIBUTABLE TO A CHANGE IN CONTROL, A TERMINATION BY EXECUTIVE FOR GOOD REASON, OR A TERMINATION BY COMPANY WITHOUT CAUSE.

    If Executive's employment is terminated before the expiration of the term, and such termination is attributable to (i) a Change in Control; (ii) a termination by Executive for good reason; or (iii) Company's election to terminate, then:

    (a) Company shall pay to Executive, in a lump sum and without discount to present value, an amount equal to the Annual Salary, as set forth in paragraph 5(a), due to Executive for the

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balance of the term, but in no event shall such payment total less than five hundred thousand dollars ($500,000);

    (b) Company shall pay to Executive, in a lump sum and without discount to present value, Executive's declared but unpaid Annual Bonus, if such Annual Bonus has been declared, but if not declared then Company shall pay to Executive an amount which equals the average of Executive's Annual Bonus during the three (3) calendar years prior to the termination date;

    (c) At the election of Executive, Company shall (i) provide to Executive and his spouse and dependents, for a period of twelve (12) months, medical benefits which shall be comparable to the benefits received by Executive at the time of termination of his employment; or (ii) provide to Executive additional compensation, payable on a monthly basis, which would approximate the cost to Executive to obtain such comparable benefits;

    (d) Company shall reimburse Executive for Executive's business expenses incurred through the effective date of the termination;

    (e) Pursuant to paragraph 5(e), Company shall forgive the payment of any and all loans made by Company to Executive. Company shall pay, or shall pay to Executive, an amount equal to any and all taxes, of any kind or nature, that are incurred by Executive as a result of the forgiveness of the loans; and

    (f)  Unless otherwise provided in the agreement memorializing them, the vesting conditions imposed on any stock options, warrants or other rights subject to vesting shall be accelerated and shall vest on the date of Executive's termination.

Executive shall not be required to mitigate the amount of any payment made pursuant to this paragraph 13 by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Executive in any subsequent employment.

    14.  MISCELLANEOUS

    (a)  Preparation of Agreement.  It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement.

    (b)  Cooperation.  Each party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may from time to time be reasonable necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense.

    (c)  Interpretation.

    (i)  Entire Agreement/No Collateral Representations.  Each party expressly acknowledges and agrees that this Agreement, including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the parties with respect to the subject matter hereof; (2) supersedes any prior or contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally, the "Prior Agreements"), and that any such prior agreements are of no force or effect except as expressly set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent oral agreements.

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Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the modification or supplement is sought.

    (ii)  Waiver.  No breach of any agreement or provision herein contained, or of any obligation under this Agreement, may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except by written instrument signed by the party to be charged or as otherwise expressly authorized herein. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or a waiver or relinquishment of any other agreement or provision or right or power herein contained.

    (iii)  Remedies Cumulative.  The remedies of each party under this Agreement are cumulative and shall not exclude any other remedies to which such party may be lawfully entitled.

    (iv)  Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law.

    (v)  No Third Party Beneficiary.  Notwithstanding anything else herein to the contrary, the parties specifically disavow any desire or intention to create any third party beneficiary obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights hereunder or any right of enforcement hereof.

    (vi)  Headings; References; Incorporation; Gender.  The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals thereof. Any exhibit referenced in this Agreement shall be construed to be incorporated in this Agreement. As used in this Agreement, each gender shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires.

    (d)  Enforcement.

    (i)  Applicable Law.  This Agreement and the rights and remedies of each party arising out of or relating to this Agreement (including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of California, as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California.

    (ii)  Consent to Jurisdiction; Service of Process.  Any action or proceeding arising out of or relating to this Agreement shall be filed in and heard and litigated solely before the state courts of California located within the County of Los Angeles.

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    (iii)  Consent to Specific Performance and Injunctive Relief and Waiver of Bond or Security.  Each party acknowledges that Company may, as a result of Executive's breach of the covenants and obligations included in paragraph 3 of this Agreement, sustain immediate and long-term substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Each party agrees that in the event of Executive's breach or threatened breach of the covenants and obligations included in paragraph 3, Company shall be entitled to obtain equitable relief from a court of competent jurisdiction or arbitration without proof of any actual damages that have been or may be caused to Company by such breach or threatened breach and without the posting of bond or other security in connection therewith.

    (e)  No Assignment of Rights or Delegation of Duties by Executive.  Executive's rights and benefits under this Agreement are personal to him and therefore (i) no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; and (ii) Executive may not delegate his duties or obligations hereunder.

    (f)  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (C) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (D) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth (5th) business day following the date mailed). Each party, and their respective counsel, hereby agree that if Notice is to be given hereunder by such party's counsel, such counsel may communicate directly with all principals, as required to comply with the foregoing notice provisions. Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such other address as the receiving party shall have specified most recently by like Notice, with a copy to the other parties hereto. Any Notice given to the estate of a party shall be sufficient if addressed to the party as provided in this subparagraph.

    (g)  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, binding on all parties hereto. Any signature page of this Agreement may be detached from any counterpart of this Agreement and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional signature pages.

    (h)  Execution by All Parties Required to be Binding; Electronically Transmitted Documents.  This Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all parties hereto. If a copy or counterpart of this Agreement is originally executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually signed by the party whose facsimile signature appears.

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IN WITNESS WHEREOF, the parties have executed this Agreement.

Company:
STAAR Surgical Company
a Delaware corporation
By:	/s/ ANDREW F. POLLET
Executive:
/s/ WILLIAM C. HUDDLESTON William C. Huddleston

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Exhibit 10.39
EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.40

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Exhibit 10.40

MODIFICATION TO EMPLOYMENT AGREEMENT

    This Modification to Employment Agreement ("Modification") is dated as of the 15th day of August 2000 and is made by and between STAAR Surgical Company, a Delaware corporation, (the "Company") and William C. Huddleston (the "Executive") based on the following:

RECITALS

A. On October 1, 1999 the Executive agreed to render services to the Company as its Executive Vice President and Chief Financial Officer through September 30, 2005 on the terms and subject to the conditions set forth in that certain "Employment Agreement" signed by the Executive and by the Company.

B. Pursuant to paragraph 14(c)(i) of the Employment Agreement, the Company and the Executive wish to modify its terms and conditions.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Modification, the Company and the Executive agree as follows:

AGREEMENT

    1.  Change of Title.  Wherever in the Employment Agreement the Executive is referred to as "Executive Vice President" and "Chief Operating Officer", those terms shall be replaced by the term "Interim Chief Executive Officer" and "Interim President".

    2.  Modification to Paragraph 1.  The second paragraph of paragraph 1 shall be deleted in its entirety.

    3.  Modification to Paragraph 2.  The first sentence of paragraph 2 of the Employment Agreement shall be modified to state, "Executive shall report to Company's Board of Directors." Additionally, there shall be added to paragraph 2 the following: "Executive understands that Company intends to recruit and hire an individual as Company's President and Chief Executive Officer. Executive agrees to resign his position as President and Chief Executive Officer immediately upon Company's employment of such an individual, however, Executive will continue to render services to Company as its Executive Vice President and Chief Operating Officer pursuant to the terms of this Agreement. Executive agrees that such action by the Company shall be deemed to have been done with Executive's consent, and shall not constitute an alteration or diminishment of the position, nature, status, prestige or responsibilities of Executive, or a termination of Executive's employment."

    4.  Modification to Paragraph 5(a).  The first sentence of paragraph 5(a) of the Employment Agreement shall be modified to state, "As of June 1, 2000, Company shall pay to Executive a base salary of Three Hundred Thousand Dollars ($300,000) per year."

    5.  Deletion of Paragraphs 5(b) and 5(c).  Paragraphs 5(b) and 5(c) shall be deleted in their entirety.

    6.  Modification to Paragraph 5(e).  Paragraph 5(e) shall be deleted in its entirety and the following shall appear in its place: "Company shall forgive the payment of any and all loans made to Executive by Company if (i) Executive's employment is terminated by Company without cause, or (ii) a Change in Control occurs during Executive's employment or within two (2) years from the date of termination of Executive's employment for any reason whatsoever, including, but not limited to, termination by Company for cause and Executive's voluntary resignation. For purposes of this Agreement, a "Change in Control" shall be defined as any of the following transactions: (i) the sale by Company of substantially all of its business or assets, or (ii) the acquisition of Company's capital stock by a third party in connection with the transfer of a controlling interest of Company's capital stock to such party, or (iii) the merger or consolidation of Company with another corporation as part of a

transfer of a controlling interest of Company's capital stock to a third party. A "controlling interest of Company's capital stock" shall be defined as a transfer or acquisition by a third party of at least thirty percent (30%) of Company's capital stock in one or a series of transactions. A "third party" shall not include any employee benefit plan maintained by Company or any corporation or entity in which Company holds fifty percent (50%) of more of the voting securities."

    7.  Modification to Paragraph 10.  Paragraph 10 shall be deleted and the following shall appear in its place: "Company reserves the right to declare Executive in default of this Agreement (i) if Executive willfully breaches or habitually neglects the duties which he is required to perform under the terms of this Agreement, or (ii) if Executive (A) fails and/or refuses to obey any lawful and proper order or directive of the Board of Directors and/or Executive interferes with the compliance by other employees with any such order or directive; (B) intentionally breaches his fiduciary duties to Company; (C) causes the Company to be convicted of a crime, or to incur criminal penalties in material amounts; (D) commits any act of fraud, theft, embezzlement or misappropriation and/or any other dishonest act against Company; or (E) commits any felony which is followed by conviction or by final action of any court of law. In the event Executive is declared in default of this Agreement due to an event described in subparagraph (i) or in subparagraph (ii)(A) or ii(B), then the Board of Directors shall give notice to Executive of such event of default and Executive will have a period of thirty (30) days to cure said default. If Executive's employment is terminated pursuant to this paragraph, Company shall pay to Executive (I) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination, and (II) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except as may be required by applicable law.

    8.  Modification to Paragraph 11(c).  There shall be added to paragraph 11 (c) the following sentence, "If Executive's employment is terminated pursuant to this paragraph 11(c), Company will retain the services of Executive as a consultant for a period of twenty-four (24) months and shall pay to Executive, in exchange for such consulting services, the sum of twenty thousand eight hundred thirty-three dollars ($20,833) per month."

    9.  Deletion of Paragraph 11(e).  Paragraph 11(e) shall be deleted in its entirety.

    10.  Modification to Paragraph 12.  Paragraph 12 shall be deleted in its entirety and the following shall appear in its place: "In the event Executive's employment is terminated due to Executive's death or disability then: (a) Company shall pay Executive's accrued but unpaid Annual Salary and vacation time through the effective date of such termination; (b) Company shall reimburse Executive for any business expenses incurred prior to the effective date of the termination; (c) Executive, including Executive's permitted heirs, shall be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law; and (d) subject to regulatory considerations, and irrespective of the terms of any agreement memorializing them, the vesting conditions imposed on any stock options subject to vesting shall be accelerated and shall vest on the date of Executive's termination. Unless a greater period of time is permitted in any agreement memorializing a stock option (in which case the stock option agreement will govern), Executive's permitted heirs shall be entitled to a period of six (6) months after the termination of Executive's employment due to his death to exercise said stock options, provided, however, that the remaining terms and conditions of the agreements governing the stock options shall remain in full force and effect and shall be binding upon Executive's permitted heirs."

    11.  Modification to Paragraph 13.  Paragraph 13 shall be deleted in its entirety and the following shall appear in its place: "If Executive's employment is terminated before the expiration of the term, and such termination is attributable to (i) a Change in Control, or (ii) Company's election to terminate without cause, then: (a) Company shall pay Executive's accrued but unpaid Annual Salary and vacation time through the effective date of such termination; (b) Company shall reimburse Executive for any business expenses incurred prior to the effective date of the termination; (c) at the election of Executive, Company shall provide to Executive and his spouse and dependents, for a period of twelve (12) months, either (i) medical benefits which shall be comparable to the benefits received by Executive

at the time of termination of his employment; or (ii) funds, payable on a monthly basis, which would approximate the cost to Executive to obtain comparable benefits; (d) Company shall reimburse Executive for Executive's business expenses incurred through the effective date of termination; (e) pursuant to paragraph 5(e), Company shall forgive the payment of any and all loans made by Company to Executive; and (f) subject to regulatory considerations, and irrespective of the terms of any agreement memorializing them, the vesting conditions imposed on any stock options subject to vesting shall be accelerated and shall vest on the date of Executive's termination. Furthermore, if Executive's employment is terminated before the expiration of the term, and such termination is attributable to Company's election to terminate without cause, then Company will retain the services of Executive as a consultant for a period of twenty-four (24) months and shall pay to Executive, in exchange for such consulting services, the sum of twenty thousand eight hundred thirty-three dollars ($20,833) per month. Executive shall not be required to mitigate the amount of any payment made pursuant to this paragraph 13 by seeking other employment or otherwise, and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Executive in any subsequent employment. The provisions of this paragraph 13 shall be in lieu of any remedy or damages to which Executive may be entitled, whether such remedy may be recovered at law or in equity."

    12.  All Other Terms and Conditions to Remain the Same.  The Company and the Executive agree that all other terms and conditions of the Employment Agreement shall remain the same.

    13.  Resignation as a Director.  In signing this Modification, Executive re-affirms his resignation as a member of Company's Board of Directors (including as a member of all committees of the Board of Directors) and, upon request of Company, agrees to resign as a director of any affiliate or subsidiary of Company.

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

"Company"
STAAR Surgical Company
By:	/s/ ANDREW F. POLLET Andrew F. Pollet, Chairman of the Board
"Executive"
	/s/ WILLIAM C. HUDDLESTON William C. Huddleston

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Exhibit 10.40
MODIFICATION TO EMPLOYMENT AGREEMENT
RECITALS
AGREEMENT

EX-10.46

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EXHIBIT 10.46

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE—GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]

1.  Basic Provisions  ("Basic Provisions").

    1.1  Parties:  This Lease ("Lease"), dated for reference purposes only, April 5, 2000, is made by and between KILROY REALTY, L.P., a Delaware Limited Partnership, KILROY REALTY CORPORATION, a Maryland Corporation, General Partner ("Lessor") and STAAR SURGICAL COMPANY, a Delaware Corporation ("Lessee"), (collectively the "Parties," or individually a "Party").

    1.2(a)  Premises:  That certain portion of the Building, including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by the street address of 27121 Aliso Creek Road, Suites 100, 105, 110 & 115, located in the City of Aliso Viejo, County of Orange, State of California, with zip code 92656, as outlined on Exhibit "A" attached hereto ("Premises"). The "Building" is that certain building containing the Premises and generally described as (describe briefly the nature of the Building): a single story industrial/commercial/office building containing a total of approximately 15,208 rentable square feet, as depicted on Exhibit "B," attached hereto, located in a five (5) building industrial/commercial/office Industrial Center containing a total of approximately 133,334 rentable square feet, as depicted on Exhibit "C," attached hereto. The Premises contain approximately 6,164 rentable square feet.

In addition to Lessee's rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any rights to the roof, exterior walls or utility raceways of the Building or to any other buildings in the Industrial Center. The Premises, the Building, the Common Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the "Industrial Center." (Also see Paragraph 2.)

    1.2(b)  Parking:  twelve (12) unreserved vehicle parking spaces ("Unreserved Parking Spaces"); and three (3) reserved vehicle parking spaces ("Reserved Parking Spaces"). (Also see Paragraph 2.6.)

    1.3  Term:  three (3) years and -0- months ("Original Term") commencing May 1, 2000 ("Commencement Date") and ending April 30, 2003 ("Expiration Date"). (Also see Paragraph 3.)

    1.4  Early Possession:  Lessee acknowledges that Lesee is now in possession of the Premises. See also paragraphs 50 and 51 of the Addendum to Lease ("Early Possession Date"). (Also see Paragraphs 3.2 and 3.3.)

    1.5  Base Rent:  $8,155.00 per month ("Base Rent"), payable on the first day of each month commencing upon the Commencement Date (Also see Paragraph 4.)

/x/

If this box is checked, this Lease provides for the Base Rent to be adjusted per Addendum 49, attached hereto.

    1.6(a)  Base Rent Paid Upon Execution:  $8,155.00 as Base Rent for the month of May, 2000.

    1.6(b)  Lessee's Share of Common Area Operating Expenses:  forty and 53/100 percent (40.53%) of the Building and four and 623/1000 percent (4.623%) of the Industrial Center ("Lessee's Share") as determined by /x/ prorata square footage of the Premises as compared to the total square footage of the Building and the Industrial Center, respectively or / / other criteria as described in Addendum ____.

    1.7  Security Deposit:  $8,150.00 ("Security Deposit"); see also paragraph 50 of the Addendum to Lease. (Also see Paragraph 5.)

    1.8  Permitted Use:  Manufacture, sale, warehouse and distribution of medical devices, and office purposes associated therewith ("Permitted Use") (Also see Paragraph 6.)

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    1.9  Insuring Party.  Lessor is the "Insuring Party." (Also see Paragraph 8.)

    1.10(a)  Real Estate Brokers.  The following real estate broker(s) (collectively, the "Brokers") and brokerage relationships exist in this transaction and are consented to by the Parties (check applicable boxes):

/

/   ________________________ represents Lessor exclusively ("Lessor's Broker");

/

/   ________________________ represents Lessee exclusively ("Lessee's Broker"); or

/

/   ________________________ represents both Lessor and Lessee ("Dual Agency"). (Also see Paragraph 15.)

    1.10(b)  Payment to Brokers.  Upon the execution of this Lease by both Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares as they may mutually designate in writing, a fee as set forth in a separate written agreement between Lessor and said Broker(s) (or in the event there is no separate written agreement between Lessor and said Broker(s), the sum of $ N/A) for brokerage services rendered by said Brokers(s) in connection with this transaction.

    1.11  Guarantor.  The obligations of the Lessee under this Lease are to be guaranteed by N/A ("Guarantor"). (Also see Paragraph 37.)

    1.12  Addenda and Exhibits.  Attached hereto is an Addendum or Addenda consisting of Paragraphs 49 through 53, and Exhibits "A" through "D", all of which constitute a part of this Lease.

2.  Premises, Parking and Common Areas.

    2.1  Letting.  Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of square footage set forth in this Lease, or that may have been used in calculating rental and/or Common Area Operating Expenses, is an approximation which Lessor and Lessee agree is reasonable and the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is not subject to revision whether or not the actual square footage is more or less.

    2.2  Condition.  Lessor shall deliver the Premises to Lessee clean and free of debris on the Commencement Date and warrants to Lessee that the existing plumbing, electrical systems, fire sprinkler system, lighting, air conditioning and heating systems and loading doors, if any, in the Premises, other than those constructed by Lessee, shall be in good operating condition on the Commencement Date. If a non-compliance with said warranty exists as of the Commencement Date, Lessor shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify same at Lessor's expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty within thirty (30) days after the Commencement Date, correction of that non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense.

    2.3  Compliance with Covenants, Restrictions and Building Code.  Lessor warrants that any improvements (other than those constructed by Lessee or at Lessee's direction) on or in the Premises which have been constructed or installed by Lessor or with Lessor's consent or at Lessor's direction shall comply with all applicable covenants or restrictions of record and applicable building codes, regulations and ordinances in effect on the Commencement Date. Lessor further warrants to Lessee that Lessor has no knowledge of any claim having been made by any governmental agency that a violation or violations of applicable building codes, regulations, or ordinances exist with regard to the Premises as of the Commencement Date. Said warranties shall not apply to any Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do not comply with said warranties, Lessor shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee given within six (6) months following the Commencement Date and setting forth with specificity the nature and extent of such non-compliance, take such action, at Lessor's expense, as may be reasonable or appropriate to rectify the non-compliance. Lessor makes no warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable Laws (as defined in Paragraph 2.4).

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    2.4  Acceptance of Premises.  Lessee hereby acknowledges: (a) that it has been advised by the Broker(s) to satisfy itself with respect to the condition of the Premises (including, but not limited to, the electrical and fire sprinkler systems, security, environmental aspects, seismic and earthquake requirements, and compliance with the Americans with Disabilities Act and applicable zoning, municipal, county, state and federal laws, ordinances and regulations and any covenants or restrictions of record (collectively, "Applicable Laws") and the present and future suitability of the Premises for Lessee's intended use; (b) that Lessee has made such investigation as it deems necessary with reference to such matters, is satisfied with reference thereto, and assumes all responsibility therefore as the same relate to Lessee's occupancy of the Premises and/or the terms of this Lease; and (c) that neither Lessor, nor any of Lessor's agents, has made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease.

    2.5  Lessee as Prior Owner/Occupant.  The warranties made by Lessor in this Paragraph 2 shall be of no force or effect if immediately prior to the date set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such event, Lessee shall, at Lessee's sole cost and expense, correct any non-compliance of the Premises with said warranties.

    2.6  Vehicle Parking.  Lessee shall be entitled to use the number of Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles." Vehicles other than Permitted Size Vehicles shall be parked and loaded or unloaded as directed by Lessor in the Rules and Regulations (as defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9).

    (a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees, suppliers, shipper, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities.

    (b) If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

    (c) Lessor shall at the Commencement Date of this Lease, provide the parking facilities required by Applicable Law.

    2.7  Common Areas—Definition.  The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Industrial Center and interior utility raceways within the Premises that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

    2.8  Common Areas—Lessee's Rights.  Lessor hereby grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Industrial Center. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessor's designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

    2.9  Common Areas—Rules and Regulations.  Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time

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to time, to establish, modify, amend and enforce reasonable Rules and Regulations with respect thereto in accordance with Paragraph 40. Lessee agrees to abide by and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said rules and regulations by other lessees of the Industrial Center.

    2.10  Common Areas—Changes.  Lessor shall have the right, in Lessor's sole discretion, from time to time:

    (a) To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;

    (b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available;

    (c) To designate other land outside the boundaries of the Industrial Center to be a part of the Common Areas;

    (d) To add additional buildings and improvements to the Common Areas;

    (e) To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Industrial Center, or any portion thereof; and

    (f)  To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Industrial Center as Lessor may, in the exercise of sound business judgment, deem to be appropriate.

3.  Term.

    3.1  Term.  The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.

    3.2  Early Possession.  If an Early Possession Date is specified in Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the Early Possession Date but prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early occupancy. All other terms of this Lease, however, (including, but not limited to, the obligations to pay Lessee's Share of Common Area Operating Expenses and to carry the insurance required by Paragraph 8) shall be in effect during such period. Any such early possession shall not affect nor advance the Expiration Date of the Original Term.

    3.3  Delay in Possession.  If for any reason Lessor cannot deliver possession of the Premises to Lessee by the Early Possession Date, if one is specified in Paragraph 1.4, or if no Early Possession Date is specified, by the Commencement Date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease, or the obligations of Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not, except as otherwise provided herein, be obligated to pay rent or perform any other obligation of Lessee under the terms of this Lease until Lessor delivers possession of the Premises to Lessee. If possession of the Premises is not delivered to Lessee within sixty (60) days after the Commencement Date, Lessee may, at its option, by notice in writing to Lessor within ten (10) days after the end of said sixty (60) day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder; provided further, however, that if such written notice of Lessee is not received by Lessor within said ten (10) day period, Lessee's right to cancel this Lease hereunder shall terminate and be of no further force or effect. Except as may be otherwise provided, and regardless of when the Original Term actually commences, if possession is not tendered to Lessee when required by this Lease and Lessee does not terminate this Lease, as aforesaid, the period free of the obligation to pay Base Rent, if any, that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to the period during which the Lessee would have otherwise enjoyed under the terms hereof, but minus any days of delay caused by the acts, changes or omissions of Lessee.

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4.  Rent.

    4.1  Base Rent.  Lessee shall pay Base Rent and other rent or charges, as the same may be adjusted from time to time, to Lessor in lawful money of the United States, without offset or deduction, on or before the day on which it is due under the terms of this Lease. Base Rent and all other rent and charges for any period during the term hereof which is for less than one full month shall be prorated based upon the actual number of days of the month involved. Payment of Base Rent and other charges shall be made to Lessor at its address stated herein or to such other persons or at such other addresses as Lessor may from time to time designate in writing to Lessee.

    4.2  Common Area Operating Expenses.  Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's Share (as specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as hereinafter defined, over Common Area Operating Expenses for the calendar year 2000, as the "Base Year" for such Common Area Operating Expenses, during each calendar year of the term of this Lease, commending January 1, 2001 in accordance with the following provisions:

(a)  "Common Area Operating Expenses"  are defined, for purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Industrial Center, including, but not limited to, the following:

     (i) The operation, repair and maintenance, in neat, clean, good order and condition, of the following:

   (aa) The Common Areas, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators and roof.

   (bb) Exterior signs and any tenant directories.

   (cc) Fire detection and sprinkler systems.

    (ii) The cost of water, gas, electricity and telephone to service the Common Areas.

    (iii) Trash disposal, property management and security services and the costs of any environmental inspections.

    (iv) Reserves set aside for maintenance and repair of Common Areas.

    (v) Any increase above the Base Real Property Taxes (as defined in Paragraph 10.2(b)) for the Building and the Common Areas.

    (vi) Any "Insurance Cost Increase" (as defined in Paragraph 8.1).

   (vii) The cost of insurance carried by Lessor with respect to the Common Areas.

   (viii) Any deductible portion of an insured loss concerning the Building or the Common Areas.

    (ix) Any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense.

    (b) Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Building or to any other building in the Industrial Center or to the operation, repair and maintenance thereof, shall be allocated entirely to the Building or to such other building. However, any Common Area Operating Expenses and Real Property Taxes that are not specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Industrial Center.

    (c) The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Industrial Center already has the same, Lessor already

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provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them.

    (d) Lessee's Share of Common Area Operating Expenses over the Base Year Common Area Operating Expenses shall be payable by Lessee, commencing January 1, 2001, within ten (10) days after a reasonably detailed statement of actual expenses is presented to Lessee by Lessor setting forth the calendar year 2000 Base Year Common Area Operating Expenses and increases thereof after January 1, 2001. At Lessor's option, however, an amount may be estimated by Lessor from time to time of Lessee's Share of annual Common Area Operating Expenses and the same shall be payable monthly or quarterly, as Lessor shall designate, commencing January 1, 2001, during each 12-month period of the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall deliver to Lessee within ninety (90) days after the expiration of each calendar year, or as soon thereafter as available, a reasonably detailed statement showing Base Year Common Area Operating Expenses and Lessee's Share of increases of the actual Common Area Operating Expenses over Base Year Common Area Operating Expenses incurred during the preceding year. If Lessee's payments under this Paragraph 4.2(d) during said preceding year exceed Lessee's Share as indicated on said statement, Lessee shall be credited the amount of such overpayment against Lessee's Share of Common Area Operating Expenses next becoming due. If Lessee's payments under this Paragraph 4.2(d) during said preceding year were less than Lessee's Share as indicated on said statement, Lessee shall pay to Lessor the amount of the deficiency within ten (10) days after delivery by Lessor to Lessee of said statement. Payment of Lessee's Share of Common Area Operating Expenses for any partial year after the Base Year shall be prorated based upon the actual number of months or days involved in such subsequent year.

5.  Security Deposit.  Lessee shall deposit with Lessor upon Lessee's execution hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's faithful performance of Lessee's obligations under this Lease. If Lessee fails to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, cost, expense, loss or damage (including attorneys' fees) which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after written request therefore deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. Any time the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor as an addition to the Security Deposit so that the total amount of the Security Deposit shall at all times bear the same proportion to the then current Base Rent as the initial Security Deposit bears to the initial Base Rent set forth in Paragraph 1.5. Lessor shall not be required to keep all or any part of the Security Deposit separate from its general accounts. Lessor shall, at the expiration or earlier termination of the term hereof and after Lessee has vacated the Premises, return to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's interest herein), that portion of the Security Deposit not used or applied by Lessor. Unless otherwise expressly agreed in writing by Lessor, no part of the Security Deposit shall be considered to be held in trust, to bear interest or other increment for its use, or to be prepayment for any monies to be paid by Lessee under this Lease.

6.  Use.

    6.1  Permitted Use.

    (a) Lessee shall use and occupy the Premises only for the Permitted Use set forth in Paragraph 1.8, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates waste or a nuisance, or that disturbs owners and/or occupants of, or causes damage to the Premises or neighboring premises or properties.

    (b) Lessor hereby agrees to not unreasonably withhold or delay its consent to any written request by Lessee, Lessee's assignees or subtenants, and by prospective assignees and subtenants of Lessee, its assignees and subtenants, for a modification of said Permitted Use, so long as the same will

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not impair the structural integrity of the improvements on the Premises or in the Building or the mechanical or electrical systems therein, does not conflict with uses by other lessees, is not significantly more burdensome to the Premises or the Building and the improvements thereon, and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within five (5) business days after such request give a written notification of same, which notice shall include an explanation of Lessor's reasonable objections to the change in use.

    6.2  Hazardous Substances.

(a)  Reportable Uses Require Consent.  The term "Hazardous Substance" as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment, or the Premises; (ii) regulated or monitored by any governmental authority; or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substance shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products or by-products thereof. Lessee shall not engage in any activity in or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances without the express prior written consent of Lessor and compliance in a timely manner (at Lessee's sole cost and expense) with all Applicable Requirements (as defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and (iii) the presence in, on or about the Premises of a Hazardous Substance with respect to which any Applicable Laws require that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but upon notice to Lessor and in compliance with all Applicable Requirements, use any ordinary and customary materials reasonably required to be used by Lessee in the normal course of the Permitted Use, so long as such use is not a Reportable Use and does not expose the Premises, or neighboring properties to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may (but without any obligation to do so) condition its consent to any Reportable Use of any Hazardous Substance by Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in its reasonable discretion, deems necessary to protect itself, the public, the Premises and the environment against damage, contamination or injury and/or liability therefor, including, but not limited to, the installation (and, at Lessor's option, removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the Premises (such as concrete encasements) and/or the deposit of an additional Security Deposit under Paragraph 5 hereof.

(b)  Duty to Inform Lessor.  If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises or the Building, other than as previously consented to by Lessor, Lessee shall immediately give Lessor written notice thereof, together with a copy of any statement, report, notice, registration, application, permit, business plan, license, claim, action, or proceeding given to, or received from, any governmental authority or private party concerning the presence, spill, release, discharge of, or exposure to, such Hazardous Substance including, but not limited to, all such documents as may be involved in any Reportable Use involving the Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under or about the Premises (including, without limitation, through the plumbing or sanitary sewer system).

(c)  Indemnification.  Lessee shall indemnify, protect, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, and the Premises, harmless from and against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's obligations under this Paragraph 6.2(c)

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shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation (including consultants' and attorneys' fees and testing), removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement.

    6.3  Lessee's Compliance with Requirements.  Lessee shall, at Lessee's sole cost and expense, fully, diligently and in a timely manner, comply with all "Applicable Requirements," which term is used in this Lease to mean all laws, rules, regulations, ordinances, directives, covenants, easements and restrictions of record, permits, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor's engineers and/or consultants, relating in any manner to the Premises (including, but not limited to, matters pertaining to (i) industrial hygiene, (ii) environmental conditions on, in, under or about the Premises, including soil and groundwater conditions, and (iii) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill, or release of any Hazardous Substance), now in effect or which may hereafter come into effect. Lessee shall, within five (5) days after receipt of Lessor's written request, provide Lessor with copies of all documents and information, including, but not limited to, permits, registrations, manifests, applications, reports and certificates, evidencing Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Requirements.

    6.4  Inspection; Compliance with Law.  Lessor, Lessor's agents, employees, contractors and designated representatives, and the holders of any mortgages, deeds of trust or ground leases on the Premises ("Lenders") shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease and all Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be entitled to employ experts and/or consultants in connection therewith to advise Lessor with respect to Lessee's activities, including, but not limited to, Lessee's installation, operation, use, monitoring, maintenance, or removal of any Hazardous Substance on or from the Premises. The costs and expenses of any such inspections shall be paid by the party requesting same, unless a Default or Breach of this Lease by Lessee or a violation of Applicable Requirements or a contamination, caused or materially contributed to by Lessee, is found to exist or to be imminent, or unless the inspection is requested or ordered by a governmental authority as the result of any such existing or imminent violation or contamination. In such case, Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case may be, for the costs and expenses of such inspections.

7.  Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations.

    7.1  Lessee's Obligations.

    (a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole cost and expense and at all times, keep the Premises and every part thereof in good order, condition and repair (whether or not such portion of the Premises requiring repair, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, without limiting the generality of the foregoing, all equipment or facilities specifically serving the Premises, such as plumbing, heating, air conditioning, ventilating, electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire hose connections if within the Premises, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights, but excluding any items which are the responsibility of Lessor pursuant to Paragraph 7.2 below. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices. Lessee's

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obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair.

    (b) Lessee shall, at Lessee's sole cost and expense, procure and maintain a contract, with copies to Lessor, in customary form and substance for and with a contractor specializing and experienced in the inspection, maintenance and service of the heating, air conditioning and ventilation system for the Premises. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain the contract for the heating, air conditioning and ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof.

    (c) If Lessee fails to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf, and put the Premises in good order, condition and repair, in accordance with Paragraph 13.2 below.

    7.2  Lessor's Obligations.  Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler and/or standpipe and hose (if located in the Common Areas) or other automatic fire extinguishing system including fire alarm and/or smoke detection systems and equipment, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute now or hereafter in effect which would otherwise afford Lessee the right to make repairs at Lessor's expense or to terminate this Lease because of Lessor's failure to keep the Building, Industrial Center or Common Areas in good order, condition and repair.

    7.3  Utility Installations, Trade Fixtures, Alterations.

(a)  Definitions; Consent Required.  The term "Utility Installations" is used in this Lease to refer to all air lines, power panels, electrical distribution, security, fire protection systems, communications systems, lighting fixtures, heating, ventilating and air conditioning equipment, plumbing, and fencing in, on or about the Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment which can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements on the Premises which are provided by Lessor under the terms of this Lease, other than Utility Installations or Trade Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be made any Alterations or Utility Installations in, on, under or about the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Utility Installations to the interior of the Premises (excluding the roof) without Lessor's consent but upon notice to Lessor, so long as they are not visible from the outside of the Premises, do not involve puncturing, relocating or removing the roof or any existing walls, or changing or interfering with the fire sprinkler or fire detection systems and the cumulative cost thereof during the term of this Lease as extended does not exceed $2,500.00.

(b)  Consent.  Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. All consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits required by governmental authorities; (ii) the furnishing of copies of such permits together with a copy of the plans and specifications for the Alteration or Utility Installation to Lessor prior to commencement of the work thereon; and (iii) the compliance by Lessee with all conditions of said permits in a prompt and expeditious manner. Any Alterations or Utility Installations by Lessee during the term of this

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Lease shall be done in a good and workmanlike manner, with good and sufficient materials, and be in compliance with all Applicable Requirements. Lessee shall promptly upon completion thereof furnish Lessor with as-built plans and specifications therefor. Lessor may (but without obligation to do so) condition its consent to any requested Alteration or Utility Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a lien and completion bond in an amount equal to one and one-half times the estimated cost of such Alteration or Utility Installation.

(c)  Lien Protection.  Lessee shall pay when due all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days' notice prior to the commencement of any work in, on, or about the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense, defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor, in an amount equal to one and one-half times the amount of such contested lien claim or demand, indemnifying Lessor against liability for the same, as required by law for the holding of the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor's attorneys' fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.

    7.4  Ownership, Removal, Surrender, and Restoration.

(a)  Ownership.  Subject to Lessor's right to require their removal and to cause Lessee to become the owner thereof as hereinafter provided in this Paragraph 7.4, all Alterations and Utility Installations made to the Premises by Lessee shall be the property of and owned by Lessee, but considered a part of the Premises. Lessor may, at any time and at its option, elect in writing to Lessee to be the owner of all or any specified part of the Lessee-Owned Alterations and Utility Installations. Unless otherwise instructed per Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility Installations shall, at the expiration or earlier termination of this Lease, become the property of Lessor and remain upon the Premises and be surrendered with the Premises by Lessee.

(b)  Removal.  Unless otherwise agreed in writing, Lessor may require that any or all Lessee-Owned Alterations or Utility Installations be removed by the expiration or earlier termination of this Lease, and that the area affected by the removal of the Lessee-Owned Alterations or Utility Installations be restored to the condition that existed prior to the installation of the particular Lessee-Owned Alteration or Utility Installation, notwithstanding that their installation may have been consented to by Lessor. Lessor may require the removal at any time of all or any part of any Alterations or Utility Installations made without the required consent of Lessor.

(c)  Surrender/Restoration.  Lessee shall surrender the Premises by the end of the last day of the Lease term or any earlier termination date, clean and free of debris and in good operating order, condition and state of repair, ordinary wear and tear excepted. Ordinary wear and tear shall not include any damage or deterioration that would have been prevented by good maintenance practice or by Lessee performing all of its obligations under this Lease. Except as otherwise agreed or specified herein, the Premises, as surrendered, shall include the Alterations and Utility Installations. The obligation of Lessee shall include the repair of any damage occasioned by the installation, maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and Lessee-Owned Alterations and Utility Installations, as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or remediation of any soil, material or ground water contaminated by Lessee, all as may then be required by Applicable Requirements and/or good practice. Lessee's Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee subject to its obligation to repair and restore the Premises per this Lease.

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8.  Insurance; Indemnity.

    8.1  Payment of Premium Increases.

    (a) As used herein, the term "Insurance Cost Increase" is defined as any increase in the actual cost of the insurance applicable to the Building and required to be carried by Lessor pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), ("Required Insurance"), over and above the Base Premium, as hereinafter defined, calculated on an annual basis. "Insurance Cost Increase" shall include, but not be limited to, requirements of the holder of a mortgage or deed of trust covering the Premises, increased valuation of the Premises, and/or a general premium rate increase. The term "Insurance Cost Increase" shall not, however, include any premium increases resulting from the nature of the occupancy of any other lessee of the Building. If the parties insert a dollar amount in Paragraph 1.9, such amount shall be considered the "Base Premium." If a dollar amount has not been inserted in Paragraph 1.9 and if the Building has been previously occupied during the twelve (12) month period immediately preceding the Commencement Date, the "Base Premium" shall be the annual premium applicable to such twelve (12) month period. If the Building was not fully occupied during such twelve (12) month period, the "Base Premium" shall be the lowest annual premium reasonably obtainable for the Required Insurance as of the Commencement Date, assuming the most nominal use possible of the Building. In no event, however, shall Lessee be responsible for any portion of the premium cost attributable to liability insurance coverage in excess of $1,000,000 procured under Paragraph 8.2(b).

    (b) Lessee shall pay any Insurance Cost Increase to Lessor pursuant to Paragraph 4.2. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Commencement Date or Expiration Date.

    8.2  Liability Insurance.

(a)  Carried by Lessee.  Lessee shall obtain and keep in force during the term of this Lease a Commercial General Liability policy of insurance protecting Lessee, Lessor and any Lender(s) whose names have been provided to Lessee in writing (as additional insureds) against claims for bodily injury, personal injury and property damage based upon, involving or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $2,000,000 per occurrence with an "Additional Insured-Managers or Lessors of Premises" endorsement and contain the "Amendment of the Pollution Exclusion" endorsement for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance required by this Lease or as carried by Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance to be carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.

(b)  Carried by Lessor.  Lessor shall also maintain liability insurance described in Paragraph 8.2(a) above, in addition to and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.

    8.3  Property Insurance—Building, Improvements and Rental Value.

(a)  Building and Improvements.  Lessor shall obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor and to any Lender(s), insuring against loss or damage to the Premises. Such insurance shall be for full replacement cost, as the same shall exist from time to time, or the amount required by any Lender(s), but in no event more than the commercially reasonable and available insurable value thereof if, by reason of the unique nature or age of the improvements involved, such latter amount is less than full replacement cost. Lessee-Owned Alterations and Utility Installations, Trade Fixtures and Lessee's personal property shall be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and commercially appropriate, Lessor's policy or policies shall insure against all risks of direct physical loss or damage

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(including the perils of flood and/or earthquake), including coverage for any additional costs resulting from debris removal and reasonable amounts of coverage for the enforcement of any ordinance or law regulating the reconstruction or replacement of any undamaged sections of the Building required to be demolished or removed by reason of the enforcement of any building, zoning, safety or land use laws as the result of a covered loss, but not including plate glass insurance. Said policy or policies shall also contain an agreed valuation provision in lieu of any co-insurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located.

(b)  Rental Value.  Lessor shall also obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor and any Lender(s), insuring the loss of the full rental and other charges payable by all lessees of the Building to Lessor for one year (including all Real Property Taxes, insurance costs, all Common Area Operating Expenses and any scheduled rental increases). Said insurance may provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year's loss of rental revenues from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any co-insurance clause, and the amount of coverage shall be adjusted annually to reflect the projected rental income, Real Property Taxes, insurance premium costs and other expenses, if any, otherwise payable, for the next 12-month period. Common Area Operating Expenses shall include any deductible amount in the event of such loss.

(c)  Adjacent Premises.  Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Industrial Center if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises.

(d)  Lessee's Improvements.  Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee-Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease.

    8.4  Lessee's Property Insurance.  Subject to the requirements of Paragraph 8.5, Lessee at its cost shall either by separate policy or, at Lessor's option, by endorsement to a policy already carried, maintain insurance coverage on all of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and Utility Installations in, on, or about the Premises similar in coverage to that carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance shall be full replacement cost coverage with a deductible not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property and the restoration of Trade Fixtures and Lessee-Owned Alterations and Utility Installations. Upon request from Lessor, Lessee shall provide Lessor with written evidence that such insurance is in force.

    8.5  Insurance Policies.  Insurance required hereunder shall be in companies duly licensed to transact business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of at least B+, V, or such other rating as may be required by a Lender, as set forth in the most current issue of "Best's Insurance Guide." Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor, within seven (7) days after the earlier of the Early Possession Date or the Commencement Date, certified copies of, or certificates evidencing the existence and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such policy shall be cancelable or subject to modification except after thirty (30) days' prior written notice to Lessor. Lessee shall at least thirty (30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand.

    8.6  Waiver of Subrogation.  Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages (whether in contract or in tort) against the other, for loss or damage to their property arising out of or incident to the perils

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required to be insured against under Paragraph 8. The effect of such releases and waivers of the right to recover damages shall not be limited by the amount of insurance carried or required, or by any deductibles applicable thereto. Lessor and Lessee agree to have their respective insurance companies issuing property damage insurance waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.

    8.7  Indemnity.  Except for Lessor's negligence and/or breach of express warranties, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, costs, liens, judgments, penalties, loss of permits, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, the occupancy of the Premises by Lessee, the conduct of Lessee's business, any act, omission or neglect of Lessee, its agents, contractors, employees or invitees, and out of any Default or Breach by Lessee in the performance in a timely manner of any obligation on Lessee's part to be performed under this Lease. The foregoing shall include, but not be limited to, the defense or pursuit of any claim or any action or proceeding involved therein, and whether or not (in the case of claims made against Lessor) litigated and/or reduced to judgment. In case any action or proceeding be brought against Lessor by reason of any of the foregoing matters, Lessee, upon notice from Lessor, shall defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be so indemnified.

    8.8  Exemption of Lessor from Liability.  Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said injury or damage results from conditions arising upon the Premises or upon other portions of the Building of which the Premises are a part, from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible or not. Lessor shall not be liable for any damages arising from any act or neglect of any other lessee of Lessor nor from the failure by Lessor to enforce the provisions of any other lease in the Industrial Center. Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee's business or for any loss of income or profit therefrom.

9.  Damage or Destruction.

    9.1  Definitions.

(a)  "Premises Partial Damage"  shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations, the repair cost of which damage or destruction is less than fifty percent (50%) of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures) immediately prior to such damage or destruction.

(b)  "Premises Total Destruction"  shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations, the repair cost of which damage or destruction is fifty percent (50%) or more of the then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures) immediately prior to such damage or destruction. In addition, damage or destruction to the Building, other than Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any lessees of the Building, the cost of which damage or destruction is fifty percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any lessees of the Building) of the Building shall, at the option of Lessor, be deemed to be Premises Total Destruction.

(c)  "Insured Loss"  shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event

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required to be covered by the insurance described in Paragraph 8.3(a) irrespective of any deductible amounts or coverage limits involved.

(d)  "Replacement Cost"  shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of applicable building codes, ordinances or laws, and without deduction for depreciation.

(e)  "Hazardous Substance Condition"  shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.

    9.2  Premises Partial Damage—Insured Loss.  If Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect. In the event, however, that there is a shortage of insurance proceeds and such shortage is due to the fact that, by reason of the unique nature of the improvements in the Premises, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said ten (10) day period, Lessor shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If Lessor does not receive such funds or assurance within said period, Lessor may nevertheless elect by written notice to Lessee within ten (10) days thereafter to make restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect. If Lessor does not receive such funds or assurance within such ten (10) day period, and if Lessor does not so elect to restore and repair, then this Lease shall terminate sixty (60) days following the occurrence of the damage or destruction. Unless otherwise agreed, Lessee shall in no event have any right to reimbursement from Lessor for any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

    9.3  Partial Damage—Uninsured Loss.  If Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense and this Lease shall continue in full force and effect), Lessor may, at Lessor's option, either (i) repair such damage as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such damage of Lessor's desire to terminate this Lease as of the date sixty (60) days following the date of such notice. In the event Lessor elects to give such notice of Lessor's intention to terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such damage totally at Lessee's expense and without reimbursement from Lessor. Lessee shall provide Lessor with the required funds or satisfactory assurance thereof within thirty (30) days following such commitment from Lessee. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to made such repairs as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the funds or assurance thereof within the times specified above, this Lease shall terminate as of the date specified in Lessor's notice of termination.

    9.4  Total Destruction.  Notwithstanding any other provision hereof, if Premises Total Destruction occurs (including any destruction required by any authorized public authority), this Lease shall terminate sixty (60) days following the date of such Premises Total Destruction, whether or not the damage or destruction is an Insured Loss or was caused by a negligent or willful act of Lessee. In the event, however, that the damage or destruction was caused by Lessee, Lessor shall have the right to recover Lessor's damages from Lessee except as released and waived in Paragraph 8.6.

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    9.5  Damage Near End of Term.  If at any time during the last six (6) months of the term of this Lease there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at Lessor's option, terminate this Lease effective sixty (60) days following the date of occurrence of such damage by giving written notice to Lessee of Lessor's election to do so within thirty (30) days after the date of occurrence of such damage. Provided, however, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by (a) exercising such option, and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is ten (10) days after Lessee's receipt of Lessor's written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate as of the date set forth in the first sentence of this Paragraph 9.5.

    9.6  Abatement of Rent; Lessee's Remedies.

    (a) In the event of (i) Premises Partial Damage or (ii) Hazardous Substance Condition for which Lessee is not legally responsible, the Base Rent, Common Area Operating Expenses and other charges, if any, payable by Lessee hereunder for the period during which such damage or condition, its repair, remediation or restoration continues, shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired, but not in excess of proceeds from insurance required to be carried under Paragraph 8.3(b). Except for abatement of Base Rent, Common Area Operating Expenses and other charges, if any, as aforesaid, all other obligations of Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair, remediation or restoration.

    (b) If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence, in a substantial and meaningful way, the repair or restoration of the Premises within ninety (90) days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice of Lessee's election to terminate this Lease on a date not less than sixty (60) days following the giving of such notice. If Lessee gives such notice to Lessor and such Lenders and such repair or restoration is not commenced within thirty (30) days after receipt of such notice, this Lease shall terminate as of the date specified in said notice. If Lessor or a Lender commences the repair or restoration of the Premises within thirty (30) days after the receipt of such notice, this Lease shall continue in full force and effect. "Commence" as used in this Paragraph 9.6 shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever occurs first.

    9.7  Hazardous Substance Conditions.  If a Hazardous Substance Condition occurs, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at Lessor's option either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to investigate and remediate such condition exceeds twelve (12) times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition of Lessor's desire to terminate this Lease as of the date sixty (60) days following the date of such notice. In the event Lessor elects to give such notice of Lessor's intention to terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee's commitment to pay for the excess costs of (a) investigation and remediation of such Hazardous Substance Condition to the extent required by Applicable Requirements, over (b) an amount equal to twelve (12) times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with the funds required of Lessee

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or satisfactory assurance thereof within thirty (30) days following said commitment by Lessee. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such investigation and remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time period specified above, this Lease shall terminate as of the date specified in Lessor's notice of termination.

    9.8  Termination—Advance Payments.  Upon termination of this Lease pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment made by Lessee to Lessor and so much of Lessee's Security Deposit as has not been, or is not then required to be, used by Lessor under the terms of this Lease.

    9.9  Waiver of Statutes.  Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises and the Building with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent it is inconsistent herewith.

10.  Real Property Taxes.

    10.1  Payment of Taxes.  Lessor shall pay the Real Property Taxes, as defined in Paragraph 10.2(a), applicable to the Industrial Center, and except as otherwise provided in Paragraph 10.3, any increases in such amounts over the Base Real Property Taxes shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.

    10.2  Real Property Tax Definitions.

    (a) As used herein, the term "Real Property Taxes" shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed upon the Industrial Center by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage, or other improvement district thereof, levied against any legal or equitable interest of Lessor in the Industrial Center or any portion thereof, Lessor's right to rent or other income therefrom, and/or Lessor's business of leasing the Premises. The term "Real Property Taxes" shall also include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring, or changes in Applicable Law taking effect, during the term of this Lease, including but not limited to a change in the ownership of the Industrial Center or in the improvements thereon, the execution of this Lease, or any modification, amendment or transfer thereof, and whether or not contemplated by the Parties.

    (b) As used herein, the term "Base Real Property Taxes" shall be the amount of Real Property Taxes which are assessed against the Premises, Building or Common Areas in the calendar year during which the Lease is executed. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for any real estate tax year shall be included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common.

    10.3  Additional Improvements.  Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Industrial Center by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee's request.

    10.4  Joint Assessment.  If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from

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the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive.

    10.5  Lessee's Property Taxes.  Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee-Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises or stored within the Industrial Center. When possible, Lessee shall cause its Lessee-Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within ten (10) days after receipt of a written statement setting forth the taxes applicable to Lessor's property.

11.  Utilities.  Lessee shall pay directly for all utilities and services supplied to the Premises, including, but not limited to, electricity, telephone, security, gas and cleaning of the Premises, together with any taxes thereon. If any such utilities or services are not separately metered to the Premises or separately billed to the Premises, Lessee shall pay to Lessor a reasonable proportion to be determined by Lessor of all such charges jointly metered or billed with other premises in the Building, in the manner and within the time periods set forth in Paragraph 4.2(d).

12.  Assignment and Subletting.

    12.1  Lessor's Consent Required.

    (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent given under and subject to the terms of Paragraph 36.

    (b) A change in the control of Lessee shall constitute an assignment requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-five percent (25%) or more of the voting control of Lessee shall constitute a change in control for this purpose.

    (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or will result in a reduction of the Net Worth of Lessee, as hereinafter defined, by an amount equal to or greater than twenty-five percent (25%) of such Net Worth of Lessee as it was represented to Lessor at the time of full execution and delivery of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, at whichever time said Net Worth of Lessee was or is greater, shall be considered an assignment of this Lease by Lessee to which Lessor may reasonably withhold its consent. "Net Worth of Lessee" for purposes of this Lease shall be the net worth of Lessee (excluding any Guarantors) established under generally accepted accounting principles consistently applied.

    (d) An assignment or subletting of Lessee's interest in this Lease without Lessor's specific prior written consent shall, at Lessor's option, be a Default curable after notice per Paragraph 13.1, or a non-curable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unconsented to assignment or subletting as a non-curable Breach, Lessor shall have the right to either: (i) terminate this Lease, or (ii) upon thirty (30) days' written notice ("Lessor's Notice"), increase the monthly Base Rent for the Premises to the greater of the then fair market rental value of the Premises, as reasonably determined by Lessor, or one hundred ten percent (110%) of the Base Rent then in effect. Pending determination of the new fair market rental value, if disputed by Lessee, Lessee shall pay the amount set forth in Lessor's Notice, with any overpayment credited against the next installment(s) of Base Rent coming due, and any underpayment for the period retroactively to the effective date of the adjustment being due and payable immediately upon the determination thereof. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to the then fair market value as reasonably determined by Lessor (without the Lease being considered an

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encumbrance or any deduction for depreciation or obsolescence, and considering the Premises at its highest and best use and in good condition) or one hundred ten percent (110%) of the price previously in effect, (ii) any index-oriented rental or price adjustment formulas contained in this Lease shall be adjusted to require that the base index be determined with reference to the index applicable to the time of such adjustment, and (iii) any fixed rental adjustments scheduled during the remainder of the Lease term shall be increased in the same ratio as the new rental bears to the Base Rent in effect immediately prior to the adjustment specified in Lessor's Notice.

    (e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.

    12.2  Terms and Conditions Applicable to Assignment and Subletting.

    (a) Regardless of Lessor's consent, any assignment or subletting shall not (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, nor (iii) alter the primary liability of Lessee for the payment of Base Rent and other sums due Lessor hereunder or for the performance of any other obligations to be performed by Lessee under this Lease.

    (b) Lessor may accept any rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of any rent for performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for the Default or Breach by Lessee of any of the terms, covenants or conditions of this Lease.

    (c) The consent of Lessor to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting by Lessee or to any subsequent or successive assignment or subletting by the assignee or sublessee. However, Lessor may consent to subsequent sublettings and assignments of the sublease or any amendments or modifications thereto without notifying Lessee or anyone else liable under this Lease or the sublease and without obtaining their consent, and such action shall not relieve such persons from liability under this Lease or the sublease.

    (d) In the event of any Default or Breach of Lessee's obligation under this Lease, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of the Lessee's obligations under this Lease, including any sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor.

    (e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including, but not limited to, the intended use and/or required modification of the Premises, if any, together with a non-refundable deposit of $1,000 or ten percent (10%) of the monthly Base Rent applicable to the portion of the Premises which is the subject of the proposed assignment or sublease, whichever is greater, as reasonable consideration for Lessor's considering and processing the request for consent. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested by Lessor.

    (f)  Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, be deemed, for the benefit of Lessor, to have assumed and agreed to conform and comply with each and every term, convenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented in writing.

    (g) The occurrence of a transaction described in Paragraph 12.2(c) shall give Lessor the right (but not the obligation) to require that the Security Deposit be increased by an amount equal to six (6) times the then monthly Base Rent, and Lessor may make the actual receipt by Lessor of the Security Deposit increase a condition to Lessor's consent to such transaction.

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    (h) Lessor, as a condition to giving its consent to any assignment or subletting, may require that the amount and adjustment schedule of the rent payable under this Lease be adjusted to what is then the market value and/or adjustment schedule for property similar to the Premises as then constituted, as determined by Lessor.

    12.3  Additional Terms and Conditions Applicable to Subletting.  The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

    (a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all rentals and income arising from any sublease of all or a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may collect such rent and income and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach (as defined in Paragraph 13.1) shall occur in the performance of Lessee's obligations under this Lease, Lessee may, except as otherwise provided in this Lease, receive, collect and enjoy the rents accruing under such sublease. Lessor shall not, by reason of the foregoing provision or any other assignment of such sublease to Lessor, nor by reason of the collection of the rents from a sublessee, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor the rents and other charges due and to become due under the sublease. Sublessee shall rely upon any such statement and request from Lessor and shall pay such rents and other charges to Lessor without any obligation or right to inquire as to whether such Breach exists and notwithstanding any notice from or claim from Lessee to the contrary. Lessee shall have no right or claim against such sublessee, or, until the Breach has been cured, against Lessor, for any such rents and other charges so paid by said sublessee to Lessor.

    (b) In the event of a Breach by Lessee in the performance of its obligations under this Lease, Lessor, at its option and without any obligation to do so, may require any sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any other prior defaults or breaches of such sublessor under such sublease.

    (c) Any matter or thing requiring the consent of the sublessor under a sublease shall also require the consent of Lessor herein.

    (d) No sublessee under a sublease approved by Lessor shall further assign or sublet all or any part of the Premises without Lessor's prior written consent.

    (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.

13.  Default; Breach; Remedies.

    13.1  Default; Breach.  Lessor and Lessee agree that if an attorney is consulted by Lessor in connection with a Lessee Default or Breach (as hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence for legal services and costs in the preparation and service of a notice of Default, and that Lessor may include the cost of such services and costs in said notice as rent due and payable to cure said default. A "Default" by Lessee is defined as a failure by Lessee to observe, comply with or perform any of the terms, covenants, conditions or rules applicable to Lessee under this Lease. A "Breach" by Lessee is defined as the occurrence of any one or more of the following Defaults, and, where a grace period for cure after notice is specified herein, the failure by Lessee to cure such Default prior to the expiration of the applicable grace period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:

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    (a) The vacating of the Premises without the intention to reoccupy same, or the abandonment of the Premises.

    (b) Except as expressly otherwise provided in this Lease, the failure by Lessee to make any payment of Base Rent, Lessee's Share of Common Area Operating Expenses, or any other monetary payment required to be made by Lessee hereunder as and when due, the failure by Lessee to provide Lessor with reasonable evidence of insurance or surety bond required under this Lease, or the failure of Lessee to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of three (3) days following written notice thereof by or on behalf of Lessor to Lessee.

    (c) Except as expressly otherwise provided in this Lease, the failure by Lessee to provide Lessor with reasonable written evidence (in duly executed original form, if applicable) of (i) compliance with Applicable Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service contracts required under Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease per Paragraph 30, (vi) the guaranty of the performance of Lessee's obligations under this Lease if required under Paragraphs 1.11 and 37, (vii) the execution of any document requested under Paragraph 42 (easements), or (viii) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of ten (10) days following written notice by or on behalf of Lessor to Lessee.

    (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that are to be observed, complied with or performed by Lessee, other than those described in Subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a period of thirty (30) days after written notice thereof by or on behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's Default is such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a Breach of this Lease by Lessee if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion.

    (e) The occurrence of any of the following events: (i) the making by Lessee of any general arrangement or assignment for the benefit of creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within thirty (30) days; provided, however, in the event that any provision of this Subparagraph 13.1(e) is contrary to any applicable law, such provision shall be of no force or effect, and shall not affect the validity of the remaining provisions.

    (f)  The discovery by Lessor that any financial statement of Lessee or of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially false.

    (g) If the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantor's breach of its guaranty obligation on an anticipatory breach basis, and Lessee's failure, within sixty (60) days following written notice by or on behalf of Lessor to Lessee of any such event, to provide Lessor with written alternative assurances of security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease.

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    13.2  Remedies.  If Lessee fails to perform any affirmative duty or obligation of Lessee under this Lease, within ten (10) days after written notice to Lessee (or in case of an emergency, without notice), Lessor may, at its option (but without obligation to do so), perform such duty or obligation on Lessee's behalf, including, but not limited to, the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its own option, may require all future payments to be made under this Lease by Lessee to be made only by cashier's check. In the event of a Breach of this Lease by Lessee (as defined in Paragraph 13.1), with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach, Lessor may:

    (a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the worth at the time of the award of the unpaid rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District in which the Premises are located at the time of award plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease shall not waive Lessor's right to recover damages under this Paragraph 13.2. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding the unpaid rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit for such rent and/or damages. If a notice and grace period required under Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or to perform or quit, as the case may be, given to Lessee under any statute authorizing the forfeiture of leases for unlawful detainer shall also constitute the applicable notice for grace period purposes required by Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period under the unlawful detainer statute shall run concurrently after the one such statutory notice, and the failure of Lessee to cure the Default within the greater of the two (2) such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.

    (b) Continue the Lease and Lessee's right to possession in effect (in California under California Civil Code Section 1951.4) after Lessee's Breach and recover the rent as it becomes due, provided Lessee has the right to sublet or assign, subject only to reasonable limitations. Lessor and Lessee agree that the limitations on assignment and subletting in this Lease are reasonable. Acts of maintenance or preservation, efforts to relet the Premises, or the appointment of a receiver to protect the Lessor's interest under this Lease, shall not constitute a termination of the Lessee's right to possession.

    (c) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located.

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    (d) The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises.

    13.3  Inducement Recapture in Event of Breach.  Any agreement by Lessor for free or abated rent or other charges applicable to the Premises, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of which concessions are hereinafter referred to as "Inducement Provisions" shall be deemed conditioned upon Lessee's full and faithful performance of all of the terms, covenants and conditions of this Lease to be performed or observed by Lessee during the term hereof as the same may be extended. Upon the occurrence of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, and recoverable by Lessor, as additional rent due under this Lease, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of such acceptance.

    13.4  Late Charges.  Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by the terms of any ground lease, mortgage or deed of trust covering the Premises. Accordingly, if any installment of rent or other sum due from Lessee shall not be received by Lessor or Lessor's designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Base Rent, then notwithstanding Paragraph 4.1 or any other provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance.

    13.5  Breach by Lessor.  Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable time shall in no event be less than thirty (30) days after receipt by Lessor, and by any Lender(s) whose name and address shall have been furnished to Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days after such notice are reasonably required for its performance, then Lessor shall not be in breach of this Lease if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion.

14.  Condemnation.  If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than ten percent (10%) of the floor area of the Premises, or more than twenty-five percent (25%) of the portion of the Common Areas designated for Lessee's parking, is taken by condemnation, Lessee may, at Lessee's option, to be exercised in writing within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in the same proportion as the rentable

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floor area of the Premises taken bears to the total rentable floor area of the Premises. No reduction of Base Rent shall occur if the condemnation does not apply to any portion of the Premises. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution of value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any compensation, separately awarded to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of its net severance damages received, over and above Lessee's Share of the legal and other expenses incurred by Lessor in the condemnation matter, repair any damage to the Premises caused by such condemnation authority. Lessee shall be responsible for the payment of any amount in excess of such net severance damages required to complete such repair.

15.  Brokers' Fees

    15.1  Procuring Cause.  The Broker(s) named in Paragraph 1.10 is/are the procuring cause of this Lease.

    15.3  Assumption of Obligations.  Any buyer or transferee of Lessor's interest in this Lease, whether such transfer is by agreement or by operation of law, shall be deemed to have assumed Lessor's obligation under this Paragraph 15.

    15.4  Representations and Warranties.  Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder other than as named in Paragraph 1.10(a) in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and that no broker or other person, firm or entity other than said named Broker(s) is entitled to any commission or finder's fee in connection with said transaction. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, and/or attorney's fees reasonably incurred with respect thereto.

16.  Tenancy and Financial Statements.

    16.1  Tenancy Statement.  Each Party (as "Responding Party") shall within ten (10) days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing in a form similar to the then most current "Tenancy Statement" form published by the American Industrial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party.

    16.2  Financial Statement.  If Lessor desires to finance, refinance, or sell the Premises or the Building, or any part thereof, Lessee and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such financial statements of Lessee and such Guarantors as may be reasonably required by such lender or purchaser, including, but not limited to, Lessee's financial statements for the past three (3) years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17.  Lessor's Liability.  The term "Lessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises. In the event of a transfer of Lessor's title or interest in the Premises or in this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor at the time of such transfer or assignment. Except as provided in Paragraph 15.3, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.

18.  Severability.  The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

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19.  Interest on Past-Due Obligations.  Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor within ten (10) days following the date on which it was due, shall bear interest from the date due at the prime rate charged by the largest state chartered bank in the state in which the Premises are located plus four percent (4%) per annum, but not exceeding the maximum rate allowed by law, in addition to the potential late charge provided for in Paragraph 13.4.

20.  Time of Essence.  Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.

21.  Rent Defined.  All monetary obligations of Lessee to Lessor under the terms of this Lease are deemed to be rent.

22.  No Prior or other Agreements; Broker Disclaimer.  This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. Each Broker shall be an intended third party beneficiary of the provisions of this Paragraph 22.

23.  Notices.

    23.1  Notice Requirements.  All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by messenger or courier service) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission during normal business hours, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notice purposes. Either Party may by written notice to the other specify a different address for notice purposes, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for the purpose of mailing or delivering notices to Lessee. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by written notice to Lessee.

    23.2  Date of Notice.  Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail, the notice shall be deemed given forty-eight (48) hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the United States Postal Service or courier. If any notice is transmitted by facsimile transmission or similar means, the same shall be deemed served or delivered upon telephone or facsimile confirmation of receipt of the transmission thereof, provided a copy is also delivered via delivery or mail. If notice is received on a Saturday or a Sunday or a legal holiday, it shall be deemed received on the next business day.

24.  Waivers.  No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or any other term, covenant or condition hereof. Lessor's consent to, or approval of, any such act shall not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. Regardless of Lessor's knowledge of a Default or Breach at the time of accepting rent, the acceptance of rent by Lessor shall not be a waiver of any Default or Breach by Lessee of any provision hereof. Any payment given Lessor by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or

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conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

25.  Recording.  Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form memorandum of this Lease for recording purposes. The Party requesting recordation shall be responsible for payment of any fees or taxes applicable thereto.

26.  No Right to Holdover.  Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or earlier termination of this Lease. In the event that Lessee holds over in violation of this Paragraph 26 then the Base Rent payable from and after the time of the expiration or earlier termination of this Lease shall be increased to two hundred percent (200%) of the Base Rent applicable during the month immediately preceding such expiration or earlier termination. Nothing contained herein shall be construed as a consent by Lessor to any holding over by Lessee.

27.  Cumulative Remedies.  No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

28.  Covenants and Conditions.  All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions.

29.  Binding Effect; Choice of Law.  This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the state in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.

30.  Subordination; Attornment; Non-Disturbance.

    30.1  Subordination.  This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed by Lessor upon the real property of which the Premises are a part, to any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof. Lessee agrees that the Lenders holding any such Security Device shall have no duty, liability or obligation to perform any of the obligations of Lessor under this Lease, but that in the event of Lessor's default with respect to any such obligation, Lessee will give any Lender whose name and address have been furnished Lessee in writing for such purpose notice of Lessor's default pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device and shall give written notice thereof to Lessee, this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.

    30.2  Attornment.  Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not: (i) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership, (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or (iii) be bound by prepayment of more than one (1) month's rent.

    30.3  Non-Disturbance.  With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving assurance (a "non-disturbance agreement") from the Lender that Lessee's possession and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises.

    30.4  Self-Executing.  The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any such subordination or non-subordination, attornment and/or non-disturbance agreement as is provided for herein.

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31.  Attorneys' Fees.  If any Party or Broker brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred. Lessor shall be entitled to attorneys' fees, costs and expenses incurred in preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach. Broker(s) shall be intended third party beneficiaries of this Paragraph 31.

32.  Lessor's Access; Showing Premises; Repairs.  Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for the purpose of showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises or to the Building, as Lessor may reasonably deem necessary. Lessor may at any time place on or about the Premises or Building any ordinary "For Sale" signs and Lessor may at any time during the last one hundred eighty (180) days of the term hereof place on or about the Premises any ordinary "For Lease" signs. All such activities of Lessor shall be without abatement of rent or liability to Lessee.

33.  Auctions.  Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor's prior written consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.

34.  Signs.  Lessee shall not place any sign upon the exterior of the Premises or the Building, except that Lessee may, with Lessor's prior written consent, install (but not on the roof) such signs as are reasonably required to advertise Lessee's own business so long as such signs are in a location designated by Lessor and comply with Applicable Requirements and the signage criteria established for the Industrial Center by Lessor. The installation of any sign on the Premises by or for Lessee shall be subject to the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations). Unless otherwise expressly agreed herein, Lessor reserves all rights to the use of the roof of the Building, and the right to install advertising signs on the Building, including the roof, which do not unreasonably interfere with the conduct of Lessee's business; Lessor shall be entitled to all revenues from such advertising signs.

35.  Termination; Merger.  Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, Lessor shall, in the event of any such surrender, termination or cancellation, have the option to continue any one or all of any existing subtenancies. Lessor's failure within ten (10) days following any such event to make a written election to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such interest.

36.  Consents.

    (a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including, but not limited to, architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent pertaining to this Lease or the Premises, including, but not limited to, consents to an assignment a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an invoice and supporting documentation therefor. In addition to the deposit described in Paragraph 12.2(e), Lessor may, as a condition to considering any such request by Lessee, require that Lessee deposit with Lessor an

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amount of money (in addition to the Security Deposit held under Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will incur in considering and responding to Lessee's request. Any unused portion of said deposit shall be refunded to Lessee without interest. Lessor's consent to any act, assignment of this Lease or subletting of the Premises by Lessee shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent.

    (b) All conditions to Lessor's consent authorized by this Lease are acknowledged by Lessee as being reasonable. The failure to specify herein any particular condition to Lessor's consent shall not preclude the impositions by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given.

37.  Guarantor.

    37.1  Form of Guaranty.  If there are to be any Guarantors of this Lease per Paragraph 1.11, the form of the guaranty to be executed by each such Guarantor shall be in the form most recently published by the American Industrial Real Estate Association, and each such Guarantor shall have the same obligations as Lessee under this lease, including, but not limited to, the obligation to provide the Tenancy Statement and information required in Paragraph 16.

    37.2  Additional Obligations of Guarantor.  It shall constitute a Default of the Lessee under this Lease if any such Guarantor fails or refuses, upon reasonable request by Lessor to give: (a) evidence of the due execution of the guaranty called for by this Lease, including the authority of the Guarantor (and of the party signing on Guarantor's behalf) to obligate such Guarantor on said guaranty, and resolution of its board of directors authorizing the making of such guaranty, together with a certificate of incumbency showing the signatures of the persons authorized to sign on its behalf, (b) current financial statements of Guarantor as may from time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written confirmation that the guaranty is still in effect.

38.  Quiet Possession.  Upon payment by Lessee of the rent for the Premises and the performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease.

39.  Options.

    39.1  Definition.  As used in this Lease, the word "Option" has the following meaning: (a) the right to extend the term of this Lease or to renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of first refusal to lease other property of Lessor or the right of first offer to lease other property of Lessor; (c) the right to purchase the Premises, or the right of first refusal to purchase the Premises, or the right of first offer to purchase the Premises, or the right to purchase other property of Lessor, or the right of first refusal to purchase other property of Lessor, or the right of first offer to purchase other property of Lessor.

    39.2  Options Personal to Original Lessee.  Each Option granted to Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and cannot be voluntarily or involuntarily assigned or exercised by any person or entity other than said original Lessee while the original Lessee is in full and actual possession of the Premises and without the intention of thereafter assigning or subletting. The Options, if any, herein granted to Lessee are not assignable, either as a part of an assignment of this Lease or separately or apart therefrom, and no Option may be separated from this Lease in any manner, by reservation or otherwise.

    39.3  Multiple Options.  In the event that Lessee has any multiple Options to extend or renew this Lease, a later option cannot be exercised unless the prior Options to extend or renew this Lease have been validly exercised.

Page 27 of 30

    39.4  Effect of Default on Options.

    (a) Lessee shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary: (i) during the period commencing with the giving of any notice of Default under Paragraph 13.1 and continuing until the noticed Default is cured, or (ii) during the period of time any monetary obligation due Lessor from Lessee is unpaid (without regard to whether notice thereof is given Lessee), or (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three (3) or more notices of separate Defaults under Paragraph 13.1 during the twelve (12) month period immediately preceding the exercise of the Option, whether or not the Defaults are cured.

    (b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a).

    (c) All rights of Lessee under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Lessee's due and timely exercise of the Option, if, after such exercise and during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a period of thirty (30) days after such obligation becomes due (without any necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to Lessee three (3) or more notices of separate Defaults under Paragraph 13.1 during any twelve (12) month period, whether or not the Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.

40.  Rules and Regulations.  Lessee agrees that it will abide by, and keep and observe all reasonable rules and regulations ("Rules and Regulations") which Lessor may make from time to time for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Industrial Center and their invitees. Attached hereto as Exhibit "D" are the Rules and Regulations currently adopted by Lessor.

41.  Security Measures.  Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.

42.  Reservations.  Lessor reserves the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights of way, utility raceways, and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights of way, utility raceways, dedications, maps and restrictions do not reasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.

43.  Performance Under Protest.  If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.

44.  Authority.  If either Party hereto is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. If Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30) days after request by Lessor, deliver to Lessor evidence satisfactory to Lessor of such authority.

45.  Conflict.  Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

Page 28 of 30

46.  Offer.  Preparation of this Lease by either Lessor or Lessee or Lessor's agent or Lessee's agent and submission of same to Lessee or Lessor shall not be deemed an offer to lease. This Lease is not intended to be binding until executed and delivered by all Parties hereto.

47.  Amendments.  This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. The Parties shall amend this Lease from time to time to reflect any adjustments that are made to the Base Rent or other rent payable under this Lease. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by an institutional insurance company or pension plan Lender in connection with the obtaining of normal financing or refinancing of the property of which the Premises are a part.

48.  Multiple Parties.  Except as otherwise expressly provided herein, if more than one person or entity is named herein as either Lessor or Lessee, the obligations of such multiple parties shall be the joint and several responsibility of all persons or entities named herein as such Lessor or Lessee.

    Attached to this Lease and incorporated herein are the following:

Addendum paragaphs 49 through 53
Exhibits "A" through "D"

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

Page 29 of 30

The Parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.

Executed at:		Executed at:
on:		on:
By LESSOR:		By LESSEE:
KILROY REALTY, L.P.,		STAAR SURGICAL COMPANY,
A Delaware Limited Partnership		A Delaware Corporation
By:	KILROY REALTY CORPORATION, A Maryland Corporation, General Partner
By:		By:	/s/ WILLIAM C. HUDDLESTON
Name Printed:		Name Printed:	William C. Huddleston
Title:		Title:	Chief Oper. Officer
By:		By:	/s/ SANDRA K WOOD
Name Printed:		Name Printed:	Sandra K. Wood
Title:		Title:	Assist VP Corp Ser
Address:	2250 E. Imperial Highway, Suite 360	Address:
El Segundo, CA 90245
Telephone:	(310) 563-5500	Telephone:	(   )
Facsimile:	(310) 416-9113	Facsimile:	(   )
BROKER:		BROKER:
Executed at:		Executed at:
on:		on:
By:		By:
Name Printed:		Name Printed:
Title:		Title:
Address:		Address:
Telephone:	(   )	Telephone:	(   )
Facsimile:	(   )	Facsimile:	(   )

    NOTE:  These forms are often modified to meet changing requirements of law and needs of the industry. Always write or call to make sure you are utilizing the most current form:

Page 30 of 30

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 South Flower Street, Suite 600, Los Angeles, CA 90017 (213) 687-8777

Page 31 of 30

RENT ADJUSTMENTS(S)
STANDARD LEASE ADDENDUM

Dated April 5, 2000
By and Between (Lessor)	KILROY REALTY, L.P., A Delaware Limited Partnership KILROY REALTY CORPORATION, A Maryland Corporation, General Partner
(Lessee)	STAAR SURGICAL COMPANY, A Delaware Corporation
Address of Premises:	27121 Aliso Creek Road, Suite 100 Aliso Viejo, California 92656

Paragraph 49

A.  RENT ADJUSTMENTS:

    The monthly rent for each month of the adjustment period(s) specified below shall be increased using the method(s) indicated below:

(Check Method(s) to be Used and Fill in Appropriately)

/ / I. Cost of Living Adjustments(s) (COLA)

    a. On (Fill in COLA Dates): _________________________________________________________________ _______
___________________________________________________________________________________________ _____
the Base Rent shall be adjusted by the change, if any, from the Base Month specified below, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for (select one): / / CPI W (Urban Wage Earners and Clerical Workers) or / / CPI U (All Urban Consumers), for (Fill in Urban Area): ____________________________________
All Items (1982-1984=100), herein referred to as "CPI".

    b.  The monthly rent payable in accordance with paragraph A.I.a. of this Addendum shall be calculated as follows: the Base Rent set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the numerator of which shall be the CPI of the calendar month two months prior to the month(s) specified in paragraph A.I.a. above during which the adjustment is to take effect, and the denominator of which shall be the CPI of the calendar month which is two months prior to (select one): / / the first month of the term of this Lease as set forth in paragraph 1.3 ("Base Month") or / / (Fill in Other "Base Month"): ____________________________________. The sum so calculated shall constitute the new monthly rent hereunder, but in no event, shall any such new monthly rent be less than the rent payable for the month immediately preceding the rent adjustment.

    c.  In the event the compilation and/or publication of the CPI shall be transferred to any other governmental department or bureau or agency or shall be discontinued, then the index most nearly the same as the CPI shall be used to make such calculation. In the event that the Parties cannot agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration Association in accordance with the then rules of said Association and the decision of the arbitrators shall be binding upon the parties. The cost of said Arbitration shall be paid equally by the Parties.

RENT ADJUSTMENTS
Page 1 of 2

/ / II. Market Rental Value Adjustment(s) (MRV)

    a.  On (Fill in MRV Adjustment Date(s): _______________________________________________________ _____
___________________________________________________________________________________________ _____
the Base Rent shall be adjusted to the "Market Rental Value" of the property as follows:

    1)  Four months prior to each Market Rental Value Adjustment Date described above, the Parties shall attempt to agree upon what the new MRV will be on the adjustment date. If agreement cannot be reached within thirty days, then:

    (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to establish the new MRV within the next thirty days. Any associated costs will be split equally between the Parties, or

    (b) Both Lessor and Lessee shall each immediately make a reasonable determination of the MRV and submit such determination, in writing, to arbitration in accordance with the following provisions:

     (i) Within fifteen days thereafter, Lessor and Lessee shall each select an / / appraiser or / / broker ("Consultant"—check one) of their choice to act as an arbitrator. The two arbitrators so appointed shall immediately select a third mutually acceptable Consultant to act as a third arbitrator.

    (ii) The Three arbitrators shall within thirty days of the appointment of the third arbitrator reach a decision as to what the actual MRV for the Premises is, and whether Lessor's or Lessee's submitted MRV is the closest thereto. The decision of a majority of the arbitrators shall be binding on the Parties. The submitted MRV which is determined to be the closest to the actual MRV shall thereafter be used by the Parties.

    (iii) If either of the Parties fails to appoint an arbitrator within the specified fifteen days, the arbitrator timely appointed by one of them shall reach a decision on his or her own, and said decision shall be binding on the Parties.

    (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is not selected, ie. the one that is NOT the closest to the actual MRV.

    2)  Notwithstanding the foregoing, the new MRV shall not be less than the rent payable for the month immediately preceding the rent Adjustment.

    b.  Upon the establishment of each New Market Rental Value:

    1)  the new MRV will become the new "Base Rent" for the purpose of calculating any further Adjustments, and

    2)  the first month of each Market Rental Value term shall become the new 'Base Month' for the purpose of calculating any further Adjustments.

/X/ III. Fixed Rental Adjustment(s) (FRA)

The Monthly Base Rent shall be increased to the following amounts on the dates set forth below:

On (Fill in FRA Adjustment Date(s)):	The New Monthly Base Rent shall be:
May 1, 2001	$8,560.00
May 1, 2002	$8,990.00
	$
	$

B.  NOTICE

    Unless specified otherwise herein, notice of any such adjustments, other than Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the Lease.

RENT ADJUSTMENTS
Page 2 of 2

PACIFIC PARK PLAZA
27121 ALISO CREEK ROAD

[MAP]

EXHIBIT "A"

EXHIBIT "B"

[MAP]

Pacific Park Plaza

EXHIBIT "C"

[MAP]

Pacific Park Plaza

ADDENDUM TO THAT CERTAIN LEASE DATED
APRIL 5, 2000
By and Between
KILROY REALTY, L.P.,
A Delaware Limited Partnership
KILROY REALTY CORPORATION
A Maryland Corporation,
General Partner
("Lessor")
and
STAAR SURGICAL COMPANY,
A Delaware Corporation
("Lessee")

For that real property commonly known as
27121 Aliso Creek Road, Suite 100, Aliso Viejo, California 92656

50.

Existing Leases and License Agreement.  Lessee previously and/or now occupies certain premises within the Industrial Center pursuant to Leases and a License Agreement, with Security Deposits, Base Rental and Lessee's Share of Common Area Operating Expenses ("CAM") summarized as follows:

Lease/License Agreement and Premises	Monthly Base Rent and Monthly CAM
27141 Aliso Creek Road, Suites 200 & 250 Lease dated April 1, 1998; the Lease for this Premises has been terminated and Lessee has completely vacated the Premises	Base Rent CAM	= N/A = N/A
27121 Aliso Creek Road, Suites 100, 105 & 110 Lease dated March 2, 1993, as amended	Base Rent CAM	= $6,258.00/mo = $1,204.92/mo
27121 Aliso Creek Road, Suite 115 License Agreement dated August 15, 1999	Base Rent	= $1,118.00/mo
Total Security Deposits held by Lessor:	$6,778.96

(collectively the "Existing Leases").

50.1

Base Rent and CAM under the Existing Leases shall be prorated to midnight, April 30, 2000.



50.2

The Security Deposits paid by Lessee pursuant to the Existing Leases in the amount of $6,778.96 shall be credited upon the Security Deposit of $8,150.00 required by paragraph 1.7 of the Lease. The balance due of $1,371.04 shall be paid by Lessee to Lessor upon execution of this Lease.



50.3

The Existing Leases shall be terminated, cancelled and surrendered to Lessor as of midnight, April 30, 2000, except that Lessee shall remain obligated for any defaults or obligations arising under the Existing Leases and which exist as of 11:59 p.m., April 30, 2000.

51.

Lessee Improvements and Allowance.

51.1

Lessee Improvement Allowance.  Lessee shall be entitled to a lessee improvement allowance (the "Lessee Improvement Allowance") in the amount of $7,600.00 for costs relating to the design and construction of Lessee improvements to the Premises (the "Lessee Improvements").

51.2

Disbursement of the Lessee Improvement Allowance.  Except as otherwise set forth in this paragraph 51, the Lessee Improvement Allowance shall be disbursed by Lessor to Lessee in two (2) installments, each being equal to fifty percent (50%) of the Lessee Improvement

Allowance. The first installment shall be paid by Lessor to Lessee upon Lessee's execution of a construction contract with its contractor, and the second installment shall be paid at such time as the Lessee Improvements to the Premises have been substantially completed for costs related to the construction of the Lessee Improvements and for the following items and costs (collectively, the "Lessee Improvement Allowance Items"): (i) payment of the fees of the architect and the engineer who shall prepare the construction drawings for the Lessee Improvements, (ii) the cost of construction of the Lessee Improvements as set forth in the construction drawings, and (iii) the cost of other items related to the design and construction of the Lessee Improvements.

51.3

Unused Lessee Improvement Allowance; Excess Costs.  In the event that, as of the Commencement Date, there remains any unused portion of the Lessee Improvement Allowance (the "Unused Allowance"), Lessee may, at Lessee's option, either (i) credit any Unused Allowance against Base Rent payments next due under this Lease, or (ii) receive a check from Lessor in the amount of the Unused Allowance within ten (10) days after the Lease Commencement Date. In the event that the Lessee Improvement Allowance is insufficient to pay all of the costs of the Lessee Improvements (the "Excess Lessee Improvement Costs"), then Lessee shall advance all funds necessary to pay the Excess Lessee Improvement Costs.



51.4

The Lessee Improvements to be constructed by Lessee shall be subject to the provisions of paragraphs 7.3 and 7.4 of this Lease as if and to the same extent as if the Lessee Improvements are "Lessee-Owned Alterations."

52.

Estoppel Certificate.  The Tenancy Statement referred to in paragraph 16.1 and the "further writings" referred to in line 3 of paragraph 30.4 of the Lease each shall be, at the option of the Lessor or a lender or purchaser from Lessor, in the customary form of the requesting lender or a purchaser of all or a portion of the Building.

53.

Notices.  Copies of any notices to be given by Lessee to Lessor pursuant to paragraph 23.1 of the Lease also shall be given to the local office of Lessor and to Lessor's attorney, as follows:

Kilroy Realty, L.P.
184 Technology Drive, Suite 200
Irvine, California 92618
Tel, No. (949) 790-0840
Fax No. (949) 790-0844

Marshall L. McDaniel
McDaniel & McDaniel
2250 E. Imperial Highway, Suite 1200
El Segundo, California 90245
Tel. No. (310) 640-1960
Fax No. (310) 322-8790

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EXHIBIT "D"

RULES AND REGULATIONS

MULTI-LESSEE INDUSTRIAL CENTER

    The following Rules and Regulations have been adopted by Lessor pursuant to paragraph 40 of the Lease:

1.

Lessee acknowledges that it is occupying space within a multi-lessee Industrial Center, and therefore any of its activities may have an affect upon the use, occupancy, and quite enjoyment of the other lessees. As a result, Lessee shall not conduct any business or engage in any work-related activities outside of its Premises.

2.

Except as specifically provided in the Lease to which these Rules and Regulations are attached, no sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building or the Industrial Center without the prior written consent of Lessor. Lessor shall have the right to remove, at Lessee's expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Lessee by a person or company designated by Lessor.

3.

If Lessor objects in writing to any curtains, blinds, shades, screens or hanging plants or other similar objects attached to or used in connection with any window or door of the Premises, or placed on any windowsills which are visible from the exterior of the Premises, Lessee shall immediately discontinue such use. Lessee shall not place anything against or near glass partitions or doors or windows which may appear unsightly, in Lessor's sole determination, from outside the Premises.

4.

Lessee shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, escalators or stairways of the Industrial Center. The halls, passages, exits, entrances, elevators, escalators and stairways are not open to the general public, but are open, subject to reasonable regulations, to Lessee's business invitees. Lessor shall, in all cases, retain the right to control and prevent access thereto of all persons whose presence, in the judgment of Lessor, would be prejudicial to the safety, character, reputation and interest of the Industrial Center and its lessees; provided that nothing herein contained shall be construed to prevent such access to persons with whom any lessee normally deals in the ordinary course of its business, unless such persons are engaged in illegal or unlawful activities. No lessee and no employee or invitee or any lessee shall go upon the roof(s) of any building in the Industrial Center.

5.

The directory of the Building or the Industrial Center will be provided exclusively for the display of the name and location of lessees only, and Lessor reserves the right to exclude any other names therefrom and to limit the amount of space thereon dedicated to Lessee's name.

6.

All cleaning and janitorial services for the Industrial Center and the Premises shall be provided exclusively through Lessor. No person or persons other than those approved by Lessor shall be employed by Lessee or permitted to enter the Industrial Center for the purpose of cleaning the same. Lessee shall not cause any unnecessary cleaning by carelessness or indifference to the good order and cleanliness of the Premises. The provisions of this paragraph 6 shall not be applicable if Lessor does not provide janitorial services for the particular Premises of Lessee.

7.

Lessor will furnish Lessee, free of charge, with two (2) keys or access cards to each door lock in the Premises. Lessor may make a reasonable charge for any additional keys. Lessee shall not make or have additional keys, and Lessee shall not alter any lock or install any new additional lock or bolt on any door of the Premises. If Lessee loses any keys, Lessor may change the lock at Lessee's

1

expense. Lessee upon termination of its tenancy, shall deliver to Lessor the keys to all doors which have been furnished to Lessee, and in the event of loss of any keys so furnished, shall pay Lessor therefor and for the cost of replacing the lock.

8.

If Lessee requires telegraphic, telephonic, burglar alarm, satellite dishes, antennae or similar services, it shall first obtain, and comply with, Lessor's instructions in their installation. Provided that Lessor exclusively reserves all rights to the installation of any kind of telecommunication equipment upon the roof of the Building and the exclusive right to enter into exclusive or non-exclusive agreements with telecommunication providers for providing services to the Building and the Industrial Center.

9.

Lessee shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Lessor shall have the right to prescribe the weight, size and position of all equipment, materials, furniture or other property brought into the Building and the Premises. Heavy objects shall, if considered necessary by Lessor, stand on such platforms as determined by Lessor to be necessary to properly distribute the weight, which platforms shall be provided at Lessee's expense. Business machines and mechanical equipment belonging to Lessee, which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree as to be objectionable to Lessor or to any other lessees in the Building, shall be placed and maintained by Lessee in a manner to reduce to acceptable levels such noise or vibration.

10.

Lessee shall not use or keep in the Premises any kerosene, gasoline or inflammable or combustible fluid or material other than those limited quantities necessary for the operation or maintenance of Lessee's equipment. Lessee shall not use or permit to be used in the leased Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Lessor or other occupants of the Building by reason of noise, odors or vibrations, nor shall Lessee bring into or keep in or about the Premises any birds or animals.

11.

Lessee shall not use any method of heating or air conditioning other than that supplied by Lessor.

12.

Lessee shall not waste electricity, water or air conditioning and agrees to cooperate fully with Lessor to assure the most effective operation of the Building's heating and air conditioning and to comply with any governmental energy-saving rules, laws or regulations of which Lessee has actual notice, and shall refrain from attempting to adjust controls. Lessee shall keep corridor doors closed.

13.

Lessor reserves the right, exercisable without notice and without liability to Lessee, to change the name and street address of the Building and the Industrial Center.

14.

In the event the Building containing the Premises is a multi-lessee Building with an entrance lobby for access to the Lessee's Premises, Lessor reserves the right to exclude from the Building between the hours of 6:00 p.m. to 7:00 a.m. the following day, or such other hours as may be established from time to time by Lessor, and on Sundays and legal holidays, any person unless that person is known to the person or employee in charge of the Building or has a pass or is properly identified. Lessee shall be responsible for all persons for whom it requests passes and shall be liable to Lessor for all acts of such persons. Lessor shall not be liable for damages for any error with regard to the admission to or exclusion from the Building of any person. Lessor reserves the right to prevent access to the Building in case of mob, riot, public excitement or demonstration or other commotion by closing the doors or by other appropriate action.

15.

Lessee shall close and lock the doors of its Premises and entirely shut off all water faucets or other water apparatus, and turn off lights and apparatus consuming electricity or gas before Lessee and its employees leave the Premises. Lessee shall be responsible for any damage or injuries sustained by other lessees or occupants of the Building or by Lessor for noncompliance with this rule.

2

16.

The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the Lessee who, or whose employees or invitees shall have caused it.

17.

Lessee shall not sell, or permit the sale at retail of newspapers, magazines, periodicals, theater tickets or any other goods or merchandise to the general public in or on the Premises (unless Lessees' use provision specifically allows these activities). Lessee shall not make any room-to-room solicitation of business from other lessees in the Industrial Center. Lessee shall not use the Premises for any business or activity other than that specifically provided for in the Lease.

18.

Lessee shall not install any radio or television antenna, loudspeaker, satellite dishes or other devices on the roof(s) or exterior walls of the Building or the Industrial Center. Lessee shall not interfere with radio or television broadcasting or reception from or in the Industrial Center or elsewhere.

19.

Lessee shall not drive nails, screw or drill into the partitions, woodwork or plaster or in any way deface the Premises or any part thereof, except in accordance with the provisions of the Lease pertaining to alterations. Lessor reserves the right to direct electricians as to where and how telephone and telegraph wires are to be introduced to the Premises. Lessee shall not cut or bore holes for wires. Lessee shall not affix any floor covering to the floor of the Premises in any manner except as approved by Lessor. Lessee shall repair any damage resulting from noncompliance with this rule.

20.

Lessee shall not install, maintain or operate upon the Premises any vending machines without prior written consent of Lessor.

21.

Canvassing, soliciting and distribution of handbills or any other written material, and peddling in the Industrial Center are prohibited, and Lessee shall cooperate with Lessor to prevent such activities.

22.

Lessor reserves the right to exclude or expel from the Industrial Center any person who, in Lessor's judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the Rules and Regulations of the Building.

23.

Lessee shall store all its trash and garbage within its Premises or in other facilities provided by Lessor. Lessee shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Lessor.

24.

The Premises shall not be used for the storage of merchandise held for sale to the general public at the Premises, (unless Lessee's Lease specifically permits on-site sales activity) for lodging or for manufacturing of any kind (unless Lessee's Lease specifically permits manufacturing within the Premises), nor shall the Premises be used for any improper, immoral or objectionable purpose. No cooking shall be done or permitted on the Premises without Lessor's consent, except the use by Lessee or Underwriters' Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar beverages shall be permitted, and the use of a microwave oven for employees use shall be permitted, provided that such equipment and use is in accordance with all applicable federal, state, country and city laws, codes, ordinance, rules and regulations.

25.

Lessee shall not use in any space or in the public halls of the Building any hand truck except those equipped with rubber tires and side guards or such other material-handling equipment as Lessor may approve. Lessee shall not bring any other vehicles of any kind into the Building.

3

26.

Without the written consent of Lessor, Lessee shall not use the name of the Building or the Industrial Center in connection with or in promoting or advertising the business of Lessee.

27.

Lessee shall comply with all safety, fire protection and evacuation procedures and regulations established by Lessor or any governmental agency.

28.

Lessee assumes any and all responsibility for protecting its Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed.

29.

To the extent Lessor reasonably deems it necessary to exercise exclusive control over any portions of the Industrial Center Common Areas for the mutual benefit of the lessees in the Industrial Center, Lessor may do so subject to nondiscriminatory additional Rules and Regulations.

30.

Lessee's requirements for the use or operation of the Premises shall be attended to only upon appropriate application to Lessor's asset management office for the Industrial Center by an authorized individual. Employees of Lessor shall not perform any work or do anything outside of their regular duties unless under special instructions from Lessor, and no employee of Lessor will admit any person (Lessor or otherwise) to any office without specific approval from Lessor.

31.

Lessor may waive any one or more of these Rules and Regulations for the benefit of Lessee or any other lessee, but no such waiver by Lessor shall be constructed as a waiver of such rules and Regulations in favor of Lessee or any other lessee, nor prevent Lessor from thereafter enforcing any such Rules and Regulations against any or all of the Lessees of the Industrial Center. Lessee acknowledges that it is occupying space in a mixed-use, multi-lessee commercial/industrial/office park, and that inherent in any such park is the fact that Lessor may have to waive these Rules and Regulations selectively and on a case by case basis.

32.

These Rules and Regulations are in addition to, and shall not be constructed to in any way modify or amend, in whole or part, the terms, covenants, agreements and conditions of the Lease.

33.

Lessor reserves the right to make such other and reasonable Rules and Regulations as, in its sole judgment, from time to time may be needed for safety and security, for care and cleanliness of the Industrial Center and for the preservation of good order therein. Lessee agrees to abide by all such Rules and Regulations herein set forth and any additional rules and regulations which are adopted.

34.

Lessee shall be responsible for the observance of all of the foregoing rules by Lessee's employees, agents, clients, customers, invites, and guest.

4

PARKING RULES AND REGULATIONS

    The following rules and regulations shall govern the use of the parking facilities which are a part of the Industrial Center, which can be modified at any time in the sole discretion of Lessor:

1.

All claimed damage or loss to motor vehicles must be reported, itemized in writing and delivered to Lessor within five (5) business days after any claimed damage or loss occurs. Any claim not so made is waived. Lessor is not responsible for damage by water, fire, or defective brakes, or parts, or for the act or omissions of others, or for articles left in vehicles.

2.

Lessee shall not park or permit its employees to park in any parking areas designated by Lessor as areas for parking by visitors to the Industrial Center or for the exclusive use of lessees or other occupants of the Industrial Center. Lessee shall not leave vehicles in the parking areas overnight or park any vehicles in the parking areas other than automobiles, motorcycles, motor driven or non-motor driven bicycles or trucks not to exceed four wheels.

3.

Parking stickers or any other device or form of identification supplied by Lessor as a condition of use of the parking facilities shall remain the property of Lessor. Such parking identification device must be displayed as requested and may not be mutilated in any manner. The serial number of the parking identification device may not be obliterated. Devices are not transferable and any device in the possession of an unauthorized holder will be void. Lessor may charge a fee for parking stickers, card or other parking control devices supplied by Lessor.

4.

No overnight or extended term storage of vehicles shall be permitted.

5.

Vehicles must be parked entirely within painted stall lines of a single parking stall.

6.

All direction signs and arrows must be observed.

7.

The speed limit within all parking areas shall not exceed five (5) miles per hour.

8.

Parking is prohibited:

(a)

in areas not striped for parking;

(b)

in aisles;

(c)

where "no parking" signs are posted;

(d)

on ramps;

(e)

in cross-hatched areas;

(f)

in loading areas; and

(g)

in such other areas as may be designated by Lessor or Lessor's parking representative.

9.

Every parker is required to park and lock his/her own vehicle. All responsibility for damage to vehicles and the contents thereof is assumed by the parker.

10.

Loss or theft of parking identification devices must be reported to Lessor immediately, and a lost or stolen report must be filed by the Lessee or user of such parking identification device at the time. Lessor has the right to exclude any vehicle from the parking facilities that does not have an identification device.

11.

Any parking identification devices reported lost or stolen found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution.

12.

Washing, waxing, cleaning or servicing of any vehicle in any area not specifically reserved for such purpose is prohibited.

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13.

The parking operators, managers or attendants are not authorized to make or allow any exceptions to these Parking Rules and Regulations.

14.

Lessee's continued right to use any parking spaces in the parking facilities is conditioned upon the employee or agent of Lessee abiding by these Parking Rules and Regulations and those contained in this Lease. Further, if this Lease terminates for any reason whatsoever, Lessee's right to use the parking spaces in the parking facilities shall terminate concurrently therewith.

15.

Lessor may refuse to permit any person who violates these Parking Rules and Regulations to park in the parking facilities, and any violation of the Parking Rules and Regulations shall subject the vehicle to removal, at such vehicle owner's expense.

6

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RENT ADJUSTMENTS(S) STANDARD LEASE ADDENDUM
PACIFIC PARK PLAZA 27121 ALISO CREEK ROAD
EXHIBIT A MAP
EXHIBIT B MAP
EXHIBIT C MAP
ADDENDUM TO THAT CERTAIN LEASE DATED APRIL 5, 2000 By and Between KILROY REALTY, L.P., A Delaware Limited Partnership KILROY REALTY CORPORATION A Maryland Corporation, General Partner ("Lessor") and STAAR SURGICAL COMPANY, A Delaware Corporation ("Lessee")
For that real property commonly known as 27121 Aliso Creek Road, Suite 100, Aliso Viejo, California 92656
EXHIBIT "D"
RULES AND REGULATIONS MULTI-LESSEE INDUSTRIAL CENTER
PARKING RULES AND REGULATIONS

EX-10.47

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PROMISSORY NOTE

$511,563 April 7, 2000
Monrovia, California

FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged, Carl M. Manisco ("Maker"), hereby promises to pay to STAAR Surgical Company, or order ("Holder"), at the address designated on the signature page of this Note, or at such other place as Holder may designate by written notice to Maker, the principal sum hereinbelow described ("Principal Amount"), together with interest thereon, in the manner and at the times provided and subject to the terms and conditions described herein.

    1.  Principal Amount.

    The Principal Amount means the sum of five hundred eleven thousand five hundred and sixty three dollars ($511,563).

    2.  Interest.

    Interest on the Principal Amount from time-to-time remaining unpaid shall accrue from September 4, 1998 at the lower of: (i) the rate of seven percent (7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Interest shall be computed on the basis of a three hundred sixty (360) day year and a thirty (30) day month.

    3.  Payment of Principal and Interest.

    Subject to paragraph 9, below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on September 4, 2003.

    4.  Security/Release of Security.

    Maker has pledged as security for the repayment of all sums payable under this Note 85,000 shares of Staar Surgical Company common stock (the "Stock"). Maker has executed a Stock Pledge Agreement dated September 4, 1998 evidencing Holder's security interest in the Stock, and by signing this Note reaffirms and remakes the covenants and promises included therein. If, for a period of fifteen (15) consecutive days, the fair market value of the Stock falls below all sums unpaid under this Note, then Maker will be required to transfer to Holder, upon receipt of Holder's written request, additional security, in any form acceptable to Holder, in an amount equal to the difference between all sums due under this Note and the fair market value of the Stock.

    5.  Prepayments.

    Maker shall have the right to prepay any portion of the Principal Amount without prepayment penalty or premium or discount.

    6.  Manner of Payments/Crediting of Payments.

    Payments of any amount required hereunder shall be made in lawful money of the United States or in such other property as Holder, in its sole and absolute discretion, may accept, without deduction or offset, and shall be credited first against accrued but unpaid late charges, if any, thereafter against accrued but unpaid interest, if any, and thereafter against the unpaid balance of the Principal Amount.

    7.  Maker Waivers.

    Maker waives notice of acceptance hereof, presentment and demand for payment, protest and notice of dishonor or default, trial by jury, and the right to interpose any set-off or counterclaim of any

1

description. No delay or omission on the part of Holder in exercising any rights under this Note on default by Maker, including, without limitation, Holder's right to accelerate, nor reinstatement of this Note by Holder after such exercise, shall operate as a waiver of Holder's right to exercise such right or of any other right under this Note for the same default or any other default. Maker consents to all extensions without notice for any period or periods of time and to the acceptance of partial payments before or after maturity, and to the acceptance, release, and substitution of security, all without prejudice to Holder. The pleading of any statute of limitations as a defense to the obligations evidenced by this Note is waived by Maker to the fullest extent permissible by law.

    8.  Interest on Delinquent Payments.

    Any payment under this Note not paid when due shall bear interest at the same rate and method as interest is charged on the Principal Amount from the due date until paid.

    9.  Acceleration Upon Default.

    At the option of Holder, all or any part of the indebtedness of Maker hereunder shall immediately become due and payable, irrespective of any agreed maturity date, upon the happening of any of the following events of default:

    (a) If any part of the Principal Amount and/or interest thereon under this Note are not paid when due, provided, however, Maker shall be entitled to a grace period of ten (10) days following written notice of such event of default to cure said event of default;

    (b) If Maker shall breach any non-monetary condition or obligation imposed on Maker pursuant to the terms of this Note, provided, however, that if any such breach is reasonably susceptible of being cured, Maker shall be entitled to a grace period of thirty (30) days following written notice of such event of default to cure;

    (c) If Maker shall make an assignment for the benefit of creditors;

    (d) If a custodian, trustee, receiver, or agent is appointed or takes possession of substantially all of the property of Maker;

    (e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing Maker's inability to pay Maker's debts as they become due;

    (f)  If Maker shall apply for or consent to the appointment of a custodian, trustee, receiver, intervenor, liquidator or agent of Maker, or commence any proceeding related to Maker under any bankruptcy or reorganization statute, or under any arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect;

    (g) If any petition is filed against Maker under the Bankruptcy Code and either (A) the Bankruptcy Court orders relief against Maker, or (B) such petition is not dismissed by the Bankruptcy Court within thirty (30) days of the date of filing; or

    (h) If any attachment, execution, or other writ is levied on substantially all of the assets of Maker and remains in effect for more than five (5) days.

Maker shall notify Holder immediately if any event of default which is described in sub-paragraph (c) through sub-paragraph (h), above, occurs.

    10.  Collection Costs and Attorneys' Fees.

    Maker agrees to pay Holder all costs and expenses, including reasonable attorneys' fees, paid or incurred by Holder in connection with the collection or enforcement of this Note or any instrument securing payment of this Note, including without limitation, defending the priority of such instrument or conducting a trustee sale thereunder. In the event any litigation is initiated concerning the

2

enforcement, interpretation or collection of this Note, the prevailing party in any proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

    11.  Notice.

    Any notice to either party under this Note shall be given by personal delivery or by express mail, Federal Express, DHL or similar airborne/overnight delivery service, or by mailing such notice by first class or certified mail, return receipt requested, addressed to such party at the address set forth below, or to such other address as either party from time to time may designate by written notice. Notices delivered by overnight delivery service shall be deemed delivered the next business day following consignment for such delivery service. Mailed notices shall be deemed delivered and received in accordance with this provision three (3) days after deposit in the United States mail.

    12.  Usury Compliance.

    All agreements between Maker and Holder are expressly limited, so that in no event or contingency whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance, or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable usury laws. If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, Holder shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of the unpaid Principal Amount under this Note and not to the payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note, such excess shall be refunded to Maker. This provision shall control every other provision of all agreements between Maker and Holder.

    13.  Jurisdiction; Venue.

    This Note shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of California. Any action to enforce payment of this Note shall be filed and heard solely in Los Angeles County, California.

    14.  Note Non-Negotiable by Holder.

    Holder shall not assign, convey, pledge, hypothecate, discount or otherwise transfer or dispose of this Note.

3

    15.  Replacement Note.

    Maker acknowledges receipt of the Principal Amount on September 4, 1998. This Note replaces and supersedes that certain Promissory Note executed by Maker in favor of Holder on September 4, 1998.

MAKER:

/s/ CARL M. MANISCOCarl M. Manisco

MAKER'S ADDRESS:

1911 Walker Avenue
Monrovia, California 91016
Attn.: John R. Wolf

HOLDER'S ADDRESS:

STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer

4

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PROMISSORY NOTE

EX-10.48

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PROMISSORY NOTE

$461,875 April 7, 2000
Monrovia, California

FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged, William C. Huddleston ("Maker"), hereby promises to pay to STAAR Surgical Company, or order ("Holder"), at the address designated on the signature page of this Note, or at such other place as Holder may designate by written notice to Maker, the principal sum hereinbelow described ("Principal Amount"), together with interest thereon, in the manner and at the times provided and subject to the terms and conditions described herein.

    1.  Principal Amount.

    The Principal Amount means the sum of four hundred sixty-one thousand eight hundred seventy-five dollars ($461,875).

    2.  Interest.

    Interest on the Principal Amount from time-to-time remaining unpaid shall accrue from September 4, 1998 at the lower of: (i) the rate of seven percent (7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Interest shall be computed on the basis of a three hundred sixty (360) day year and a thirty (30) day month.

    3.  Payment of Principal and Interest.

    Subject to paragraph 9, below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on September 4, 2003.

    4.  Security/Release of Security.

    Maker has pledged as security for the repayment of all sums payable under this Note 85,000 shares of Staar Surgical Company common stock (the "Stock"). Maker has executed a Stock Pledge Agreement dated September 4, 1998 evidencing Holder's security interest in the Stock, and by signing this Note reaffirms and remakes the covenants and promises included therein. If, for a period of fifteen (15) consecutive days, the fair market value of the Stock falls below all sums unpaid under this Note, then Maker will be required to transfer to Holder, upon receipt of Holder's written request, additional security, in any form acceptable to Holder, in an amount equal to the difference between all sums due under this Note and the fair market value of the Stock.

    5.  Prepayments.

    Maker shall have the right to prepay any portion of the Principal Amount without prepayment penalty or premium or discount.

    6.  Manner of Payments/Crediting of Payments.

    Payments of any amount required hereunder shall be made in lawful money of the United States or in such other property as Holder, in its sole and absolute discretion, may accept, without deduction or offset, and shall be credited first against accrued but unpaid late charges, if any, thereafter against accrued but unpaid interest, if any, and thereafter against the unpaid balance of the Principal Amount.

    7.  Maker Waivers.

    Maker waives notice of acceptance hereof, presentment and demand for payment, protest and notice of dishonor or default, trial by jury, and the right to interpose any set-off or counterclaim of any

1

description. No delay or omission on the part of Holder in exercising any rights under this Note on default by Maker, including, without limitation, Holder's right to accelerate, nor reinstatement of this Note by Holder after such exercise, shall operate as a waiver of Holder's right to exercise such right or of any other right under this Note for the same default or any other default. Maker consents to all extensions without notice for any period or periods of time and to the acceptance of partial payments before or after maturity, and to the acceptance, release, and substitution of security, all without prejudice to Holder. The pleading of any statute of limitations as a defense to the obligations evidenced by this Note is waived by Maker to the fullest extent permissible by law.

    8.  Interest on Delinquent Payments.

    Any payment under this Note not paid when due shall bear interest at the same rate and method as interest is charged on the Principal Amount from the due date until paid.

    9.  Acceleration Upon Default.

    At the option of Holder, all or any part of the indebtedness of Maker hereunder shall immediately become due and payable, irrespective of any agreed maturity date, upon the happening of any of the following events of default:

    (a) If any part of the Principal Amount and/or interest thereon under this Note are not paid when due, provided, however, Maker shall be entitled to a grace period of ten (10) days following written notice of such event of default to cure said event of default;

    (b) If Maker shall breach any non-monetary condition or obligation imposed on Maker pursuant to the terms of this Note, provided, however, that if any such breach is reasonably susceptible of being cured, Maker shall be entitled to a grace period of thirty (30) days following written notice of such event of default to cure;

    (c) If Maker shall make an assignment for the benefit of creditors;

    (d) If a custodian, trustee, receiver, or agent is appointed or takes possession of substantially all of the property of Maker;

    (e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing Maker's inability to pay Maker's debts as they become due;

    (f)  If Maker shall apply for or consent to the appointment of a custodian, trustee, receiver, intervenor, liquidator or agent of Maker, or commence any proceeding related to Maker under any bankruptcy or reorganization statute, or under any arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect;

    (g) If any petition is filed against Maker under the Bankruptcy Code and either (A) the Bankruptcy Court orders relief against Maker, or (B) such petition is not dismissed by the Bankruptcy Court within thirty (30) days of the date of filing; or

    (h) If any attachment, execution, or other writ is levied on substantially all of the assets of Maker and remains in effect for more than five (5) days.

Maker shall notify Holder immediately if any event of default which is described in sub-paragraph (c) through sub-paragraph (h), above, occurs.

    10.  Collection Costs and Attorneys' Fees.

    Maker agrees to pay Holder all costs and expenses, including reasonable attorneys' fees, paid or incurred by Holder in connection with the collection or enforcement of this Note or any instrument securing payment of this Note, including without limitation, defending the priority of such instrument or conducting a trustee sale thereunder. In the event any litigation is initiated concerning the

2

enforcement, interpretation or collection of this Note, the prevailing party in any proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

    11.  Notice.

    Any notice to either party under this Note shall be given by personal delivery or by express mail, Federal Express, DHL or similar airborne/overnight delivery service, or by mailing such notice by first class or certified mail, return receipt requested, addressed to such party at the address set forth below, or to such other address as either party from time to time may designate by written notice. Notices delivered by overnight delivery service shall be deemed delivered the next business day following consignment for such delivery service. Mailed notices shall be deemed delivered and received in accordance with this provision three (3) days after deposit in the United States mail.

    12.  Usury Compliance.

    All agreements between Maker and Holder are expressly limited, so that in no event or contingency whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance, or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable usury laws. If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, Holder shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of the unpaid Principal Amount under this Note and not to the payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note, such excess shall be refunded to Maker. This provision shall control every other provision of all agreements between Maker and Holder.

    13.  Jurisdiction; Venue.

    This Note shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of California. Any action to enforce payment of this Note shall be filed and heard solely in Los Angeles County, California.

    14.  Note Non-Negotiable by Holder.

    Holder shall not assign, convey, pledge, hypothecate, discount or otherwise transfer or dispose of this Note.

3

    15.  Replacement Note.

    Maker acknowledges receipt of the Principal Amount on September 4, 1998. This Note replaces and supersedes that certain Promissory Note executed by Maker in favor of Holder on September 4, 1998.

MAKER:

/s/ WILLIAM C. HUDDLESTONWilliam C. Huddleston

MAKER'S ADDRESS:

1911 Walker Avenue
Monrovia, California 91016
Attn.: John R. Wolf

HOLDER'S ADDRESS:

STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer

4

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PROMISSORY NOTE

EX-10.49

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Exhibit 10.49

MODIFICATION OF PROMISSORY NOTE

    This Modification of Promissory Note ("Modification") is made this 21st day of August 2000 by and between William C. Huddleston ("Maker") and STAAR Surgical Company ("Holder") in reference to the following facts:

RECITALS

A.  On April 7, 2000, Maker executed a Promissory Note ("Note") in favor of Holder for the amount of $461,875.

B.  Maker and Holder have agreed to modify the terms of the Note.

AGREEMENT

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are acknowledged, Maker and Holder agree as follows:

    1.  Extension of Term. Paragraph 3 of the Note shall be modified to state, "Subject to paragraph 9 below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on September 4, 2003, provided, however, that if Maker's employment with Holder is terminated prior to September 4, 2003 (a) by Holder without cause or (b) by Maker for any reason, then Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on a date which is the later of September 4, 2003 or two years from the date of such termination. Irrespective of the foregoing, payment of this Note is subject to the terms of that certain Employment Agreement dated October 1, 1999 by and between Maker and Holder, as such Employment Agreement was modified on August 21, 2000, the terms of which are incorporated into this Note by reference."

    2.  Remaining Provisions Shall Remain. All other terms and provisions of the Note shall remain the same.

    3.  Attachment to Note Upon Execution. Upon execution, this Modification shall be attached by Holder to the Note and shall become a part of it.

WHEREAS, Maker and Holder have executed this Modification as of the date set forth above.

"MAKER"
	/s/ WILLIAM C. HUDDLESTON William C. Huddleston

"HOLDER" STARR Surgical Company, a Delaware corporation
By:	/s/ ANDREW F. POLLET

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Exhibit 10.49
MODIFICATION OF PROMISSORY NOTE
RECITALS
AGREEMENT

EX-10.50

DESCRIPTION OF ORAL AGREEMENT


         On or about April 18, 2000, Mr. John R. Wolf, our former President and
Chief Executive Officer, agreed to transfer to the Company, and the Company
agreed to accept, 243,067 shares of the Company's Common Stock as full payment
of the principal and all accrued interest of loans made to Mr. Wolf by the
Company. These loans include the following:




                DATE OF LOAN                         AMOUNT OF LOAN
                                                  
                February 28, 1991                    $1,301,745
                September 4, 1998                    $  839,375
                July 21, 1999                        $   93,750
                November 12, 1999                    $   55,259



         These loans total $2,290,129. With the exception of the loan in the
amount of $839,375, we received full recourse promissory notes from Mr. Wolf
memorializing these loans. The loans were used by Mr. Wolf to exercise options
to purchase our Common Stock.

EX-10.51

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[CIBC WORLD MARKETS LETTERHEAD]

Exhibit 10.51

     May 12, 2000

PERSONAL AND CONFIDENTIAL

STAAR Surgical Company
1911 Walker Avenue
Monrovia, CA 91016

Attn:  William C. Huddleston
    Executive Vice President and Chief Operating Officer

Dear Mr. Huddleston:

    This letter will confirm the understanding and agreement (the "Agreement") between CIBC World Markets Corp. ("CIBC World Markets") and STAAR Surgical Company (the "Company") as follows:

1.

Engagement:  The Company hereby engages CIBC World Markets as its exclusive agent for the proposed private placement of up to 1,250,000 shares of common stock of the Company (the "Shares") to a limited number of Qualified Institutional Buyers, as such term is defined in Rule 144A promulgated under the Securities Act of 1933 (the "Investors"). Such placement shall be referred to as the "Transaction." CIBC World Markets agrees to use its best efforts to effect the Transaction under the terms, and subject to the conditions, contained herein.

2.

CIBC World Markets' Role:  CIBC World Markets hereby accepts the engagement described herein and, in that connection, agrees to:

(a)

assist in structuring the Transaction;

(b)

assist in preparing a private placement memorandum (the "Memorandum") describing the Company, the Shares and the Transaction;

(c)

review with the Company a list of the Investors to whom the Memorandum will be provided;

(d)

prepare other communications to be used in placing the Shares, whether in the form of letter, circular, notice or otherwise; and

(e)

assist and advise the Company with respect to the negotiation of the sale of the Shares to the Investors.

3.

Due Diligence:  It is understood that CIBC World Markets' assistance in the Transaction will be subject to the satisfactory completion of such investigation and inquiry into the affairs of the Company as CIBC World Markets deems appropriate under the circumstances (such investigation hereinafter to be referred to as "Due Diligence") and the approval of CIBC World Markets' Commitment and Due Diligence Committees. CIBC World Markets shall have the right in its sole discretion to terminate this Agreement if the outcome of the Due Diligence is not satisfactory to CIBC World Markets or if approval of the Commitment and Due Diligence Committees is not obtained ("Early Termination").

4.

Term; Exclusivity:  The term of CIBC World Markets' engagement hereunder as the Company's exclusive agent shall extend from the date hereof until the earlier of March 31, 2001 or Early Termination, and that during the term of CIBC World Markets' engagement hereunder: (i) the Company will not, and will not permit its representatives to, other than in coordination with CIBC World Markets, contact or solicit institutions, corporations or other entities as potential purchasers of the Securities and (ii) the Company will not pursue any financing transaction which would be in lieu of a Transaction. Furthermore, the Company agrees that during the term of CIBC World Markets' engagement hereunder, all inquiries, whether direct or indirect, from prospective

investors will be referred to CIBC World Markets and will be deemed to have been contacted by CIBC World Markets in connection with the Transaction. The Company may reject any potential Investor if in its discretion, the Company believes that the inclusion of such Investor in the Company would be incompatible with the best interests of the Company. The Company shall not be obligated to sell the Shares or to accept any offer thereof, and the terms of such Shares and the final decision to issue the same shall be subject to the discretionary approval of the Company.

Either party may terminate this Agreement at any time by giving the other party at least thirty (30) days prior written notice of such termination, at which time the Company shall pay to CIBC World Markets all fees earned and reimburse CIBC World Markets for all reasonable expenses incurred, in accordance with Paragraphs 8 and 9 hereof, respectively. The Company agrees to pay CIBC World Markets any fees specified in Paragraph 8 if the events specified therein shall occur during the term of this Agreement or within one year after the termination or expiration of this Agreement. Any obligation pursuant to this Paragraph 4 shall survive the termination or expiration of this Agreement.

No offers or sales of any securities of the same or similar class as the Shares will be made by the Company or any affiliate during the six-month period after the completion of the offering of the Securities in each case except in compliance with the registration requirements of the Securities Act of 1933, as amended, or an exemption therefrom. The Company and CIBC World Markets have not made and shall not make any general solicitation in connection with the offer and sale of the Shares. CIBC World Markets will offer the shares only to Qualified Institutional Buyers.

5.

Best Efforts:  It is understood that CIBC World Markets' involvement in the Transaction is strictly on a best efforts basis and that the consummation of the Transaction will be subject to, among other things, market conditions.

6.

Information:  The Company shall furnish, or cause to be furnished, to CIBC World Markets all information reasonably requested by CIBC World Markets for the purpose of rendering services hereunder (all such information being the "Information"). In addition, the Company agrees to make available to CIBC World Markets upon request from time to time the officers, directors, accountants, counsel and other advisors of the Company. The Company recognizes and confirms that CIBC World Markets (a) will use and rely on the Information and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same; (b) does not assume responsibility for the accuracy or completeness of the Information and such other information; and (c) will not make an appraisal of any of the assets or liabilities of the Company.

The Company represents and warrants to CIBC World Markets that (i) all such information, including the Memorandum, any documents attached as exhibits thereto and/or incorporated by reference therein, and any communications prepared pursuant to paragraph 2(a) above, and will be true and accurate in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and (ii) any projected financial information or other forward-looking information which the Company provides to CIBC World Markets will be made by the Company in food faith, based on management's best estimates then available and based on facts and assumptions which the Company believes to be reasonable.

7.

Company Responsibilities, Representations and Warranties:

(a)

The sale of the Shares to any Investor will be evidenced by a purchase agreement ("Purchase Agreement") between the Company and such Investor in a form reasonably satisfactory to the Company and CIBC World Markets. Prior to the signing of any Purchase Agreement, officers

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of the Company with responsibility for financial affairs will be available to answer inquiries from prospective investors.

(b)

The selling price of the Shares to be issued and sold by the Company pursuant to the Purchase Agreements will be specified in writing by CIBC World Markets on behalf of the Company to the prospective investors prior to the execution of the Purchase Agreements, subject to the Company's approval.



(c)

The closing of the sale of the Shares contemplated by the Purchase Agreement (the "Closing") shall be promptly following the execution and delivery of the Purchase Agreement and the satisfaction of other condition set forth in the Purchase Agreement. The Company will perform the covenants set forth in the Purchase Agreements. The Purchase Agreements will require the Company to file, promptly after it has signed and delivered such Purchase Agreements, a registration statement with the Securities and Exchange Commission (the "SEC") for the resale from time to time of the Securities to be issued pursuant to such Purchase Agreements (the "Registration Statement"). The Company will not modify any such Purchase Agreements, nor will it execute and deliver any additional Purchase Agreements after the time it has filed the Registration Statement.



(d)

The Company (i) represents and warrants that the representations and warranties contained in the Purchase Agreements will be true and correct in all respects on the date of such Purchase Agreements and on the Closing Date and (ii) agrees that CIBC World Markets shall be entitled to rely on such representations and warranties as if they were made directly to CIBC World Markets.



(e)

The Company agrees that the Company shall have sole responsibility for ensuring that the sale of Securities contemplated by this Agreement shall be exempt from the registration requirements of the Securities Act of 1933, as amended, and will otherwise comply with the securities laws of any applicable country or other jurisdiction. The Company shall not take any action or permit to be taken any action on its behalf that would cause such sale of Securities to fail to (i) qualify for such an exemption, or (ii) otherwise comply with such securities laws.



(f)

The Company will cause its independent public accountants to address and deliver to the Company and CIBC World Markets a letter or letters (which letters are frequently referred to as "Comfort Letters") dated as of the Closing, which letter or letters shall be in the form reasonably requested by CIBC World Markets.



(g)

The Company will cause its counsel to address and deliver to the Company and CIBC World Markets an opinion dated as of the Closing with respect to such matters as CIBC World Markets and its counsel shall reasonably request.



(h)

The Company will cause its outside intellectual property and/or regulatory counsel to deliver one or more opinions, dated as of the Closing, to CIBC World Markets regarding such matters as CIBC World Markets and its counsel shall reasonably request.



(i)

The Company acknowledges that the Purchase Agreements will require the Company's counsel, its intellectual property counsel and/or its regulatory counsel to deliver one or more opinions to the Investors. The Company agrees that CIBC World Markets shall be entitled to rely on any opinions delivered to the Investors in connection with the Transaction and resale of the Shares under the Registration Statement.



(j)

For a period of ninety (90) days from the effective date of the Registration Statement, the Company will not, without the prior written consent of CIBC World Markets, sell, contract to sell or otherwise dispose of or issue any securities of the Company, except pursuant to previously issued options, any agreements providing for anti-dilution or other stock purchase

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or share issuance rights in existence on the date hereof, any employee benefit or similar plan of the Company in existence on the date hereof or duly adopted hereafter, or any technology license agreement, strategic alliance or joint venture in existence on the date hereof or which the Company may enter into hereafter.

(k)

During the time the Registration Statement is effective covering the resales of any Securities sold to Investors, the Company will furnish to CIBC World Markets:



(i)

as soon as practicable (but in the case of the annual report of the Company to its stockholders, within 120 days after the end of each fiscal year of the Company), one copy of: (a) its annual report to its stockholders (which annual report shall contain financial statements audited in accordance with generally accepted accounting principles in the United States by a firm of certified public accountants of recognized standing), (b) if not included in substance in its annual report to stockholders, its annual report on Form 10-K, (c) each of its quarterly reports to its stockholders and, if not included in substance in its quarterly report to stockholders, its quarterly report on Form 10-Q and any other document or agreement that is incorporated by reference into the Registration Statement, and (d) the full Registration Statement (the foregoing in each case, excluding exhibits); and



(ii)

upon reasonable request, all exhibits excluded by the parenthetical to the last clause of the immediately preceding paragraph and all other information that is generally available to the public.

8.

Fees:  As compensation for the services to be rendered by CIBC World Markets hereunder, the Company will pay CIBC World Markets at the Closing, from the proceeds of the Sale of the Shares, a transaction fee (the "Transaction Fee") equal to the greater of (a) six and one-half percent (6.5%) of the gross proceeds raised from the sale of the Shares. Further, the Company will pay CIBC World Markets the Transaction Fee, if within twelve months from the termination of this Agreement, the Company reaches an agreement in principle for the sale of the Shares to any Investors which CIBC World Markets previously solicited or sought to solicit (but were not permitted to do so due to the Company's rejection of such proposed Investors pursuant to the last sentence of Section 6 hereof) on its behalf. Upon the Company's request, at the termination or expiration of this Agreement, CIBC World Markets will supply the Company with a list of Investors which CIBC World Markets has solicited or sought to solicit (but were not permitted to do so due to the Company's rejection of such proposed Investors pursuant to the last sentence of Section 6 hereof), on its behalf, and the Company will pay CIBC World Markets any unpaid expenses reimbursable under paragraph 9 of this Agreement. The Company's obligations hereunder shall survive the termination or expiration of this Agreement.

9.

Expense Reimbursement:  The Company agrees to reimburse CIBC World Markets for all of its reasonable out-of-pocket expenses in connection with the performance of its activities under the terms of this Agreement. Reasonable out-of-pocket expenses include, but are not limited to, costs such as printing, telephone, telex, courier service, direct computer expenses, accommodations and travel. The Company will reimburse CIBC World Markets for fees and expenses of legal counsel employed by and for CIBC World Markets, if any, in connection with this Agreement. All such fees, expenses and costs will be billed monthly and are payable when invoiced. The parties' obligations under this paragraph shall survive the termination or expiration of this Agreement.

10.

Registration:  The Company contemplates that the provisions of the Purchase Agreement will bind the Investors, upon execution, to purchase the Shares subject to customary conditions to closing not within the control of the Investors. The Company agrees to use its best efforts to take such actions under the laws of various states, as shall be agreed upon by the Lead Placement Agent and the Company, as may be required to allow the lawful sale of the Shares. The Company

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further agrees to file a Registration Statement on Form S-3 for the sale of the Shares with the SEC as soon as practicable after the Closing Date and to use its best efforts to cause the SEC to declare the Registration Statement effective on or prior to the 75th day after the date the Registration Statement was filed by the Company. The Company agrees to bear the expenses (excluding underwriters fees, commissions and discounts) of such registration with the SEC and qualification under state securities laws, including fees and disbursements of Company counsel.

11.

Indemnity:  In addition to the fees and reimbursement of expenses provided for above, the parties agree to the indemnification provisions set forth as Annex A herein, which are incorporated herein by reference as if fully set forth below. The parties' obligations under this paragraph shall survive the termination or expiration of this Agreement.

12.

GOVERNING LAWS:  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISION THEREOF. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO OR ARISING OUT OF THIS AGREEMENT, THE TRANSACTION OR ANY TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS WAIVED.

13.

Right of First Refusal:  In consideration for CIBC World Markets' agreement to act as sole placement agent in connection with the Transaction, the Company hereby grants CIBC World Markets a right of first refusal to serve as the Company's lead financial advisor and investment banker in connection with any financial transaction (other than customary commercial bank lending) for a period of 12 months from the closing of the Transaction. In the event the Company advises CIBC World Markets that it desires to effect any financial transaction, the Company and CIBC World Markets will negotiate in good faith the terms of CIBC World Markets' engagement in a separate agreement, which agreement would set forth, among other matters, compensation for CIBC World Markets based upon customary fees for the services provided. The Company's obligation under this Paragraph 13 shall become effective only in the event of completion of the Transaction.

14.

Confidentiality:  Except as required by law, this Agreement and the services and advice to be provided by CIBC World Markets hereunder, shall not be disclosed to third parties without CIBC World Markets' prior written permission. Notwithstanding, CIBC World Markets shall be permitted to advertise the services it provided in connection with the private placement subsequent to the consummation of the private placement. Such expense shall not be reimbursable under paragraph 9 hereof.

15.

No Brokers; Advisors:  The Company represents and warrants to CIBC World Markets that there are no brokers, representatives or other persons which have an interest in compensation due to CIBC World Markets from any transaction contemplated herein or which would otherwise be due any fee, commission or remuneration upon consummation of any Transaction.

16.

Authorization:  The Company and CIBC World Markets represent and warrant that each has all requisite power and authority to enter into and carry out the terms and provisions of this Agreement and the execution, delivery and performance of this Agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound.

17.

Miscellaneous:  This Agreement including Annex A, constitutes the entire understanding and agreement between the Company and CIBC World Markets with respect to the subject matter hereof and supercedes all prior understanding or agreements between the parties with respect thereto, whether oral or written, express or implied. Any amendments or modifications must be executed in writing by both parties. This Agreement and all rights, liabilities and obligations hereunder shall be binding upon and inure to the benefit of each party's successors but may not be assigned without the prior written approval of the other party.

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This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. The descriptive headings of the Paragraphs of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in anyway the meaning or interpretation of this Agreement.

CIBC World Markets is delighted to accept this engagement and looks forward to working with you. Please confirm that the foregoing correctly sets forth our agreement by signing the enclosed duplicate of this letter in the space provided and returning it, whereupon this letter shall constitute a binding agreement as of the date first above written.

		Very truly yours,
		CIBC World Markets Corp.
		By:	/s/ MICHAEL FEKETE Michael Fekete Managing Director
ACCEPTED AND AGREED TO AS OF THE ABOVE DATE STAAR Surgical Company
By:	/s/ WILLIAM C. HUDDLESTON William C. Huddleston Chief Financial Officer and Chief Operating Officer

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ANNEX A: INDEMNIFICATION

    The Company agrees to indemnify and hold harmless CIBC World Markets and its affiliates and their respective directors, officers, employees, agents and controlling persons (each such person, including CIBC World Markets, an "Indemnified Party") from and against any losses, claims, damages and liabilities, joint or several (collectively the "Damages"), to which such Indemnified Party may become subject in connection with or otherwise relating to or arising from (i) any transaction contemplated by this letter agreement or the engagement of or performance of services by an Indemnified Party thereunder or (ii) an untrue statement or an alleged untrue statement of a material fact or the omission or alleged omission to state a material fact necessary in order to make a statement not misleading in light of the circumstances under which it was made, and will reimburse each Indemnified Party for all fees and expenses (including the fees and expenses of counsel) (collectively, "Expenses") as incurred in connection with investigating, preparing, pursuing or defending any threatened or pending claim, action, proceeding or investigation (collectively, the "Proceedings") arising therefrom, whether or not such Indemnified Party is a formal party to such Proceeding; provided, that the Company will not be liable to any such Indemnified Party to the extent that any Damages are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification hereunder. The Company also agrees that no Indemnified Party will have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company or any person asserting claims on behalf of the Company arising out of or in connection with any transactions contemplated by this letter agreement or the engagement of or performance of services by an Indemnified Party thereunder except to the extent that any Damages are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Party.

    If for any reason other than in accordance with this letter agreement, the foregoing indemnity is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless, then the Company will contribute to the amount paid or payable by an Indemnified Party as a result of such Damages (including all Expenses incurred) in such proportion as is appropriate to reflect the relative benefits to the Company and/or its stockholders on the one hand, and CIBC World Markets on the other hand, in connection with the matters covered by this letter agreement or, if the foregoing allocation is not permitted by applicable law, not only such relative benefits but also the relative faults of such parties as well as any relevant equitable considerations. The Company agrees that for purposes of this paragraph the relative benefits to the Company and/or its stockholders and CIBC World Markets in connection with the matters covered by this letter agreement will be deemed to be in the same proportion that the total value paid or received or to be paid or received by the Company and/or its stockholders in connection with the transactions contemplated by this letter agreement, whether or not consummated, bears to the fees paid to CIBC World Markets under this letter agreement; provided, that in no event will the total contribution of all Indemnified Parties to all such Damages exceed the amount of fees actually received and retained by CIBC World Markets hereunder (excluding any amounts received by CIBC World Markets as reimbursement of expenses).

    The Company agrees not to enter into any waiver, release or settlement of any Proceeding, (whether or not CIBC World Markets or any other Indemnified Party is a formal party to such Proceeding) in respect of which indemnification may be sought hereunder without prior written consent of CIBC World Markets (which consent will not be unreasonably withheld), unless such waiver, release or settlement includes an unconditional release of CIBC World Markets and each Indemnified Party from all liability arising out of such Proceeding.

    The indemnity, reimbursement and contribution obligations of the Company hereunder will be in addition to any liability which the Company may otherwise have to any Indemnified Party and will be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company or an Indemnified Party. The provisions of this Annex will survive the modification, termination, or expiration of this letter agreement.

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Exhibit 10.51
ANNEX A: INDEMNIFICATION

EX-10.52

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PROMISSORY NOTE

$272,500 June 2, 2000
Monrovia, California

FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged, Peter J. Utrata ("Maker"), hereby promises to pay to STAAR Surgical Company, or order ("Holder"), at the address designated on the signature page of this Note, or at such other place as Holder may designate by written notice to Maker, the principal sum hereinbelow described ("Principal Amount"), together with interest thereon, in the manner and at the times provided and subject to the terms and conditions described herein.

    1.  Principal Amount.

    The Principal Amount means the sum of two hundred seventy-two thousand five hundred dollars ($272,500).

    2.  Interest.

    Interest on the Principal Amount from time-to-time remaining unpaid shall accrue from the date of this Note at the lower of: (i) the rate of seven percent (7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Interest shall be computed on the basis of a three hundred sixty (360) day year and a thirty (30) day month.

    3.  Payment of Principal and Interest.

    Subject to paragraph 8, below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note five (5) years from the date of this Note, on June 1, 2005.

    4.  Security/Release of Security.

    Maker shall pledge as security for the repayment of all sums payable under this Note 20,000 shares of Staar Surgical Company common stock (the "Stock"). Maker shall execute a Stock Pledge Agreement of even date herewith evidencing Holder's security interest in the Stock. If, for a period of fifteen (15) consecutive days, the fair market value of the Stock falls below all sums unpaid under this Note, then Maker will be required to transfer to Holder, upon receipt of Holder's written request, additional security, in any form acceptable to Holder, in an amount equal to the difference between all sums due under this Note and the fair market value of the Stock.

    5.  Prepayments.

    Maker shall have the right to prepay any portion of the Principal Amount without prepayment penalty or premium or discount.

    6.  Manner of Payments/Crediting of Payments.

    Payments of any amount required hereunder shall be made in lawful money of the United States or in such other property as Holder, in its sole and absolute discretion, may accept, without deduction or offset, and shall be credited first against accrued but unpaid late charges, if any, thereafter against accrued but unpaid interest, if any, and thereafter against the unpaid balance of the Principal Amount.

    7.  Interest on Delinquent Payments.

    Any payment under this Note not paid when due shall bear interest at the same rate and method as interest is charged on the Principal Amount from the due date until paid.

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    8.  Acceleration Upon Default.

    At the option of Holder, all or any part of the indebtedness of Maker hereunder shall immediately become due and payable, irrespective of any agreed maturity date, upon the happening of any of the following events of default:

    (a) If any part of the Principal Amount and/or interest thereon under this Note are not paid when due, provided, however, Maker shall be entitled to a grace period of ten (10) days following written notice of such event of default to cure said event of default;

    (b) If Maker shall breach any non-monetary condition or obligation imposed on Maker pursuant to the terms of this Note, provided, however, that if any such breach is reasonably susceptible of being cured, Maker shall be entitled to a grace period of thirty (30) days following written notice of such event of default to cure;

    (c) If Maker shall make an assignment for the benefit of creditors;

    (d) If a custodian, trustee, receiver, or agent is appointed or takes possession of substantially all of the property of Maker;

    (e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing Maker's inability to pay Maker's debts as they become due;

    (f)  If Maker shall apply for or consent to the appointment of a custodian, trustee, receiver, intervenor, liquidator or agent of Maker, or commence any proceeding related to Maker under any bankruptcy or reorganization statute, or under any arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect;

    (g) If any petition is filed against Maker under the Bankruptcy Code and either (A) the Bankruptcy Court orders relief against Maker, or (B) such petition is not dismissed by the Bankruptcy Court within thirty (30) days of the date of filing; or

    (h) If any attachment, execution, or other writ is levied on substantially all of the assets of Maker and remains in effect for more than five (5) days.

Maker shall notify Holder immediately if any event of default which is described in sub-paragraph (c) through sub-paragraph (h), above, occurs.

    9.  Collection Costs and Attorneys' Fees.

    Maker agrees to pay Holder all costs and expenses, including reasonable attorneys' fees, paid or incurred by Holder in connection with the collection or enforcement of this Note or any instrument securing payment of this Note, including without limitation, defending the priority of such instrument or conducting a trustee sale thereunder. In the event any litigation is initiated concerning the enforcement, interpretation or collection of this Note, the prevailing party in any proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

    10.  Notice.

    Any notice to either party under this Note shall be given by personal delivery or by express mail, Federal Express, DHL or similar airborne/overnight delivery service, or by mailing such notice by first class or certified mail, return receipt requested, addressed to such party at the address set forth below, or to such other address as either party from time to time may designate by written notice. Notices delivered by overnight delivery service shall be deemed delivered the next business day following consignment for such delivery service. Mailed notices shall be deemed delivered and received in accordance with this provision three (3) days after deposit in the United States mail.

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    11.  Usury Compliance.

    All agreements between Maker and Holder are expressly limited, so that in no event or contingency whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance, or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable usury laws. If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, Holder shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of the unpaid Principal Amount under this Note and not to the payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note, such excess shall be refunded to Maker. This provision shall control every other provision of all agreements between Maker and Holder.

    12.  Jurisdiction; Venue.

    This Note shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of California. Any action to enforce payment of this Note shall be filed and heard solely in Los Angeles County, California.

THIS PROMISSORY NOTE IS A REPLACEMENT PROMISSORY NOTE. THE ORIGINAL NOTE HAS BEEN LOST.

MAKER:

/s/ PETER J. UTRATAPeter J. Utrata

MAKER'S ADDRESS:

303 East Town Street, Suite 270
Columbus, Ohio 43215

HOLDER'S ADDRESS:

STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer

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PROMISSORY NOTE

EX-10.53

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STOCK PLEDGE AGREEMENT

    This STOCK PLEDGE AGREEMENT (hereinafter "Agreement") is made and entered into as of the 2nd day of June, 2000, by and between Peter J. Utrata, an individual ("Pledgor") and Staar Surgical Company, a Delaware corporation ("Pledgee") with reference to the following facts:

RECITALS

WHEREAS, Pledgor has executed in favor of Pledgee a promissory note (the "Note"), a copy of which is attached hereto as Exhibit "1" and is incorporated herein by this reference, for the sum of two hundred seventy-two thousand five hundred dollars ($272,500); and

WHEREAS, Pledgor desires to pledge to Pledgee the interest of Pledgor in certain common stock, which is included on Exhibit "2", attached hereto and incorporated herein by this reference, pursuant to the terms of this Agreement, for the purpose of securing payment of the Note.

THEREFORE, in consideration of mutual covenants and promises contained herein, and for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement (hereinafter collectively "parties" and individually "party") agree as follows:

AGREEMENT

    1.  Pledge of Stock and Proceeds.

    (a)  Original Pledge.  As collateral security for the payment and/or performance of all of Pledgor's presently existing or hereinafter arising obligations and liabilities to Pledgee under the Note, Pledgor hereby pledges, grants and assigns to Pledgee a continuing security interest in the following:

     (i) Twenty thousand (20,000) shares of the Common Stock of Staar Surgical Company (the "Stock"); and

    (ii) the proceeds of the Stock including, without limitation, any and all dividends, cash, instruments and other property from time-to-time received, receivable, or otherwise distributed in respect of or in exchange for any of the Stock ("Proceeds"). (The Stock and the Proceeds shall hereinafter be collectively referred to as the "Collateral").

    (b)  Increase in Security.  If, for a period of fifteen (15) consecutive days, the fair market value of the Stock falls below all sums due under the Note, then Pledgor will be required to transfer to Pledgee, upon receipt of Pledgee's written request, additional security, in any form acceptable to Pledgee, in an amount equal to the difference between all sums due under the Note and the fair market value of the Stock.

    (c)  Delivery of Stock Power to Pledgee.  Pledgor shall deliver to Pledgee, concurrently with the execution of this Agreement, the Stock along with an Assignment of Corporate Shares in the form of Exhibit "3" attached hereto and incorporated herein by this reference ("Stock Assignment"), signed by Pledgor, in blank, such Stock Assignment to be used by Pledgee in accordance with the terms of this Agreement.

    (d)  Pledgee's Acceptance of Collateral and Appointment as Pledgor's Attorney-In-Fact.  Pledgee hereby agrees to accept the Collateral and agrees to hold and dispose of the Collateral in accordance with and subject only to the terms of this Agreement. Pledgor hereby irrevocably appoints Pledgee as Pledgor's attorney-in-fact to arrange for the transfer of the Collateral and to do and perform all actions that are necessary or appropriate in order to effect the terms of this Agreement.

    (e)  Release of Collateral.  Pledgee shall release the Collateral from this Agreement and return the Collateral to Pledgor upon satisfaction in full of Pledgor's obligations under the Note.

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    2.  Matters Pertaining to the Collateral.

    (a)  Voting and Consensual Rights.  Pledgor shall retain the right to vote the Stock and to exercise any other rights pertaining to the Stock, provided, however, so long as Pledgor is in "Default" as defined in Paragraph 3 of this Agreement, Pledgee shall vote the Stock and exercise any rights pertaining to the Stock.

    (b)  Rights to Dividends and Distributions.  So long as Pledgor is not in Default and except as expressly limited below, Pledgor shall be entitled to receive and retain any proceeds distributed on account of the Stock. Notwithstanding the foregoing, Pledgee, rather than Pledgor, shall be entitled to collect and receive all of the following types of proceeds, which shall be added to and shall become a part of the Collateral:

     (i) all proceeds paid or payable other than in cash, and all instruments and other property distributed in respect of, or in exchange for, the Stock;

    (ii) all proceeds paid or payable with respect to the Stock in connection with a partial or total liquidation or dissolution of the issuing corporation or in connection with a reduction of capital, capital surplus or paid-in surplus of the issuing corporation; and

    (iii) all proceeds distributed in redemption of, or in exchange for, the Stock. To the extent the foregoing proceeds exceed the amount of Pledgor's obligations and liabilities under the Note and/or this Agreement, Pledgor shall be entitled to receive these excess proceeds.

    In the event and for so long as Pledgor is in Default, Pledgee shall be paid any proceeds with respect to the Stock; provided, however, Pledgee shall apply such payments against the outstanding balance of the Note.

    (c)  Stock Adjustments.  In the event that, during the term of this Agreement, any stock dividend, reclassification, readjustment, or other change is declared or made in the capital structure of the issuing corporation, all new, substituted and additional shares or other securities issued with respect to the Stock by reason of any such change shall be delivered to and held by Pledgee under the terms of this Agreement in the same manner as the Stock.

    3.  Default and Remedy on Default.

    At the option of Pledgee, upon the happening of any of the following events of default ("Default"), Pledgee shall have all of the rights and remedies set forth therein:

    (a)  Default Under Note.  If an event of default, as set forth in paragraph 9 of the Note, occurs and is not cured as specifically provided therein; or

    (b)  Default Under This Agreement.  If Pledgor defaults in the due performance or observance of any representation or obligation under this Agreement.

    4.  Pledgor's Representations, Warranties and Covenants.

    Pledgor represents, warrants and covenants to Pledgee as follows:

    (a) Upon delivery to Pledgee as contemplated hereby, the Collateral will be free of any security interests, liens, pledges or encumbrances created by Pledgor (except for the security interest created hereby), or any claims of third parties of any nature whatsoever, charges, escrows, options, rights of first refusal, or other agreements, restrictions, arrangements, commitments or obligations, written or oral, created by Pledgor, affecting the legal or beneficial ownership of the Collateral.

    (b) From and after the date hereof, Pledgor shall not make any agreements restricting in any manner the transferability of the Collateral or otherwise affecting the Collateral;

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    (c) Pledgor shall, at Pledgor's expense, take any steps necessary to preserve Pledgee's rights in the Collateral against any claims of third parties; and

    (d) Pledgor has arrangements for keeping informed of changes or potential changes affecting the Collateral (including, without limitation, rights to convert, rights to subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and Pledgee shall not have any responsibility or liability for informing Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto.

    5.  Miscellaneous.

    (a) It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail himself or itself of same. This Agreement was prepared by each party in conjunction with counseling from such party's respective attorney or the opportunity to obtain such counseling. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting of this Agreement, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of it. Each party shall pay all costs and expenses incurred or to be incurred by such party in negotiating and preparing this Agreement and in performing and complying with all representations, warranties, covenants, agreements and conditions contained in this Agreement to be performed or complied with by such party, including legal fees.

    (b) Each party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may be reasonably necessary to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense. Pledgor shall reimburse Pledgee for any costs and expenses incurred by Pledgee in connection with any breach or default of Pledgor under this Agreement, including collection efforts, whether or not suit is commenced or judgement is entered. Furthermore, should any party institute or should the parties otherwise become a party to any action or proceeding to enforce or interpret this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all costs and expenses of prosecuting or defending the action or proceeding. This Agreement and the rights of each party under this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State of Delaware.

    (c) The parties expressly acknowledge and agree that this Agreement: (i) is the final, complete and exclusive statement of the parties' agreement with respect to the subject matter hereof, (ii) supersedes any prior or contemporaneous promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively "Prior Agreements"), and that any such Prior Agreements are of no force or effect except as expressly set forth herein, and (iii) may not be varied, supplemented or contradicted by evidence of such Prior Agreements or by evidence of subsequent oral agreements. Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the modification, supplement or discharge is sought. By execution hereof, the parties specifically disavow any desire or intention to create a "third party" beneficiary contract, and specifically declare that no person or entity, save and except for the parties and their permitted successors, and assigns, shall have any rights hereunder nor any right of enforcement hereof. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable, then the remaining part of this Agreement shall nevertheless not be affected thereby and shall continue in full force and effect to the fullest extent provided by law. This Agreement is to be read, construed and applied together with the Note, which, taken together, set forth

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the complete understanding and agreement of the parties with respect to the matters referred to herein and therein.

    (d) Pledgor may not delegate its duties under this Agreement, in whole or in part, without the prior written consent of Pledgee, which consent may be withheld in Pledgee's sole and arbitrary discretion. Notwithstanding the preceding sentence, no such delegation shall release Pledgor from any liability or obligation under this Agreement without the written consent of Pledgee, which consent may be withheld in Pledgee's sole and arbitrary discretion. Subject to the foregoing, all of the representations, warranties, covenants, conditions and provisions of this Agreement shall be binding upon and shall inure to the benefit of each party and such party's respective heirs, executors, administrators, legal representatives, successors and/or assigns.

    (e) The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals thereof. As used in this Agreement, each gender shall be deemed to include each other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires.

    (f)  All notices, demands, requests, consents, approvals or other communications ("Notices") given hereunder shall be as provided in the Note.

THIS STOCK PLEDGE AGREEMENT IS A REPLACEMENT AGREEMENT. THE ORIGINAL AGREEMENT HAS BEEN LOST.

WHEREFORE, the parties hereto have executed this Agreement as of the date first set forth above.

Pledgor:
/s/ PETER J. UTRATA
Peter J. Utrata
Address:	303 East Town Street, Suite 270 Columbus, Ohio 43215
Pledgee:
STAAR SURGICAL COMPANY 1911 Walker Avenue Monrovia, California 91016

By:

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EXHIBIT "1"

PROMISSORY NOTE

$272,500 June 2, 2000
Monrovia, California

FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged, Peter J. Utrata ("Maker"), hereby promises to pay to STAAR Surgical Company, or order ("Holder"), at the address designated on the signature page of this Note, or at such other place as Holder may designate by written notice to Maker, the principal sum hereinbelow described ("Principal Amount"), together with interest thereon, in the manner and at the times provided and subject to the terms and conditions described herein.

    1.  Principal Amount.

    The Principal Amount means the sum of two hundred seventy-two thousand five hundred dollars ($272,500).

    2.  Interest.

    Interest on the Principal Amount from time-to-time remaining unpaid shall accrue from the date of this Note at the lower of: (i) the rate of seven percent (7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Interest shall be computed on the basis of a three hundred sixty (360) day year and a thirty (30) day month.

    3.  Payment of Principal and Interest.

    Subject to paragraph 8, below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note five (5) years from the date of this Note, on June 1, 2005.

    4.  Security/Release of Security.

    Maker shall pledge as security for the repayment of all sums payable under this Note 20,000 shares of Staar Surgical Company common stock (the "Stock"). Maker shall execute a Stock Pledge Agreement of even date herewith evidencing Holder's security interest in the Stock. If, for a period of fifteen (15) consecutive days, the fair market value of the Stock falls below all sums unpaid under this Note, then Maker will be required to transfer to Holder, upon receipt of Holder's written request, additional security, in any form acceptable to Holder, in an amount equal to the difference between all sums due under this Note and the fair market value of the Stock.

    5.  Prepayments.

    Maker shall have the right to prepay any portion of the Principal Amount without prepayment penalty or premium or discount.

    6.  Manner of Payments/Crediting of Payments.

    Payments of any amount required hereunder shall be made in lawful money of the United States or in such other property as Holder, in its sole and absolute discretion, may accept, without deduction or offset, and shall be credited first against accrued but unpaid late charges, if any, thereafter against accrued but unpaid interest, if any, and thereafter against the unpaid balance of the Principal Amount.

    7.  Interest on Delinquent Payments.

    Any payment under this Note not paid when due shall bear interest at the same rate and method as interest is charged on the Principal Amount from the due date until paid.

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    8.  Acceleration Upon Default.

    At the option of Holder, all or any part of the indebtedness of Maker hereunder shall immediately become due and payable, irrespective of any agreed maturity date, upon the happening of any of the following events of default:

    (a) If any part of the Principal Amount and/or interest thereon under this Note are not paid when due, provided, however, Maker shall be entitled to a grace period of ten (10) days following written notice of such event of default to cure said event of default;

    (b) If Maker shall breach any non-monetary condition or obligation imposed on Maker pursuant to the terms of this Note, provided, however, that if any such breach is reasonably susceptible of being cured, Maker shall be entitled to a grace period of thirty (30) days following written notice of such event of default to cure;

    (c) If Maker shall make an assignment for the benefit of creditors;

    (d) If a custodian, trustee, receiver, or agent is appointed or takes possession of substantially all of the property of Maker;

    (e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing Maker's inability to pay Maker's debts as they become due;

    (f)  If Maker shall apply for or consent to the appointment of a custodian, trustee, receiver, intervenor, liquidator or agent of Maker, or commence any proceeding related to Maker under any bankruptcy or reorganization statute, or under any arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect;

    (g) If any petition is filed against Maker under the Bankruptcy Code and either (A) the Bankruptcy Court orders relief against Maker, or (B) such petition is not dismissed by the Bankruptcy Court within thirty (30) days of the date of filing; or

    (h) If any attachment, execution, or other writ is levied on substantially all of the assets of Maker and remains in effect for more than five (5) days.

Maker shall notify Holder immediately if any event of default which is described in sub-paragraph (c) through sub-paragraph (h), above, occurs.

    9.  Collection Costs and Attorneys' Fees.

    Maker agrees to pay Holder all costs and expenses, including reasonable attorneys' fees, paid or incurred by Holder in connection with the collection or enforcement of this Note or any instrument securing payment of this Note, including without limitation, defending the priority of such instrument or conducting a trustee sale thereunder. In the event any litigation is initiated concerning the enforcement, interpretation or collection of this Note, the prevailing party in any proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

    10.  Notice.

    Any notice to either party under this Note shall be given by personal delivery or by express mail, Federal Express, DHL or similar airborne/overnight delivery service, or by mailing such notice by first class or certified mail, return receipt requested, addressed to such party at the address set forth below, or to such other address as either party from time to time may designate by written notice. Notices delivered by overnight delivery service shall be deemed delivered the next business day following consignment for such delivery service. Mailed notices shall be deemed delivered and received in accordance with this provision three (3) days after deposit in the United States mail.

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    11.  Usury Compliance.

    All agreements between Maker and Holder are expressly limited, so that in no event or contingency whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance, or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable usury laws. If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, Holder shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of the unpaid Principal Amount under this Note and not to the payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note, such excess shall be refunded to Maker. This provision shall control every other provision of all agreements between Maker and Holder.

    12.  Jurisdiction; Venue.

    This Note shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of California. Any action to enforce payment of this Note shall be filed and heard solely in Los Angeles County, California.

MAKER:

EXHIBIT ONLY—DO NOT SIGNPeter J. Utrata

MAKER'S ADDRESS:

303 East Town Street, Suite 270
Columbus, Ohio 43215

HOLDER'S ADDRESS:

STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer

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EXHIBIT "2"

LIST OF SHARES

    20,000 shares of the common stock of STAAR Surgical Company represented by certificate number SS            .

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EXHIBIT "3"

ASSIGNMENT OF CORPORATE SHARES

(Without Certificate)

FOR VALUE RECEIVED, the undersigned hereby assigns to Staar Surgical Company, a Delaware corporation, as Pledgee under that certain Stock Pledge Agreement entered into on June 2, 2000 by and between Peter J. Utrata and Staar Surgical Company, twenty thousand (20,000) shares of the common stock of Staar Surgical Company, represented by certificate number(s)            standing in the undersigned's name on the books of said corporation, and does hereby instruct and appoint the custodian of that corporation's stock books to so transfer the said stock on the books of said corporation.

Dated:                         

EXHIBIT ONLY—DO NOT SIGN

WITNESS:

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RECITALS
AGREEMENT
EXHIBIT "1" PROMISSORY NOTE
EXHIBIT "2" LIST OF SHARES
EXHIBIT "3" ASSIGNMENT OF CORPORATE SHARES (Without Certificate)

EX-10.54

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RESIGNATION, SEVERANCE AND RELEASE AGREEMENT

    This Resignation, Severance and Release Agreement ("Agreement") is entered into by and between STAAR Surgical Company, a Delaware corporation, and its subsidiaries (collectively, the "Company") and Michael Lloyd, an individual ("Lloyd"), this 9th day of June, 2000 based upon the following:

RECITALS

Whereas, the Company and Lloyd wish to memorialize their agreement regarding the termination of Lloyd's employment with the Company and the severance benefits that are to be transferred or paid to Lloyd as a result of the termination of his employment; and

Whereas, the Company and Lloyd wish to memorialize their agreement regarding Lloyd's waiver of all rights and claims which he may have against the Company, if any.

Now, therefore, in consideration of the mutual covenants and promises contained herein and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Lloyd agree as follows:

AGREEMENT

    1.  Incorporation of Recitals.  The recitals to this Agreement are an integral part of this Agreement and are hereby incorporated as a part of this Agreement as if set forth in it.

    2.  Termination of Employment.  As of the date of execution of this Agreement, Lloyd's employment with the Company shall terminate and Lloyd shall not perform further services for the Company.

    3.  Consideration for Agreement.  In exchange for Lloyd's release of the Company from any past and future obligations (if any), whether monetary or otherwise, allegedly owed by the Company to Lloyd based upon Lloyd's employment, the Company shall pay to Lloyd the sum of one hundred thousand dollars ($100,000). Furthermore, the Company agrees that Lloyd may exercise the following options prior to the dates such options expire or are terminated at the prices set forth below:

11/5/90	40,000 Warrants @ $4.00
8/1/91	12,500 Formula Stock Option @ $2.50
11/10/92	25,000 Incentive Stock Option @ $5.875
3/31/94	35,000 Incentive Stock Option @ $4.75
8/4/98	50,000 Incentive Stock Option @ $6.25
11/5/93	11,986 Anti-Dilution Warrants expired not available to exercise

    4.  Waiver of All Claims.  Lloyd agrees that Lloyd is not entitled to receive, will not claim and expressly waives any entitlement to rights, benefits or compensation from the Company other than as expressly set forth in this Agreement. Lloyd acknowledges that there may be adverse tax consequences relating to his receipt of some or all of the consideration set forth in section 3. LLOYD AGREES THAT HE WILL CONSULT WITH HIS TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE CONSIDERATION. LLOYD ACKNOWLEDGES THAT IT IS HIS SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO DO THIS INVESTIGATION.

    5.  Complete Release by Lloyd.

    (a)  Release.  Lloyd irrevocably and unconditionally releases all of the claims described in subsection (b) of this section 5 that Lloyd may now have against the following persons or entities (the "Releasees"): the Company, all of its past and present employees, officers, directors,

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stockholders, owners, representatives, assigns, attorneys, agents, insurers, employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs) and any other persons acting by, through, under or in concert with any of the persons or entities listed in this subsection.

    (b)  Claims Released.  The claims released include all claims, promises, debts, causes of action or similar rights of any type or nature Lloyd has or had which in any way relate to (i) Lloyd's employment with the Company, or the termination of that employment, such as claims for compensation, bonuses, commissions, lost wages or unused accrued vacation or sick pay, (ii) the design or administration of any employee benefit program or Lloyd's entitlement to benefits under any such program, (iii) any claims to attorneys' fees and/or other legal costs, and (iv) any other claims or demands Lloyd may, on any basis, have. The claims released include, but are not limited to, claims arising under any of the following statutes or common law doctrines:

     (i) Anti-Discrimination Statutes, such as the Age Discrimination in Employment Act, which prohibits age discrimination in employment; the Civil Rights Act of 1991, Title VII of the Civil Rights Act of 1964, and §1981 of the Civil Rights Act of 1866, which prohibit discrimination based on race, color, national origin, religion or sex; the Equal Pay Act, which prohibits paying men and women unequal pay for equal work; the Americans With Disabilities Act, which prohibits discrimination against the disabled; the California Fair Employment and Housing Act, which prohibits discrimination in employment based upon race, color, national origin, ancestry, physical or mental disability, medical condition, martial status, sex, or age; and any other federal, state or local laws or regulations prohibiting employment discrimination.

    (ii) Federal Employment Statutes, such as the Employee Retirement Income Security Act of 1974, which, among other things, protects pension or health plan benefits; and the Fair Labor Standards Act of 1938, which regulates wage and hour matters.

    (iii) Other Laws, such as any federal, state or local laws restricting an employer's right to terminate employees or otherwise regulating employment; any federal, state or local law enforcing express or implied employment contracts or requiring an employer to deal with employees fairly or in good faith; and any other federal, state or local laws providing recourse for alleged wrongful discharge, physical or personal injury, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation and similar or related claims. The laws referred to in this section include statutes, regulations, other administrative guidance and common law doctrines both in the United States and in Australia.

    (c)  Release Extends to Both Known and Unknown Claims.  This release covers both claims that Lloyd knows about and those Lloyd does not know about. Lloyd understands the significance of this release of unknown claims and his waiver of any statutory protection against a release of unknown claims. Lloyd expressly waives the protection of any such governmental statutes or regulations.

    More particularly, and without limitation, Lloyd acknowledges that Lloyd has read and is familiar with and understands the provisions of Section 1542 of the California Civil Code, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

LLOYD EXPRESSLY WAIVES ANY RIGHT OR CLAIM OF RIGHT LLOYD MAY HAVE UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE.

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    (d)  Ownership of Claims.  Lloyd represents that Lloyd has not assigned or transferred, or purported to assign or transfer, all or any part of any claim released by this Agreement.

    6.  Lloyd's Promises.  In addition to the release of claims provided for in section 5, Lloyd promises never to file or prosecute a lawsuit, administrative complaint or charge, or other complaint or charge asserting any claims that are released by the Agreement. Lloyd represents that Lloyd has not filed or caused to be filed any lawsuit, complaint or charge with respect to any claim this Agreement releases. Lloyd further agrees to request any government agency or other body assuming jurisdiction of any complaint or charge relating to a released claim to withdraw from the matter or dismiss the matter with prejudice.

    7.  Consequences of Lloyd's Violation of Promises.  If Lloyd breaks any of the promises in this Agreement, such as, by way of example and not by way of limitation, by filing or prosecuting a lawsuit or charge based on claims that Lloyd has released, or if any representation made by Lloyd in this Agreement was false when made, Lloyd will: (i) immediately return to the Company the consideration paid to him pursuant to section 5 above; and (ii) pay reasonable attorneys' fees and all other costs incurred as a result of such breach or false representation, such as, by way of example and not by way of limitation, the Company's cost of defending any suit brought with respect to a claim released by him.

    8.  Consulting with Attorney.  Lloyd acknowledges that he has had ample opportunity to consult with an attorney prior to executing this Agreement.

    9.  Return of Company Property.  Immediately following the execution of this Agreement, Lloyd shall transfer to the Company all files (including, but not limited to, electronic files), records, documents, drawings, specifications, equipment and similar items in its possession relating to the business of the Company or its confidential information.

    10.  Severability.  The provisions of this Agreement are severable. If any part of it is found to be unenforceable, all other provisions shall remain fully valid and enforceable.

    11.  Choice of Laws/Venue.  This Agreement shall be governed by the laws of the State of California, and any action or proceeding relating to this Agreement shall be heard solely before the Courts of the County of Los Angeles, California.

    12.  Nature, Effect and Interpretation of this Agreement.

    (a)  Entire Agreement.  This is the entire Agreement between Lloyd and the Company; it may not be modified or cancelled in any manner except by a writing signed by both the Company and Lloyd. The Company has made no promises or representations to Lloyd other than those in this Agreement and Lloyd has made no promises or representations to the Company other than those in this Agreement.

    (b)  Successors and Assigns.  This Agreement shall bind both the Company's and Lloyd's heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.

    (c)  Interpretation.  This Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties. Unless the context indicates otherwise, the term "or" shall be deemed to include the term "and" and the singular or plural number shall be deemed to include the other. Paragraph headings used in this Agreement are intended solely for convenience of reference and shall not be used in the interpretation of any of this Agreement. It is acknowledged that neither party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against either party as the alleged draftsman of this Agreement.

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    (d)  Counterparts and Facsimiles.  For the convenience of the parties to this Agreement, this document may be executed by facsimile signatures and in counterparts which shall together constitute the agreement of the parties as one and the same instrument.

    (e)  Implementation.  The Company and Lloyd both agree that, without the receipt of further consideration, they will sign and deliver any documents and do anything else that is necessary in the future to make the provisions of this Agreement effective.

    13.  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (1) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (2) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (3) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (4) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth {5th} business day following the date mailed). Notices shall be addressed to the parties as follows:

Lloyd:	Michael Lloyd 2409 Bonnie Brae Avenue Claremont, California 91711
Company:	STAAR Surgical Company 1911 Walker Avenue Monrovia, California 91016 Attn.: Chief Executive Officer

    14.  Binding Arbitration.  The Company and Lloyd agree to submit all controversies, claims and matters of difference to binding arbitration according to the rules and practices of the American Arbitration Association from time-to-time in force.

PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

    Executed at Monrovia, California this 2nd day of June 2000.

"LLOYD"

Michael Lloyd

"COMPANY"

STAAR Surgical Company

By:

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RECITALS
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EX-10.55

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Exhibit 10.55

PARKING LOT AND STORAGE LEASE
1900 Walker Ave., Monrovia CA 91016

    THIS LEASE, entered into this 11th day of June, 2000, by and between and Gilbert Bates & LaVonne Bates, and Staar Surgical Company., hereinafter called respectively Landlord and Tenant. This Lease replaces the previous leases between the Parties dated August 3, 1995 and June 20, 1997.

    WITNESSETH; that for and in consideration of the payment of the rents and the performance of the covenants contained on the part of Tenant, said Landlord does hereby demise and let unto the Tenant, for use as a parking lot those premises described as South ¹/2 of parking lot, as well as 4,464 s.f. of inside storage located as per Exhibit "A", at 1900 Walker Avenue, Monrovia, California, for tenancy commencing on the 1st day of July 2000, and at a monthly lease of Forty Thousand Eighty Two, ($4,082)* GROSS dollars per month, payable monthly in advance on the 1st day of each and every month for a period of one year.

*The above rent is based on $2,232 rent for the warehouse and $1,850 for the parking lot.

    It is further mutually agreed between the parties as follows:

    (1) Parking lot shall be occupied by no more than 35 cars. Each car must be parked in a striped stall. Personnel using Inside Storage shall not have access to restrooms, electrical room, telephones or any other area not contained in the leased area without approval of Landlord.

    (2) Tenant absolves Landlord of any responsibility or liability in connection with Tenants use of property. Tenant shall maintain gate motor in proper working order. Tenants shall keep premises clear and free of excessive engine oil, trash and other debris. Tenant shall not park vehicles overnight. Tenant shall keep the trees and shrubs trimmed and in good appearance.

    (3) Tenant shall not violate any city ordinance or state law in or about said premises.

    (4) That all alterations, additions or improvements made in and to said premises shall, unless otherwise provided by written agreement between the parties hereto, be the property of Landlord and shall remain upon and be surrendered with the premises.

    (5) Tenant shall not sub-let the demised premises, or any part thereof, or assign this agreement without the Landlord's written consent.

    (6) Any failure by Tenant to pay rent or other charges promptly when due, or to comply with any other term or condition hereof, shall at the option of the Landlord, and after sixty lawful notice given, forthwith terminate this tenancy.

    (7) Tenant shall keep and maintain the premises in a clean and sanitary condition at all times, and upon the termination of the tenancy shall surrender the control keys and premises to the Landlord in as good condition as when received, ordinary wear and damage by the elements excepted.

    (8) Tenant shall provide Landlord evidence of adequate insurance for the use of premises, naming Gilbert Bates, LaVonne Bates, L. Bates, Inc. and GLB Apparel, Inc., as additional insured in an amount not less that $1,000,000.

    (9) Nothing contained in this agreement shall be construed as waiving any of Landlord's right under the laws of the State of California.

    (10) After completion of the term of this lease, there shall be no holdover unless there is a written agreement to that effect signed by Staar, Unitek Miyachi & Lessor in place (thirty) 30 days prior to

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the expiration of June 1^st, 2001. Absent such an agreement, Tenant agrees to be vacated by the Expiration Date.

    (12) The prevailing party in an action brought for the recovery of rent or other moneys due or to become due under the lease or by reason of a breach of any covenant herein contained or for the recovery of the possession of said premised, or to compel the performance of anything agreed to be done herein, or to recover for damages to said property, or to enjoin any act contrary to the provisions hereof, shall be awarded all of the costs in connection therewith, including, but not by way of limitation, reasonable attorney's fees.

    (13) Landlord shall not be liable or responsible in any way for injury to any person, or for loss of, or damage to, any article belonging to Tenant, or located in said premises, or other premises under control of Landlord. Landlord shall not liable for and this agreement shall not be terminated by reason of any interruption of, or interference with, services or accommodation due Tenant, caused by strike, riot, orders of public authorities, acts of other Tenants, accident, the making of necessary repairs to the building of which said premises are a part or any other cause beyond the Landlord's control.

    (14) Except in case of emergency, Landlord agrees to not enter the Inside Storage Area leased by Tenant. Upon request, Tenant shall provide access to Landlord, or his agent, to said premises for reasonable purposes including inspection, maintenance and showing same to prospective Tenants or purchasers. Tenant agrees to provide Landlord a key and access code to be used by Landlord only in the event of an Emergency, in which case Landlord agrees to notify Tenant or Tenant's Security Personnel of such access as soon as practically possible, but in no case later than the commencement of the next business day. Tenant hereby agrees not to change any lock or access device to said premises without the prior written consent of Landlord.

    15) Tenant agrees that he has inspected the premises, and equipment and that the same are now in good order and condition; and that he will on demand pay Landlord for all loss, breakage and damage. Landlord agrees to provide labor to move the partition wall and gate in order to segregate the inside storage space. Tenant agrees to pay for the relocating their security sensors. Tenant is responsible for security of this area. Tenant will be provided access to north ground level loading doors at any time during normal working hours. Tenant will have 24-hour pedestrian access to the storage space via the man door on the north side of the building (El Norte Street). Tenant agrees to maintain the fencing, gate and electrical fixtures. Tenant will be provided with an alarm keypad and code, which will deactivate the alarm for the area of this lease. Landlord may enter the parking area leased by Tenant without notice for any reasonable purpose.

    (16) The following items are furnished: 35 remote activators/changes. Landlord agrees to resurface and restripe the parking lot prior to the Tenants occupancy.

    (17) The security deposit is refundable provided all rents have been paid and and no damage has occurred and no repairs are necessary to return premises to original condition. The security deposit is hereby reduced to four thousand eighty two and no/100 ($4,082). Excess Security Deposit may be applied to the next months rent.

    (18) This lease is a confidential transaction between Landlord and Tenant. The terms, including but not limited to the length of the agreement, are not to be disclosed in whole or in part by either party without prior written consent of the other party.

    (19) Tenant agrees to cooperate with Landlord (at Landlords expense) in the repair, resurfacing and restriping of the parking lot. Landlord will attempt to perform this work on the weekend so as to not unduly inconvenience Tenant. In the event the parking lot is unusable for any work day due to this work, Tenant will be credited at the rate of $70.00 per day.

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All rent checks are to be made payable to Gilbert Bates. Rent shall be paid at 425 E. Huntington Drive, Monrovia, CA 91016. Rent is due on the first day of each month. Rent payments paid after the third day of the month must include a late charge of $200 plus $50 for each additional day that the rent continues to be unpaid. The total late charges for any one-month shall not exceed $500. Returned checks will be charged $20.

LANDLORD	TENANT
/s/ GILBERT L. BATES GILBERT L. BATES	/s/ SANDRA K. WOOD WILLIAM HUDDLESTON STAAR SURGICAL, INC.
/s/ LAVONNE BATES LAVONNE BATES	Assist. V.P. Corp Services TITLE
6-29-00 DATE	6-29-00 DATE

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EXHIBIT "A"
1900 Walker Ave
Monrovia CA

    [FLOOR PLAN]

4

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PARKING LOT AND STORAGE LEASE 1900 Walker Ave., Monrovia CA 91016
EXHIBIT "A" 1900 Walker Ave Monrovia CA

EX-10.56

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PROMISSORY NOTE
Secured by Deed of Trust

$288,000 November 1, 2000
Monrovia, California

FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged, Andrew F. Pollet ("Maker"), hereby promises to pay to STAAR Surgical Company, or order ("Holder"), at the address designated on the signature page of this Note, or at such other place as Holder may designate by written notice to Maker, the principal sum hereinbelow described ("Principal Amount"), together with interest thereon, in the manner and at the times provided and subject to the terms and conditions described herein.

    1.  Principal Amount.

    The Principal Amount means the sum of two hundred eighty-eight thousand dollars ($288,000).

    2.  Interest.

    Interest on the Principal Amount from time-to-time remaining unpaid shall accrue from the date of this Note at the lower of: (i) the rate of seven percent (7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Interest shall be computed on the basis of a three hundred sixty (360) day year and a thirty (30) day month.

    3.  Payment of Principal and Interest.

    Subject to paragraph 8, below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note five (5) years from the date of this Note, on November 1, 2005.

    4.  Security/Release of Security.

    Maker shall pledge as security for the repayment of all sums payable under this Note the real property commonly known as 10934 Alto Court, Oak View, California. Maker acknowledges executing and recording with the Ventura County Recorder a deed of trust dated September 5, 2000 and recorded as document number 00-0166279-00, evidencing Holder's security interest in the real property. If, for a period of fifteen (15) consecutive days, the fair market value of the real property falls below all sums unpaid under this Note and the unpaid balance of all promissory notes or other obligations secured thereby, then Maker will be required to transfer to Holder, upon receipt of Holder's written request, additional security, in any form acceptable to Holder, in an amount equal to the difference between all sums due under this Note and such other notes or obligations and the fair market value of the real property.

    5.  Prepayments.

    Maker shall have the right to prepay any portion of the Principal Amount without prepayment penalty or premium or discount.

    6.  Manner of Payments/Crediting of Payments.

    Payments of any amount required hereunder shall be made in lawful money of the United States or in such other property as Holder, in its sole and absolute discretion, may accept, without deduction or offset, and shall be credited first against accrued but unpaid late charges, if any, thereafter against accrued but unpaid interest, if any, and thereafter against the unpaid balance of the Principal Amount.

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    7.  Interest on Delinquent Payments.

    Any payment under this Note not paid when due shall bear interest at the same rate and method as interest is charged on the Principal Amount from the due date until paid.

    8.  Acceleration Upon Default.

    At the option of Holder, all or any part of the indebtedness of Maker hereunder shall immediately become due and payable, irrespective of any agreed maturity date, upon the happening of any of the following events of default:

    (a) If any part of the Principal Amount and/or interest thereon under this Note are not paid when due, provided, however, Maker shall be entitled to a grace period of ten (10) days following written notice of such event of default to cure said event of default;

    (b) If Maker shall breach any non-monetary condition or obligation imposed on Maker pursuant to the terms of this Note, provided, however, that if any such breach is reasonably susceptible of being cured, Maker shall be entitled to a grace period of thirty (30) days following written notice of such event of default to cure;

    (c) If Maker shall make an assignment for the benefit of creditors;

    (d) If a custodian, trustee, receiver, or agent is appointed or takes possession of substantially all of the property of Maker;

    (e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing Maker's inability to pay Maker's debts as they become due;

    (f)  If Maker shall apply for or consent to the appointment of a custodian, trustee, receiver, intervenor, liquidator or agent of Maker, or commence any proceeding related to Maker under any bankruptcy or reorganization statute, or under any arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect;

    (g) If any petition is filed against Maker under the Bankruptcy Code and either (A) the Bankruptcy Court orders relief against Maker, or (B) such petition is not dismissed by the Bankruptcy Court within thirty (30) days of the date of filing; or

    (h) If any attachment, execution, or other writ is levied on substantially all of the assets of Maker and remains in effect for more than five (5) days.

Maker shall notify Holder immediately if any event of default which is described in sub-paragraph (c) through sub-paragraph (h), above, occurs.

    9.  Collection Costs and Attorneys' Fees.

    Maker agrees to pay Holder all costs and expenses, including reasonable attorneys' fees, paid or incurred by Holder in connection with the collection or enforcement of this Note or any instrument securing payment of this Note, including without limitation, defending the priority of such instrument or conducting a trustee sale thereunder. In the event any litigation is initiated concerning the enforcement, interpretation or collection of this Note, the prevailing party in any proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

    10.  Notice.

    Any notice to either party under this Note shall be given by personal delivery or by express mail, Federal Express, DHL or similar airborne/overnight delivery service, or by mailing such notice by first class or certified mail, return receipt requested, addressed to such party at the address set forth below,

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or to such other address as either party from time to time may designate by written notice. Notices delivered by overnight delivery service shall be deemed delivered the next business day following consignment for such delivery service. Mailed notices shall be deemed delivered and received in accordance with this provision three (3) days after deposit in the United States mail.

    11.  Usury Compliance.

    All agreements between Maker and Holder are expressly limited, so that in no event or contingency whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance, or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable usury laws. If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, Holder shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of the unpaid Principal Amount under this Note and not to the payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note, such excess shall be refunded to Maker. This provision shall control every other provision of all agreements between Maker and Holder.

    12.  Jurisdiction; Venue.

    This Note shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of California. Any action to enforce payment of this Note shall be filed and heard solely in Los Angeles County, California.

MAKER:

/s/ ANDREW F. POLLETAndrew F. Pollet

MAKER'S ADDRESS:

c/o 10900 Wilshire Boulevard, Suite 500
Los Angeles, California 90024

HOLDER'S ADDRESS:

STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer

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PROMISSORY NOTE Secured by Deed of Trust

EX-10.57

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	Recording Requested By
Andrew F. and Sally M. Pollet
AND WHEN RECORDED MAIL TO: STAAR Surgical Company c/o Mary Ann Sapone Pollet & Richardson 10900 Wilshire Blvd., Suite 500 Los Angeles, California 90024		Ventura, County Recorder RICHARD D. DEAN DOC- 2000-0166279-00 Check Number 222750 REQD BY JANNEY & JANNEY Monday, OCT 23, 2000 10:47:36 Ttl Pd $20.00   Nbr-0000262592                 DJS/C3/2-3

SPACE ABOVE THIS LINE FOR RECORDER'S USE

SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS (INDIVIDUAL)

ALL	Title No.
PTN	Escrow No.

This Deed of Trust, made this 5th day of September 2000, between Andrew F. Pollet and Sally M. Pollet, as individuals and as Co-Trustees of the Andrew F. and Sally M. Pollet Revocable Trust dated March 6, 1990, herein called Trustor, whose address is 10934 Alto Court, Oak View, California 93022

(Number and Street) (city) (state) (zip)

Provident Title Company, a California corporation, herein called Trustee, and STAAR Surgical Company, a Delaware corporation, herein called Beneficiary

Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to TRUSTEE IN TRUST, WITH POWER OF SALE, that property in Ventura County, California, described as:

See attached Exhibit A

TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary by paragraph (10) of the provisions incorporated herein by reference to collect and apply such rents, issues and profits.

For the Purpose of Securing: 1. Performance of each agreement of Trustor incorporated by reference or contained herein. 2. Payment of the indebtedness evidenced by promissory note, and any extension or renewal thereof, in the principal sum of $878,625 executed by Trustor in favor of Beneficiary or order. 3. Payment of such further sums as the then record owner of said property may borrow from Beneficiary, when evidenced by another note (or notes) reciting it is so secured.

To Protect the Security of This Deed of Trust, Trustor Agrees: By the execution and delivery of this Deed of Trust and the rate secured hereby, that provisions (1) to (14), inclusive, of the fictitious deed of trust recorded October 23, 1961, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, viz:

COUNTY	BOOK	PAGE	COUNTY	BOOK	PAGE	COUNTY	BOOK	PAGE
Los Angeles	T2055	899	Riverside	3005	523	San Diego	Series 2 Book 1961 Page 183887
Orange	5889	611	San Bernardino	5567	61	Ventura	2062	386

(which provisions, identical in all counties, are printed on the reverse hereof) hereby are adopted and incorporated herein and made a part hereof as fully as though set forth herein at length; that he will observe and perform said provisions; and that the references to property, obligations, and parties in said provisions shall be construed to refer to the property, obligations, and parties set forth in this Deed of Trust.

The Undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to him at his address hereinbefore set forth.

STATE OF CALIFORNIA COUNTY OF LOS ANGELES	}SS.	/s/ Andrew F. Pollet Andrew F. Pollet, individually & as Co-Trustee of the Andrew F. & Sally M. Pollet Rev. Trust
On Sept 5, 2000 before me, Mary Ann Parlapiano, Notary Public personally appeared Andrew F. Pollet & Sally M. Pollet personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal		/s/ Sally M. Pollet Sally M. Pollet, individually and as Co-Trustee of the Andrew F. & Sally M. Pollet Rev. Trust

Signature	/s/ Mary Ann Parlapiano	MARY ANN PARLAPIANO Commission # 1199651 Notary Public - California Los Angeles County My Comm. Expires Oct 25, 2002
		(This area for official notarial seal)

DO NOT RECORD

   The following is a copy of provisions (1) to (14) inclusive of the fictitious deed of trust, recorded in each county in California, as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.

To Protect the Security of This Deed of Trust, Trustor Agrees:

   (1) To keep said property in good condition and repair, not to remove or demolish any building thereon, to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon, not to commit or permit waste thereof, not to commit, suffer or permit any act upon said property in violations of law, to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general.

   (2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.

   (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.

   (4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.

   Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Beneficiary or Trustee being authorized to enter upon said property for such purposes, appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto, and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees.

   (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure of the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary and not to exceed the maximum allowed by law at the time when said statement is demanded.

   (6) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance.

   (7) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay.

   (8) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof.

   (9) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "The person or persons legally entitled thereto." Five years after issuance of such full reconveyance, Trustee may destroy said note and this Deed (unless directed in such request to retain them).

   (10) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys' fees. Upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.

   (11) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.

   After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place

fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including the Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.

   After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby, and the remainder, if any, to the person or persons legally entitled thereto.

   (12) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such successor. Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee.

   (13) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.

   (14) That Trustee accepts this trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.

DO NOT RECORD

REQUEST FOR FULL RECONVEYANCE

To be used only when note has been paid:

To Provident Title company, Trustee:            dated             

   The undersigned is the legal owner and holder of all indebtedness secured by the within Deed of Trust. All sums secured by said Deed of Trust have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel all evidences of indebtedness, secured by said Deed of Trust, delivered to you herewith together with said Deed or Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, the estate now held by you under the same.

Mail Reconveyance to:
	By
	By

Do not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be
delivered to the Trustee for cancellation before reconveyance will be made.

Exhibit A

    Lot 50 of Tract 3044-3 in the County of Ventura, State of California as shown on the map of said tract recorded in book 92, pages 93 through 96 of Miscellaneous Records (Maps) in the office of the County Recorder of said County.

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SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS (INDIVIDUAL)
REQUEST FOR FULL RECONVEYANCE
Exhibit A

EX-10.58

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[CIBC WORLD MARKETS LETTERHEAD]

Exhibit 10.58

     September 8, 2000

PERSONAL AND CONFIDENTIAL

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

Dear Mr. Pollet:

    This letter will confirm the understanding and agreement (the "Agreement") among CIBC World Markets Corp. (the "Lead Placement Agent"), Adams, Harkness & HIll, Inc. (the "Co-Placement Agent") (collectively, the "Agents") and STAAR Surgical Company (the "Company") as follows:

1.

Engagement:  The Company hereby engages the Agents as its exclusive agents in the private placement of one or more classes or series of securities of the Company to a limited number of sophisticated

investors (the "Investors"), pursuant to the following terms and conditions. Such securities (the "Securities") may take the form of common stock or other equity-linked securities. Such placement shall be referred to as the "Transaction."

Currently, the Company plans to sell up to 1,500,000 shares of it's common stock. The selection of each of the Investors from a list of potential Investors and the number of shares sold to each of such Investors shall be mutually agreed by the Company and the Agents. The number and price of the Securities the Company shall ultimately agree to sell, pursuant to the Purchase Agreements (defined below), are entirely within its discretion.

2.

The Agents' Role:  The Agents hereby accept the engagement described herein and, in that connection, agree to:

(a)

assist in preparing a private placement memorandum (the "Memorandum") describing the Company and the Securities;

(b)

review with the Company a list of the Investors to whom the Memorandum will be provided;

(c)

prepare other communications to be used in placing the Securities, whether in the form of letter, circular, notice or otherwise, and

(d)

assist and advise the Company with respect to the negotiation of the sale of the Securities to the Investors.

3.

Due Diligence:  It is understood that the Agents' assistance in the Transaction will be subject to the satisfactory completion of such investigation and inquiry into the affairs of the Company as the Agents deem appropriate under the circumstances (such investigation hereinafter to be referred to as "Due Diligence") and the approval of each Agents' internal committees. Each Agent shall have the right, in

its sole discretion, to terminate its involvement in the Transaction if the outcome of the Due Diligence is not to its satisfaction or if approval of its internal committees is not obtained. The termination by any one of the Agents shall not be imputed to the other Agents. If both Agents exercise their discretion to terminate their involvement in the Transaction, then this Agreement will terminate ("Early Termination").

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4.

Term; Exclusivity:  The term of the Agreement shall extend from the date hereof until the earlier of September 8, 2001 or Early Termination, and that during the term of this Agreement: (1) the Company will not, and will not permit its representatives to, other than in coordination with the Lead Placement Agent, contact or solicit institutions, corporations or other entities as potential purchasers of the Securities and (ii) the Company will not pursue any financing transaction which would be in lieu of a Transaction. Futhermore, the Company agrees that during the term of the Agreement all inquiries, whether direct or indirect, from prospective Investors will be referred to the Lead Placement Agent and will be deemed to have been contacted by the Lead Placement Agent in connection with the Transaction. The Company may reject any potential Investor if in its discretion, the Company believes that the inclusion of such Investor in the Company would be incompatible with the best interests of the Company. The Company shall not be obligated to sell the Securities or to accept any offer thereof, and the terms of such Securities and the final decision to issue the same shall be subject to the discretionary approval of the Company.

Any party may terminate its engagement at any time by giving the other parties at least thirty (30) days prior written notice of such termination, at which time the Company shall reimburse the Agents for all reasonable expenses incurred, in accordance with Paragraph 9 hereof. The Company agrees to pay the Agents any fees specified in Paragraph 8 if the events specified therein shall occur during the term of this Agreement or within twelve months after the termination or expiration of this Agreement. Any obligation pursuant to this Paragraph 4 shall survive the termination or expiration of this Agreement.

No offers or sales of any securities of the same or similar class as the Securities will be made by the Company or any affiliate during the six-month period after the completion of the offering of the Securities in each case except in compliance with the registration requirements of the Securities Act of 1933, as amended, or an exemption therefrom (the "Securities Act").

5.

Best Efforts:  It is understood that the Agents' involvement in the Transaction is strictly on a best efforts basis and that the consummation of the Transaction will be subject to, among other things, market conditions.

6.

Information:  The Company shall furnish, or cause to be furnished, to the Agents and to the Investors all information reasonably requested by the Agents for the purpose of rendering services hereunder or in connection with the purchase of the Securities, including the Memorandum (and together with all such other information, the "Information"). In addition, the Company agrees to make available to the Agents upon request from time to time the officers, directors, accountants, counsel and other advisors of the Company. The Company recognizes and confirms that the Agents (a) will use and rely on the information (including the Memorandum that will be delivered to each of the Investors) and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same; (b) does not assume responsibility for the accuracy or completeness of the Memorandum or the Information and such other information; and (c) will not make an appraisal of any of the assets or liabilities of the Company.

The Company represents and warrants to the he Agents that: (i) all such information, including the Memorandum, any documents attached as exhibits thereto and/or incorporated by reference therein, and any communications prepared pursuant to paragraph 2(a) above, will be true and accurate in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in the light of the circumstances under which they were made, not misleading and (ii) any projected financial information or other forward-looking information which the Campany provided to the

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Agent will be made by the Company in good faith, based on management's best estimates then available and based on facts and assumptions which the Company believes to be reasonable. The Company agrees that, upon reasonable request, it will meet with the Agents or its representatives to discuss all information relevant for disclosure in the Memorandum and will cooperate in any investigation undertaken by the Agents thereof, including any document included or incorporated by reference therein.

7.

Company's Responsibilities, Representations and Warranties:

(a)

The sale of Securities to any Investor will be evidenced by a purchase agreement ("Purchase Agreement") between the Company and such Investor in a form reasonably satisfactory to the Company and the Agents. Prior to the signing of any Purchase Agreement, officers of the Company with responsibility for financial affairs will be available to answer inquires from prospective investors.

(b)

The selling price of the Securities to be issued and sold by the Company pursuant to the Purchase Agreements will be specified in writing by the Agents on behalf of the Company to the prospective investors prior to the execution of the Purchase Agreements, subject to the Company's approval.

(c)

The Company will perform the covenants set forth in the Purchase Agreements. The Purchase Agreements will require the Company to file, as soon as practicable after it has signed and delivered such Purchase Agreements (the "Closing") but in any event no later than two weeks following the Closing, a registration statement with the Securities and Exchange Commission (the "SEC") for the resale from time to time of the Securities to be issued pursuant to such Purchase Agreements (the "Registration Statement"). The Company will not modify any such Purchase Agreements, nor will it execute and deliver any additional Purchase Agreements after the time it has filed the Registration Statement.

(d)

The Company (i) represents and warrants that the representations and warranties contained in the Purchase Agreements will be true and correct in all respects on the date of such Purchase Agreements and on the Closing Date and (ii) agrees that the Agents shall be entitled to rely on such representations and warranties as if they were made directly to the Agents.

(e)

The Company agrees that the Company shall have sole responsibility for ensuring that the sale of Securities contemplated by this Agreement shall be exempt from registration requirements of the Securities Act, and will otherwise comply with the securities laws of any applicable country or other jurisdiction. The Company shall not take any action or permit to be taken any action on its behalf that

would cause such sale of securities to fail (i) qualify for such an exemption, or (ii) otherwise comply with such securities laws. The Company hereby represents, warrants and covenants that the Company has not, and agrees that it will not, directly or indirectly, engage in any form of general solicitation or general advertising or directed selling efforts.

(f)

At the Closing, the Company will cause its independent public accountants to address and deliver to the Company and the Agents a letter or letters (which letters are frequently referred to as "Comfort Letters") dated as of the Closing, which letter or letters shall be in the form reasonably satisfactory to the agents.

(g)

At the Closing, the Company will cause its counsel to address and deliver to the Company and the Agents (stating that each of the Investors may rely thereon as if directly addressed to each of them) an opinion satisfactory to the Agents, dated as of the Closing, with respect to such

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matters as the Agents and its counsel shall reasonably request, including opinions customary for transactions of the type contemplated by this Agreement, including an opinion that the offering and sale of the Securities are not required to be registered under the Securities Act, as well as an opinion substantially in the form of Annex A hereto. In rendering such opinion, such counsel may rely upon the representations and warranties of the purchasers contained in the Purchase Agreements and upon certificates from officers of the company as to factual matters.

(h)

The Company will cause its outside intellectual property and/or regulatory counsel to deliver one or more opinions satisfactory to the Agents, dated as of the Closing, to the Agents regarding such matters as the Agents and its counsel shall reasonably request. Furthermore, the Company acknowledges that the Purchase Agreements will require the Company's counsel, its intellectual property counsel and/or its regulatory counsel to deliver one or more opinions to the Investors. The Company agrees that the Agents shall be entitled to rely on any opinions delivered as the Investors in connection with the Transaction and resale of the Securities under the Registration Statement.



(i)

The Company agrees that it will not consummate the sale of the Securities unless it delivers or causes to be delivered the items described in paragraphs (f) through (h) above to the Agents at the Closing.



(j)

For a period of ninety (90) days from the effective date of the Registration Statement, the Company will not, without the prior written consent of the Lead Placement Agent, sell, contract to sell or otherwise dispose of or issue any securities of the Company, except pursuant to previously issued options, any agreements providing for anti-dilution or other stock purchase or share issuance rights in existence on the date hereof, any employee benefit or similar plan of the Company in existence on the date hereof, or any technology license agreement, strategic alliance or joint venture in existence on the date hereof or which the Company may enter into hereafter. This paragraph shall not apply to the sale of the Company to any third party.



(k)

During the time the Registration Statement is effective covering the resales of any Securities sold to Investors, the Company will furnish to the Agents:



(i)

as soon as practicable (but in the case of the annual report of the Company to its stockholders, within 120 days after the end of each fiscal year of the Company), one copy of: (a) its annual report to its stockholders (which annual report shall contain financial statements audited in accordance with generally accepted accounting principles in the United States by a firm of certified public accountants of recognized standing), (b) if not included in substance in its annual report to stockholders, its annual report on Form 10-K, (c) each of its quarterly reports to its stockholders and, if not included in substance in its quarterly report to stockholders, its quarterly report on Form 10-Q and any other document or agreement that is incorporated by reference into the Registration Statement, and (d) the full Registration Statement (the foregoing in each case, excluding exhibits); and



(ii)

upon reasonable request, all exhibits excluded by the parenthetical to the last clause of the immediately preceding paragraph and all other information that is generally available to the public.

8.

Fees.  As compensation for the services to be rendered by the Agents hereunder, the Company will pay the Agents at the Closing, by wire transfer of immediately available funds, from the

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proceeds of the sale of the Securities, a transaction fee (the "Transaction Fee") equal to 7.0% of the gross proceeds raised from the sale of the Securities. 70.0% of the Transaction Fee shall be paid to CIBC World Markets Corp. and 30.0% of the Transaction Fee shall be paid to Adams, Harkness & Hill, Inc. Further, the Company will pay the Agents the Transaction Fee if within twelve months from the termination of this Agreement the Company reaches an agreement in principle for the sale of the Securities to any Investors which the Agents previously solicited or sought to solicit (but were not permitted to do so due to the Company's rejection of such proposed Investors pursuant to the third sentence of Section 4 hereof) on its behalf or from which the Company has received any inquiry pursuant to Section 4 hereof. The preceding sentence will not apply to any securities sold to Pharmacia Corporation. Upon the Company's request, at the termination or expiration of this Agreement, the Agents will supply the Company with a list of Investors which the Agents have solicited or sought to solicit (but were not permitted to do so due to the Company's rejection of such proposed Investors pursuant to the third sentence of Section 4 hereof) on its behalf. The Company's obligations hereunder shall survive the termination or expiration of this Agreement.

9.

Expense Reimbursement:  In addition to the Transaction Fee, and regardless of whether the sale of the Securities contemplated hereby is consummated, the Company agrees to reimburse the Agents for all of its reasonable out-of-pocket expenses in connection with the performance of its activities under the terms of this Agreement. Reasonable out-of-pocket expenses include, but are not limited to, costs such as printing, telephone, telex, courier service, direct computer expenses, accommodations and travel. The Company will reimburse the Agents for fees and expenses of legal counsel employed by and for the Agents, if any, in connection with this Agreement and the engagement hereunder. All such fees, expenses and costs shall be reimbursed promptly upon submission by the Lead Placement Agent of the expenses to be reimbursed to each of the Agents. The parties' obligations under this paragraph shall survive the termination or expiration of this Agreement. The Agents estimate that the expenses will be approximately $50,000.

10.

Indemnity.  In addition to the fees and reimbursement of expenses provided for above, the parties agree to the indemnification provisions set forth as Annex B hereto, which are incorporated herein by reference as if fully set forth below. The parties' obligations under this paragraph shall survive the termination or expiration of this Agreement.

11.

GOVERNING LAWS:  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

THE COMPANY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, IN NEW YORK, NEW YORK, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS LETTER AGREEMENT OR OUR ENGAGEMENT HEREUNDER. EACH OF THE COMPANY AND CIBC WORLD MARKETS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BROUGHT BY OR ON BEHALF OF EITHER PARTY BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS LETTER AGREEMENT, OUR ENGAGEMENT HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12.

Confidentiality.  Except as required by law, this Agreement and the services and advice to be provided by the Agents hereunder, shall not be disclosed to third parties without the Agents' prior written permission. Notwithstanding, the Agents shall be permitted to advertise the services it provided in connection with the private placement subsequent to the consummation of the private placement. Such expense shall not be reimbursable under paragraph 9 hereof.

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13.

No Brokers:  The company represents and warrants to the Agents that there are no brokers, representatives or other persons which have an interest in compensation due to the Agents from any transaction contemplated herein or which would otherwise be due any fee, commission or remuneration upon consummation of any Transaction. The Company hereby represents and warrants to the Agents that during the term of this engagement, the Company will not have, prior to the Closing, any discussions with any person other than representatives of the Agents for the purpose of engaging, or considering the engagement of, such person as a finder or broker in connection with the sale by the Company of the Securities covered by this letter to prospects in the United States of America or overseas.

14.

Authorization:  The Company and the Agents represent and warrant that each has all requisite power and authority to enter into and carry out the terms and provisions of this Agreement and the execution, delivery and performance of this Agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound.

15.

Miscellaneous:  This Agreement constitutes the entire understanding and agreement between the Company and the Agents with respect to the subject matter hereof and supersedes all prior understanding or agreements between the parties with respect thereto, whether oral or written, express or implied. Any amendments or modifications must be executed in writing by both parties. This Agreement and all rights, liabilities and obligations hereunder shall be binding upon and inure to the benefit of each party's successors but may not be assigned without the prior written approval of the other party. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. The descriptive headings of the Paragraphs of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement.

    The Agents are delighted to accept this engagement and look forward to working with you. Please confirm that the foregoing correctly sets forth our agreement by signing the enclosed duplicate of this

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letter in the space provided and returning it, whereupon this letter shall constitute a binding agreement as of the date first above written.

Very truly yours,
CIBC WORLD MARKETS CORP.
By:	/s/ MICHAEL FEKETE Michael Fekete Managing Director
ADAMS, HARKNESS & HILL, INC.
By:	/s/ GREGORY BROWN, M.D. Gregory Brown, M.D. Managing Director

ACCEPTED AND AGREED TO AS OF THE ABOVE DATE:
STAAR Surgical Company
By:	/s/ ANDREW F. POLLET Andrew F. Pollet Chairman

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ANNEX A

    The opinion of counsel to the Company shall be to the effect that nothing has come to their attention that caused them to believe that either the Registration Statement of the Company (the "Registration Statement") or the Private Placement Memorandum (the "Private Placement Memorandum"), each as of its date (or if any amendment thereof or supplement thereto has been made on or prior to the date of such opinion, then as of the date of such amendment or supplement) and as of the Closing, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading (it being understood no opinion is expressed with respect to the financial statements and related notes, financial statement schedules and other financial information included or incorporated by reference therein or omitted therefrom.)

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ANNEX B: INDEMNIFICATION

    The Company agrees to indemnify and hold harmless the Agents and their affiliates and their respective directors, officers, employees, agents and controlling persons (each such person, including the Agents, an "Indemnified Party") from and against any losses, claims, damages and liabilities, joint or several (collectively, the "Damages"), to which such Indemnified Party may become subject in connection with or otherwise relating to or arising from (i) any transaction contemplated by this Agreement or the engagement of or performance of services by an Indemnified Party thereunder or (ii) an untrue statement or an alleged untrue statement of a material fact or the omission or alleged omission to state a material fact necessary in order to make a statement not misleading in light of the circumstances under which its was made, and will reimburse each Indemnified Party for all fees and expenses (including the fees and expenses of counsel) (collectively, "Expenses") as incurred in connection with investigating, preparing, pursuing or defending any threatened or pending claim, action, proceeding or investigation (collectively, the "Proceedings") arising therefrom, whether or not such Indemnified Party is a formal party to such Proceeding; provided, that the Company will not be liable to any such Indemnified Party to the extent that any Damages are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification hereunder. The Company also agrees that no Indemnified Party will have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company or any person asserting claims on behalf of the Company arising out of or in connection with any transactions contemplated by this Agreement or the engagement of or performance of services by any Indemnified Party thereunder except to the extent that any Damages are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Party.

    If for any reason other than in accordance with this Agreement, the foregoing indemnity is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless, then the Company will contribute to the amount paid or payable by an Indemnified Party as a result of such Damages (including all Expenses incurred) in such proportion as is appropriate to reflect the relative benefits to the Company and/or its stockholders on the one hand, and the Agents on the other hand, in connection with the matters covered by this Agreement or, if the foregoing allocation is not permitted by applicable law, not only such relative benefits but also the relative faults of such parties as well as any relevant equitable considerations. The Company agrees that for purposes of this paragraph the relative benefits to the Company and/or its stockholders and the Agents in connection with the matters covered by this Agreement will be deemed to be in the same proportion that the total value paid or received or to be paid or received by the Company and/or its stockholders in connection with the transactions contemplated by this Agreement, whether or not consummated, bears to the fees paid to the Agents under this Agreement; provided, that in no event will the total contribution of all Indemnified Parties to all such Damages exceed the amount of fees actually received and retained by the Agents hereunder (excluding any amounts received by the Agents as reimbursement of expenses).

    The Company agrees not to enter into any waiver, release or settlement of any Proceeding (whether or not the Agent or any other Indemnified Party is a formal party to such Proceeding) in respect of which indemnification may be sought hereunder without the prior written consent of the Agents (which consent will not be unreasonably withheld), unless such waiver, release or settlement includes an unconditional release of Agents and each Indemnified Party from all liability arising out of such Proceeding.

    The indemnity, reimbursement and contribution obligations of the Company hereunder will be in addition to any liability which the Company may otherwise have to any Indemnified Party and will be

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binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company or an Indemnified Party. The provisions of this Annex will survive the modification, termination or expiration of this Agreement.

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    The Agents are delighted to accept this engagement and look forward to working with you. Please confirm that the foregoing correctly sets forth our agreement by signing the enclosed duplicate of this letter in the space provided and returning it, whereupon this letter shall constitute a binding agreement as of the date first above written.

		Very truly yours,
		CIBC World Markets Corp.
		By:	/s/ MICHAEL FEKETE Michael Fekete Managing Director
		Adams, Harkness & Hill, Inc.
		By:	/s/ GREGORY BROWN, M.D. Gregory Brown, M.D. Managing Director
ACCEPTED AND AGREED TO AS OF THE ABOVE DATE:
STAAR Surgical Company
By:	/s/ ANDREW F. POLLET Andrew F. Pollet Chairman

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Exhibit 10.58
ANNEX A
ANNEX B: INDEMNIFICATION

EX-10.59

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CONSULTING AGREEMENT

    This Consulting Agreement ("Agreement") is made on the 19th day of September 2000 by and among Donald R. Sanders, Ltd., an Illinois corporation doing business as Center for Clinical Research, whose address is 180 West Park Avenue, Suite 150, Elmhurst, Illinois 60126 (the "Consultant"), and STAAR Surgical Company, whose address is 1911 Walker Avenue, Monrovia, California 91016 (the "Company"), in reference to the following:

RECITALS

A.  The Company is a developer, manufacturer and global distributor of products used by ophthalmologists and other eye care professionals to improve or correct vision in patients suffering from refractive conditions, cataracts and glaucoma.

B.  The Consultant specializes in research relating to the human eye.

C.  The Company wishes to retain the Consultant, and the Consultant wishes to be retained by the Company, to assist the Company in its continued efforts to enhance its current products and to develop new products.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Consultant agree as follows:

AGREEMENT

    1.  Term.  The Company retains the Consultant and the Consultant accepts this appointment with the Company for a period of fifteen (15) months, beginning on September 1, 2000 and ending on December 31, 2001 (the "Term"). This Agreement will continue on a month to month basis after December 31, 2001 until terminated by written notice given by either party at least thirty (30) days prior to the end of any calendar month. This Agreement supersedes and replaces any and all other consulting agreements or arrangements entered into by and between the Company and the Consultant and, upon execution of this Agreement, any such consulting agreements or arrangements shall have no further force or effect.

    2.  Duties of Consultant.  The Consultant agrees to perform the services described in Exhibit "A", attached to this Agreement and made a part of it (the "Services"). The Consultant will determine the method, details and means of performing the Services, provided that the Consultant agrees that Donald R. Sanders, M.D. will supervise the Services.

    3.  Compensation for Other Staff and Experts.  The Company agrees that if the Consultant's employee, Kim Doney, performs any of the Services, the Company will compensate the Consultant at the rate of One Hundred Fifty Dollars ($150) per hour for the time expended by her, in addition to the compensation provided for in paragraph 4 below. The Consultant will provide a detailed description of the work performed by Ms. Doney, including the time spent on each project, with its invoice. The number of hours during any calendar month that Ms. Doney provides services to the Company shall not exceed ten (10) without the prior written consent of the Company. The Consultant may, with the prior written consent of the Company, engage unaffliliated third parties to assist the Consultant in connection with the Services where the expertise provided by such third parties is not otherwise available to the Consultant. The Company will be responsible for compensating any such third parties directly, so long as the Company approved the engagement in writing.

    4.  Compensation.  The Company shall pay to the Consultant, as compensation for the Services performed pursuant to this Agreement, the sum of Thirty Thousand Dollars ($30,000) per month. If this Agreement is terminated by the Company during the Term due to a Change of Control (as defined in paragraph 8.1), the Consultant shall receive the balance of the Consultant's unpaid compensation as

1

set forth in this paragraph 4, through the expiration date of the Term, in lieu of any remedy or damages to which the Consultant may be entitled, at law or in equity.

    5.  Bonus.

    5.1  Option Grant.  On July 7, 2000 the Company authorized, subject to the conditions set forth herein, a grant to Donald R. Sanders of an option to purchase Seventy-Five Thousand (75,000) shares of the Company's common stock at a price of Eleven Dollars and Twenty-Five Cents ($11.25) per share. Said grant is conditioned upon the receipt by the Company, on or before November 30, 2000, of a favorable recommendation from the FDA Advisory Panel after its review of the clinical data relating to the AquaFlow™ Glaucoma Device. If the FDA Advisory Panel fails to give a favorable recommendation by November 30, 2000, then the number of shares which the Consultant will have the option to purchase shall be reduced from Seventy-Five Thousand (75,000) to Twenty-Five Thousand (25,000), so long as the FDA Advisory Panel review is completed and a favorable recommendation given to the Company by January 31, 2001. If the FDA Advisory Panel fails to give a favorable recommendation to the Company by January 31, 2001, the grant of the option shall lapse and shall be of no further force and effect. The option must be exercised, or it will lapse, by July 31, 2001. The option discussed herein shall be referred to in this Agreement as the "Bonus Option".

    5.2  Cash Bonus.  On July 7, 2000 the Company authorized, subject to the conditions set forth herein, the payment of a bonus to any five (5) employees chosen by the Consultant. Said bonus, in the amount of Nine Thousand Dollars ($9,000) per employee, shall be paid upon the receipt by the Company, on or before November 30, 2000, of a favorable recommendation from the FDA Advisory Panel after its review of the clinical data relating to the AquaFlow™ Glaucoma Device. If the FDA Advisory Panel fails to give the Company a favorable recommendation by November 30, 2000, the bonus shall be reduced to the amount of Four Thousand Five Hundred Dollars ($4,500) per employee, so long as the FDA Advisory Panel gives a favorable recommendation to the Company by January 31, 2001. If the FDA Advisory Panel fails to give a favorable recommendation to the Company by January 31, 2001, the grant of the cash bonus shall lapse and shall be of no further force and effect.

    6.  Acceleration of Options in the Possession of the Consultant.  As of the date of this Agreement, Donald R. Sanders, M.D. has options to purchase one hundred sixty thousand (160,000) shares of the Company's common stock ("Consultant's Options"). (The Consultant's Options do not include the Bonus Option.) Upon execution of this Agreement by the Consultant and the Company, and on the condition that the sale of the common stock acquired through exercise of the Consultant's Options and the Bonus Option is made pursuant to the terms of this paragraph 6, the Company shall accelerate the vesting date of those of the Consultant's Options that are unvested, so that they shall be deemed vested on the date of execution of this Agreement. If Donald R. Sanders, M.D. exercises some or all of the Consultant's Options, or if the Bonus Option is granted to Donald R. Sanders, M.D. and he exercises a portion or all of it, Donald R. Sanders, M.D. agrees that he will sell any of the Company's common stock acquired through the exercise of the Consultant's Options or the Bonus Option through the institutional department of CIBC World Markets Corp. The obligations of Donald R. Sanders, M.D. under this paragraph 6 shall survive the expiration or termination of this Agreement for a period of thirty-six (36) months.

    7.  Nondisclosure.

    7.1  Property Belonging to Company.  The Consultant agrees that all developments, ideas, devices, improvements, discoveries, apparatus, practices, processes, methods, concepts and products relating to microsurgical and/or implantable devices, ("inventions") developed by the Consultant during the term of this Agreement are the exclusive property of the Company and shall belong to

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the Company. The Consultant agrees to assign all such inventions to the Company, if the Company so requests.

    7.2  Access to Confidential Information.  The Consultant agrees that during the term of the business relationship between the Consultant and the Company, the Consultant will have access to and become acquainted with confidential proprietary information that is owned by the Company and is regularly used in the operation of the Company's business. The Consultant acknowledges that all files, records, documents, drawings, specifications, equipment and similar items relating to the business of the Company and to its confidential proprietary information, whether they are prepared by the Consultant or come into the Consultant's possession in any other way, shall remain the exclusive property of the Company.

    7.3  No Unfair Use by Consultant.  The Consultant promises and agrees that the Consultant shall not misuse, misappropriate, or disclose in any way to any person or entity any of the Company's confidential proprietary information, either directly or indirectly, nor will the Consultant use the confidential proprietary information in any way or at any time except as required in the course of the Consultant's business relationship with the Company. The Consultant agrees that the sale or unauthorized use or disclosure of any of the Company's confidential proprietary information which is obtained by the Consultant during the Consultant's business relationship with the Company constitutes unfair competition. The Consultant promises and agrees not to engage in any unfair competition with the Company.

    7.4  Further Acts.  The Consultant agrees that, at any time during the term of this Agreement or any extension thereof, upon the request of the Company and without further compensation, but at no expense to the Consultant, the Consultant shall perform any lawful acts, including the execution of papers and oaths and the giving of testimony, that in the opinion of the Company, its successors or assigns, may be necessary or desirable in order to obtain, sustain, reissue and renew, and in order to enforce, perfect, record and maintain, patent applications and United States and foreign patents on the Company's inventions, and copyright registrations on the Company's inventions.

    7.5  Obligations Survive Agreement.  The Consultant's obligations under this section 7 shall survive the expiration or termination, for any reason, of this Agreement.

    8.  Termination.

    8.1  Termination as a Result of a Change of Control.  Subject to the payment required by paragraph 4 above, the Company may terminate this Agreement as a result of a Change of Control. A "Change of Control" shall be defined as any of the following events: (i) the sale by the Company of substantially all of its business or assets, or (ii) the sale of the capital stock of the Company in connection with the sale or transfer of a controlling interest in the Company to a third party, or (iii) the merger or consolidation of the Company with another corporation as part of a sale or transfer of a controlling interest in the Company to a third party. "A controlling interest" shall be defined as 50% or more of the common stock of the Company.

    8.2  Termination on Default.  Should either party default in the performance of this Agreement or materially breach any of its provisions, the non-breaching party may terminate this Agreement by giving written notification to the breaching party. Termination shall be effective immediately on receipt of said notice. For purposes of this section, material breaches of this Agreement shall include, but not be limited to, (i) non-payment by the Company of any sum due the Consultant hereunder which remains unpaid after twenty (20) days written demand for payment; (ii) the willful and continuing failure of the Consultant to perform the Services, which failure, if it can be cured, is not cured within twenty (20) days of the Consultant's receipt from the Company of written notice thereof, which notice shall specify such failure to perform in detail;

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(iii) the Consultant's commission of acts of dishonesty or fraud; (iv) the failure by the Consultant to comply in any material respect with any applicable laws and regulations governing the Consultant's duties under this Agreement; or (v) the commission by the Consultant of any act that does or will materially reflect unfavorably on the reputation of the Company. Termination of this Agreement for cause by the Consultant shall not relieve the Company of its obligations to make payments to the Consultant for the balance of the Term, or its obligations under paragraphs 5.1 and 5.2.

    8.3  Automatic Termination.  This Agreement terminates automatically on the occurrence of any of the following events: (i) upon the Company's receipt of FDA approval of both of its Implantable Contact Lens ("ICL") (both for myopia and hyperopia) and its AQUA-FLOW™ Glaucoma Device; or (ii) the death of Dr. Donald R. Sanders or a disability sustained by Dr. Donald R. Sanders that prevents him from rendering the Services required by this Agreement in a timely manner.

    8.4  Affect on Options and Other Obligations.  Notwithstanding the expiration or termination of this Agreement, the provisions of paragraph 6 above shall survive in full force and effect, as shall all options which have theretofore vested pursuant to paragraph 5.1 above. Further, no such expiration or termination shall relieve the Company of any accrued but unpaid obligations under paragraphs 3 and 4 above.

    9.  Status of Consultant.  The Consultant understands and agrees that its employees are not employees of the Company and that they shall not be entitled to receive employee benefits from the Company, including, but not limited to, sick leave, vacation, retirement, death benefits, an automobile, stock in the Company and/or participation in profits earned by Company. The Consultant shall be responsible for providing, at the Consultant's expense and in the Consultant's name, disability, worker's compensation or other insurance as well as licenses and permits usual or necessary for conducting the Services hereunder. Furthermore, the Consultant shall pay, when and as due, any and all taxes incurred as a result of the Consultant's compensation hereunder, including estimated taxes, and shall provide the Company with proof of said payments, upon demand. The Consultant hereby agrees to indemnify the Company for any claims, losses, costs, fees, liabilities, damages or injuries suffered by the Company arising out of the Consultant's breach of this section.

    10.  Representations by Consultant.  The Consultant represents that the Consultant has the qualifications and ability to perform the Services in a professional manner, without the advice, control, or supervision of the Company.

    11.  Business Expenses.  The Company shall reimburse the Consultant for all reasonable business expenses (which shall include travel expenses) incurred by the Consultant provided that each such expenditure qualifies as a proper deduction on the Company's federal and state income tax return. Each such expenditure shall be reimbursable only if the Consultant furnishes to the Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of that expenditure as an income tax deduction. The Consultant may not incur any single business expense (exclusive of reasonable travel expenses) in an amount exceeding Five Hundred Dollars ($500.00) without the express prior written consent of the Company. The Company shall, in its sole discretion, reimburse the Consultant or not, for any business expense which exceeds such amount and which is incurred by the Consultant without the prior written consent of the Company.

    12.  Notices.  Unless otherwise specifically provided in this Agreement, all notices or other communications (collectively and severally called "Notices") required or permitted to be given under this Agreement, shall be in writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by

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the delivery agency), or (C) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt). Notices shall be addressed to the address set forth in the introductory section of this Agreement, or to such other address as the receiving party shall have specified most recently by like Notice, with a copy to the other party.

    13.  Other Engagements.  The Consultant shall be free to accept other engagements during the Term so long as they do not interfere with the Consultant's ability to perform the Services or otherwise comply with the terms of this Agreement.

    14.  Choice of Law/Arbitration.  This Agreement shall be governed according to the laws of the state of California. The parties hereby agree that all controversies, claims and matters of difference shall be resolved by binding arbitration before the American Arbitration Association (the "AAA") according to the rules and practices of the AAA from time-to-time in force; provided, however, that the parties hereto reserve their rights to seek and obtain injunctive or other equitable relief from a court of competent jurisdiction without waiving the right to compel such arbitration pursuant to this paragraph. If the Consultant initiates any proceeding contemplated by the foregoing, it shall do so in Los Angeles County, California. If the Company initiates any proceeding contemplated by the foregoing, it shall do so in Cook County, Illinois. In the event that the Consultant initiates any such proceeding in order to obtain any compensation, of any form, owed to the Consultant under this Agreement, and if the Consultant prevails in such proceeding, the Company shall reimburse the Consultant for all fees and expenses, including, attorneys' and arbitrators' fees, incurred by the Consultant in connection therewith.

    15.  Entire Agreement.  This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the services to be rendered by the Consultant to the Company and contains all of the covenants and agreements between the parties with respect to the services to be rendered by the Consultant to the Company in any manner whatsoever. Each party to this agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding on either party.

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

    17.  Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law.

    18.  Preparation of Agreement.  It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement.

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WHEREFORE, the parties have executed this Agreement on the date first written above.

"CONSULTANT" Donald R. Sanders, Ltd, d/b/a Center for Clinical Research
By:	/s/ DONALD R. SANDERS Donald R. Sanders, M.D., President
	/s/ DONALD R. SANDERS Donald R. Sanders, M.D.
"COMPANY" STAAR Surgical Company
By:	/s/ ANDREW F. POLLET Andrew F. Pollet, Chairman of the Board

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EXHIBIT "A"
DUTIES OF CONSULTANT

    The Consultant shall act in conjunction with other physicians in the United States in making clinical trials of the Company's Implantable Contact Lenses ("ICL") and AQUA-FLOW™ Glaucoma Device. The Consultant, through its President, shall report on a regular basis to the Company's Chief Executive Officer and/or Chairman of the Board. In discharging its duties, the Consultant shall be responsible for:

    (1) adjudicating adverse events that relate to the implantation of an ICL;

    (2) corresponding with investigational sites regarding protocol and providing general information updates;

    (3) discussing patient care related issues with investigators;

    (4) approving secondary procedures on study patients;

    (5) managing investigator related issues regarding enrollment in studies, compliance, data collections, and clinical results;

    (6) acting as chairman for investigator meetings in conjunction with the Director of Clinical Affairs;

    (7) coordinating with Promedica issues related to data collection;

    (8) coordinating with the Vice President of Regulatory Affairs issues relating to ICL clinical trials;

    (9) providing product education services to physicians;

    (10) participating in Company sponsored courses and seminars;

    (11) presenting data at peer review conferences and meetings; and

    (12) consulting and participating in the development of optometric education programs.

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AGREEMENT
EXHIBIT "A" DUTIES OF CONSULTANT

EX-10.60

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the   day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated September 11, 2000, including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

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sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not

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transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to

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keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial

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statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers

11

who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a

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reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally

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recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Fortis Advantage Portfolios, Inc. Capital Appreciation Portfolio Name of Purchaser (Individual or Institution)	Tamara L. Fagely Name of Individual representing Purchaser (if an Institution)
Vice President & Treasurer Title of Individual representing Purchaser (if an Institution)	/s/ TAMARA L. FAGELY Signature of Individual Purchaser or Individual representing Purchaser
	Address:  Fortis Financial Group                  500 Bielenberg Drive                  Woodbury, MN 55125Telephone: (651) 738-5586
	Telecopier: (651) 738-0996

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
180,000	$14.00	$2,520,000

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.61

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the      day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated September 11, 2000, including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

4

hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

5

sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

6

and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

7

except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not

8

transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to

9

keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial

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statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers

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who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a

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reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally

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recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Fortis Series Fund, Inc. Aggressive Growth Series Name of Purchaser (Individual or Institution)	/s/ TAMARA L. FAGELY Name of Individual representing Purchaser (if an Institution)
Vice President & Treasurer Title of Individual representing Purchaser (if an Institution)	/s/ TAMARA L. FAGELY Signature of Individual Purchaser or Individual representing Purchaser
	Address:  Fortis Financial Group                  500 Bielenberg Drive                  Woodbury, MN 55125Telephone: (651) 738-5586
	Telecopier: (651) 738-0996

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
220,000	$14.00	$3,050,000

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.62

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the 2nd day of October, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated September 11, 2000, including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

5

sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not

8

transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to

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keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial

10

statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers

11

who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a

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reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally

13

recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Phoenix-Engemann Small Cap Fund Name of Purchaser (Individual or Institution)	Roger Engemann Name of Individual representing Purchaser (if an Institution)
Senior Vice President Title of Individual representing Purchaser (if an Institution)	/s/ ROGER ENGEMANN Signature of Individual Purchaser or Individual representing Purchaser
	Address:  600 North Rosemead Blvd.                  Pasadena, CA 91107Telephone: (626) 351-9686
	Telecopier:

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
77,840	$14.00	$1,089,760.00

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.63

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the 2nd day of October, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated September 11, 2000, including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

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sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not

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transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to

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keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial

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statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers

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who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a

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reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally

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recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Phoenix-Engemann Small & Mid-Cap Growth Fund Name of Purchaser (Individual or Institution)	Roger Engemann Name of Individual representing Purchaser (if an Institution)
President Title of Individual representing Purchaser (if an Institution)	/s/ ROGER ENGEMANN Signature of Individual Purchaser or Individual representing Purchaser
	Address:  600 North Rosemead Blvd.                  Pasadena, CA 91107Telephone: (626)351-9686
	Telecopier:

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
95,915	$14.00	$1,342,810.00

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.64

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the 2nd day of October, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated September 11, 2000, including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

3

contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

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sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not

8

transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to

9

keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial

10

statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers

11

who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a

12

reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally

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recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Phoenix-Edge Series Fund Engemann Small & Mid Cap Growth Series Name of Purchaser (Individual or Institution)	Roger Engemann Name of Individual representing Purchaser (if an Institution)
Senior Vice President Title of Individual representing Purchaser (if an Institution)	/s/ ROGER ENGEMANN Signature of Individual Purchaser or Individual representing Purchaser
	Address:  600 North Rosemead Blvd.                  Pasadena, CA 91107Telephone: (626) 351-6451
	Telecopier:

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
1,245	$14.00	$17,430.00

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.65

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the   day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated [September XX, 2000], including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

5

sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser; provided however, that the Purchaser shall be allowed to effectuate such above described transactions, but only up to the aggregate number of Shares purchased by such Purchaser hereunder, and then only in compliance with all applicable state and federal securities laws and the rules and regulations thereunder.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

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    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the

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Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

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    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or

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omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance

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with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

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    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Pequot Scout Fund, L.P. Name of Purchaser (Individual or Institution)	David J. Malat Pequot Capital Management, Inc. Investment Advisor Name of Individual representing Purchaser (if an Institution)
Chief Accounting Officer Title of Individual representing Purchaser (if an Institution)	/s/ DAVID J. MALAT Signature of Individual Purchaser or Individual representing Purchaser
	Address:  500 Nyala Farm Rd.                  Westport, CT 06880 Telephone: 203 429-2200
	Telecopier: 203 429-2430

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
145,000	$14.00	$2,030,000.00

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.66

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the   day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated [September XX, 2000], including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

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sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser; provided however, that the Purchaser shall be allowed to effectuate such above described transactions, but only up to the aggregate number of Shares purchased by such Purchaser hereunder, and then only in compliance with all applicable state and federal securities laws and the rules and regulations thereunder.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

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    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the

9

Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

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    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or

11

omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance

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with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

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    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Pequot Navigator Offshore Fund, Inc. Name of Purchaser (Individual or Institution)	David J. Malat Pequot Capital Management, Inc. Investment Advisor Name of Individual representing Purchaser (if an Institution)
Chief Accounting Officer Title of Individual representing Purchaser (if an Institution)	/s/ DAVID J. MALAT Signature of Individual Purchaser or Individual representing Purchaser
	Address:  500 Nyala Farm Rd.                  Westport, CT 06880 Telephone: 203 429-2200
	Telecopier: 203 429-2430

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
5,000	$14.00	$70,000.00

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.67

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the   day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated [September XX, 2000], including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

5

sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser; provided however, that the Purchaser shall be allowed to effectuate such above described transactions, but only up to the aggregate number of Shares purchased by such Purchaser hereunder, and then only in compliance with all applicable state and federal securities laws and the rules and regulations thereunder.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

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    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the

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Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

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    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or

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omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance

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with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

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    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Baystar International, Ltd. Name of Purchaser (Individual or Institution)	Steven Lamar Name of Individual representing Purchaser (if an Institution)
V.P. of Baystar International Management, LLC Title of Individual representing Purchaser (if an Institution)	/s/ STEVEN LAMAR Signature of Individual Purchaser or Individual representing Purchaser
	Address:  1500 West Market St., Ste 200                  Mequon, WI 53092 Telephone: (415) 834-4600
	Telecopier: (415) 834-4601

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
105,000	$14.00	$1,470,000

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Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.68

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Exhibit F

FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the   day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated [September XX, 2000], including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to

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purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions

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contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares

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hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for

5

sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making,

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and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and

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except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser; provided however, that the Purchaser shall be allowed to effectuate such above described transactions, but only up to the aggregate number of Shares purchased by such Purchaser hereunder, and then only in compliance with all applicable state and federal securities laws and the rules and regulations thereunder.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

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    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    (g) Notwithstanding anything to the contrary contained herein, at any time after the effectiveness of the Registration Statement, the Company may refuse to permit the Purchaser to resell any Shares pursuant to the Registration Statement for a period not to exceed ninety (90) days (the "Blackout Period"); provided however, that to exercise this right, the Company must deliver a certificate in writing to the Purchaser to the effect that a delay in such sale is necessary because a sale pursuant to such Registration Statement in its then-current form would not be in the best interests of the Company and its stockholders due to disclosure obligations of the Company. Notwithstanding the foregoing, the Company shall not be entitled to exercise its right to block such sales more than three (3) times during the effectiveness of the Registration Statement or more than one (1) time in any four-month period. Each Purchaser hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during such Blackout Periods.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the

9

Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

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    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or

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omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance

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with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

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    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Baystar Capital, L.P. Name of Purchaser (Individual or Institution)	Steven Lamar Name of Individual representing Purchaser (if an Institution)
V.P. of Baystar Management LLC Title of Individual representing Purchaser (if an Institution)	/s/ STEVEN LAMAR Signature of Individual Purchaser or Individual representing Purchaser
	Address:  1500 W. Market St., Ste 200                  Mequon, WI 53092Telephone: (415) 834-4600
	Telecopier: (415) 834-4601

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
195,000	$14.00	$2,730,000

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QuickLinks

Exhibit F FORM OF PURCHASE AGREEMENT

EX-10.69

Exhibit F
FORM OF PURCHASE AGREEMENT

    THIS PURCHASE AGREEMENT is made as of the   day of September, 2000, by and between STAAR Surgical Company (the "Company"), a corporation organized under the laws of the State of Delaware, with its principal offices at 1911 Walker Avenue, Monrovia, California 91016, and the purchaser whose name and address is set forth on the signature page hereof (the "Purchaser").

    IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

    1.  Sale and Purchase of the Shares.  The Company has authorized the sale of up to 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company on the terms and subject to the conditions set forth in this Agreement. At the Closing (as defined in Section 3), the Company will sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions contained in this Agreement, the number of Shares specified below such Purchaser's name on the signature page attached hereto at the price set forth thereto.

    2.  Other Purchasers.  The Company intends to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Shares to them. The Purchaser's obligations hereunder are expressly not subject to or conditioned on the purchase of the Shares by any or all of the Other Purchasers.

    3.  Closing; Delivery; Conditions.

    3.1  Closing.  The purchase and sale of the Shares (the "Closing") shall occur as soon as practicable after the execution of this Agreement by the Company and the Purchasers at the time and location (the "Closing Date") agreed upon by the Company and the Placement Agent (as defined herein). The Placement Agent will promptly notify the Purchasers of the Closing Date by facsimile transmission or otherwise.

    3.2  Delivery of the Shares.  Subject to the satisfaction of the conditions set forth below, at the Closing, the Company will deliver to each Purchaser one or more stock certificates, registered in the name of such Purchaser, representing the number of Shares to be purchased by such Purchaser as set forth opposite such Purchaser's name on the signature page hereto and bearing an appropriate legend stating that the Shares have not been registered under the Securities Act (as defined herein) and cannot be sold unless registered under the Securities Act, or an exemption from registration is available. Such deliveries shall be made against payment of the purchase price therefore (the "Purchase Price") by wire transfers to the respective accounts as designated in writing by the Company, of immediately available funds in the respective amounts set forth on the signature page hereto, as the case may be, at least two business days prior to the Closing. The name(s) in which the stock certificate are to be registered are set forth in the Stock Certificates Questionnaire attached hereto as part of Appendix I.

    3.3  Closing Conditions.

    (a) The Company's respective obligations to complete the purchase and sale of the Shares and deliver the stock certificates representing the Shares to the Purchasers at the Closing shall be subject to the following conditions, any one or more of which may be waived by the Company:

    (1) receipt by the Company of same-day funds in the full amount of the Purchase Price for the Shares being purchased hereunder; and

    (2) the accuracy of the representations and warranties made by the Purchasers and the fulfillment of those obligations of the Purchasers to be fulfilled prior to the Closing.

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    (b) The Purchaser's obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment in all material respects of those obligations of the Company to be fulfilled prior to the Closing.

    3.4  Warrants.  In the event that the Registration Statement is not declared effective within seventy-five (75) days after the filing of such Registration Statement (the "Effective Date Deadline"), the Company shall issue to Purchaser a warrant, substantially in the form attached hereto as Exhibit A (the "Initial Warrant"), to purchase up to such number of shares of Common Stock equal to 7.5% of the number of Shares purchased by Purchaser at the Closing, at an exercise price equal to the per share purchase price of the Shares. For each one-month period that elapses between the Effective Date Deadline and the date upon which the Registration Statement is declared effective by the Commission, the Company shall issue to Purchaser an additional warrant, substantially in the form of the Initial Warrant (collectively, the "Additional Warrants"), to purchase up to such number of shares of Common Stock equal to five percent (5%) of the number of Shares purchased by Purchaser at the Closing, at an exercise price equal to the exercise price of the Initial Warrant; provided that the Company shall not be required to issue more than three (3) Additional Warrants to Purchaser. For purposes of the calculation set forth in the preceding sentence, any fractional one-month period that elapses shall be deemed to be a full one-month period.

    4.  Certain Definitions.  Unless the context otherwise requires, the terms defined in this Section 4 shall have the meaning herein specified for purposes of this Agreement.

    "Agreement" means this agreement, including the exhibits and appendices thereto.

    "Agreements" means this Agreement and the agreements executed by the Other Purchasers, collectively.

    "Commission" means the Securities and Exchange Commission.

    "Exchange Act" means the Securities and Exchange Act of 1934, as amended from time to time.

    "Material Adverse Change" means a material adverse change in the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its Subsidiaries taken as a whole.

    "Placement Agent" means CIBC World Markets Corp., and Adams, Harkness & Hill, Inc.

    "Purchasers" means the Purchaser and the Other Purchasers.

    "Private Placement Memorandum" means the Confidential Private Placement Memorandum dated [September XX, 2000], including all exhibits thereto.

    "Registration Statement" means the registration statement on Form S-3, as may be amended, that will be filed pursuant to the Private Placement Memorandum with the Commission covering the re-sale of the Shares.

    "Securities Act" means the Securities Act of 1933, as amended from time to time.

    5.  Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to, and covenants with, the Purchaser as follows:

    5.1  Organization and Qualification.  The Company (and each such subsidiary or other entity controlled directly or indirectly by the Company (the "Subsidiaries") is a corporation or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its

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incorporation or organization. The Company and each of its subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other entity) in each jurisdiction in which the nature of the business conducted by it or location of the assets or properties, owned, leased or licensed by it requires such qualification, except where failure to so qualify or to be in good standing would not have a Material Adverse Effect.

    5.2  Authorized Capital Stock.  The Company had the authorized and outstanding capital stock set forth under the heading "Capitalization" in the Private Placement Memorandum, as of the date set forth therein. All of the issued and outstanding shares of the Company's Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance in all material respects with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the Private Placement Memorandum. Except as disclosed in or contemplated by the Private Placement Memorandum, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock.

    5.3  Shares.  The Shares have been duly authorized and, when issued, delivered and paid for in the manner set forth in the Agreements, will be duly authorized, validly issued, fully paid and nonassessable, and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement. No stockholder of the Company has any right (which has not been waived or has not expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the Company as contemplated herein.

    5.4  Corporate Acts and Proceedings.  The Company has full legal right, corporate power and authority to enter into the Agreements and perform the transactions contemplated hereby and thereby. The Agreements have been duly and validly authorized, executed and delivered by the Company. The execution, delivery and performance of the Agreements by the Company or its Subsidiaries and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Company and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company or the Subsidiaries are a party or by which the Company or the Subsidiaries or their respective properties may be bound or affected and in each case which would have a Material Adverse Effect or, to the Company's knowledge, under any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or its Subsidiaries or their respective properties. No consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Blue Sky laws and federal securities laws applicable to the offering of the Shares. Upon their execution and delivery, and assuming the valid execution thereof by the respective Purchasers and payment of their respective Purchase Price, the Agreements will constitute valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency,

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reorganization, moratorium or similar laws affecting the enforcement of creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Company in Section 9 hereof may be legally unenforceable.

    5.5  Contracts.  The contracts described in the Private Placement Memorandum as being in effect on the date hereof that are material to the Company, are in full force and effect on the date hereof; and neither the Company nor its Subsidiaries, nor, to the Company's knowledge, is any other party in breach of or default under any of such contracts which would have a Material Adverse Effect.

    5.6  No Actions.  Other than as described in the Private Placement Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the Company's knowledge, overtly threatened to which the Company or its Subsidiaries are or may be a party or of which property owned or leased by the Company or its Subsidiaries are or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions contemplated by this Agreement or result in a Material Adverse Change; and no labor disturbance by the employees of the Company exists, to the Company's knowledge, or is imminent which might reasonably be expected to have a Material Adverse Effect. Neither the Company nor its Subsidiaries is a party to or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body.

    5.7  Properties.  The Company and each of its Subsidiaries has good and marketable title in fee simple to all real property and good and marketable title to all personal property reflected as owned by them in the consolidated financial statements included in the Private Placement Memorandum. Such property is not subject to any lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if any, reflected in such consolidated financial statements (including the notes thereto), or (ii) those which are not material in amount and do not adversely affect the use of such property by the Company or its Subsidiaries. Any property or building held under lease by the Company or its Subsidiaries is held under valid, existing and enforceable leases, free and clear of all liens, encumbrances, claims, and defects except such as would not have a Material Adverse Effect. Except as disclosed in the Private Placement Memorandum and except for the property referred to in Section 5.8, each of the Company and its Subsidiaries owns or leases all such properties as are necessary to its operations as now conducted.

    5.8  Proprietary Rights.  Except as disclosed in the Private Placement Memorandum, (i) to the Company's knowledge, the Company has filed for or holds rights, licenses or options for the inventions, patent applications, patents, trademarks (both registered and unregistered), trade names, copyrights and trade secrets necessary for the conduct of the Company's business as currently conducted (collectively, the "Intellectual Property"); and (ii) to the Company's knowledge (for each of the following subsections (a) through (e)): (a) there are no third parties who have any ownership rights to any Intellectual Property that is owned by, or has been licensed to the Company for the products described in the Private Placement Memorandum in the case of any business the Company has or intends to conduct during the year ending December 31, 2000 that would preclude the Company from conducting its business as currently conducted and as the Private Placement Memorandum indicates the Company contemplates conducting; (b) there are currently no sales of any products that would constitute an infringement by a third party of any Intellectual Property owned, licensed or optioned by the Company; (c) there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; (d) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property owned, licensed or optioned by the Company, other than claims which would not be reasonably expected to have a Material Adverse Effect; and (e) there is no pending or

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threatened action, suit, proceeding or claim by others that the Company infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary right of others, other than claims which would not be reasonably expected to have a Material Adverse Effect.

    5.9  No Material Adverse Change.  Since June 30, 2000, and except as disclosed in the Private Placement Memorandum, (i) neither the Company nor its Subsidiaries have incurred any material liabilities or obligations, indirect, or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business or which could reasonably be expected to result in a material reduction in the future earnings of the Company; (ii) neither the Company nor its Subsidiaries have sustained any material loss or interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) neither the Company nor its Subsidiaries have paid or declared any dividends or other distributions with respect to its capital stock and the Company and its Subsidiaries are not in default in the payment of principal or interest on any outstanding debt obligations; (iv) there has not been any change in the capital stock of the Company or its Subsidiaries other than the sale of the Shares hereunder and shares or options issued pursuant to employee equity incentive plans or purchase plans approved by the Company's or the Subsidiaries' Board of Directors, as the case may be, or indebtedness material to the Company or its Subsidiaries (other than in the ordinary course of business); and (v) there has not been a Material Adverse Change.

    5.10  Financial Statement.  BDO Seidman, LLP (a) have expressed their opinion with respect to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999, (b) have not given the Company any indication that they will not include such opinion in the Registration Statement and the Prospectus, and (c) have confirmed to the Company that they are independent accountants as required by the Securities Act and the rules and regulations promulgated thereunder.

    5.11  No Defaults.  Except as to defaults, violations and breaches which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are in violation or default of any provision of their certificate of incorporation or bylaws, or other organizational documents, or in breach of, or default with respect to, any provision of any material agreement filed as an exhibit to the Company's filings with the Commission, any judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, or permit to which it is a party or by which it or any of its properties are bound; and there does not exist any state of fact which, with notice or lapse of time or both, would constitute an event of breach or default on the part of the Company or the Subsidiaries as defined in such documents, except such breaches or defaults which individually or in the aggregate would not be material to the Company and its Subsidiaries, taken as a whole.

    5.12  Compliance.  Neither the Company nor its Subsidiaries have been advised, and neither has any reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance therewith would not have a Material Adverse Effect.

    5.13  Taxes.  Each of the Company and its Subsidiaries has filed all necessary federal, state and foreign income and franchise tax returns which are required to be filed, or has received extensions thereof, and has paid or accrued all taxes shown as due thereon, and neither the Company nor its Subsidiaries has knowledge of a tax deficiency which has been or might be asserted or threatened against it which could have a Material Adverse Effect. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.

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    5.14  Books, Records and Accounts.  The books, records and accounts of the Company and its Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its Subsidiaries. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

    5.15  Offering Materials.  The Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the offering and sale of the Shares other than the Private Placement Memorandum or any amendment or supplement thereto. The Company has not in the past nor will it hereafter take any action independent of the Placement Agent to sell, offer for sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

    5.16  Insurance.  The Company maintains insurance of the type and in the amount that the Company reasonably believes is adequate for its business, including, but not limited to, insurance covering all real and personal property owned or leased by the Company against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by similarly situated companies, all of which insurance is in full force and effect.

    5.17  Investment Company.  The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

    5.18  Contributions.  At no time since its incorporation has the Company, directly or indirectly, (i) used any corporate or other funds for gifts, entertainment or other unlawful contributions to any candidate for public office, or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.

    5.19  Additional Information.  The Company represents and warrants that the information contained in the following documents, which the Placement Agent has furnished to the Purchaser, or will furnish prior to the Closing, is and will be true and correct in all material respects as of the respective dates that they were filed with the Commission, or their final dates, if not filed with the Commission and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading:

    (1) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999;

    (2) the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000;

    (3) the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders;

    (4) the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000;

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    (5) the Registration Statement;

    (6) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Appendices); and

    (7) all other documents, if any, filed by the Company with the Commission since June 30, 2000 pursuant to the reporting requirements of the Exchange Act.

    5.20  Legal Opinions.  Prior to the Closing, Pollet & Richardson, counsel to the Company, will deliver its legal opinion to the Placement Agent (stating that each of the Purchasers may rely thereon as if directly addressed to each of them), substantially in such form as such counsel rendering the opinion and the Placement Agent may agree upon (the "Opinion Letter").

    6.  Representations, Warranties and Covenants of the Purchaser.  

    6.1  Investment Intent and Expense.  The Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Shares, including investments in securities issued by the Company, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth on the signature page hereto in the ordinary course of its business and for its own account for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the regulations thereunder) only and with no present intention of distributing any of such Shares or any arrangement or understanding with any other persons regarding the distribution of such Shares within the meaning of Section 2(11) of the Securities Act; (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Act and the Rules and Regulations; (iv) the Purchaser has completed or caused to be completed the Registration Statement Questionnaire and the Stock Certificate Questionnaire, both attached hereto as Appendix I, for use in preparation of the Registration Statement, and the answers thereto are true, correct and complete as of the date hereof and will be true. correct and complete as of the effective date of the Registration Statement; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied solely upon the Private Placement Memorandum and the documents included therein and the representations and warranties of the Company contained herein; and (vi) the Purchaser is a "qualified institutional buyer" within the meaning of Rule 144A promulgated under the Securities Act.

    6.2  Restrictions on Transfer.  The Purchaser hereby covenants with the Company not to make any sale of the Shares without satisfying the prospectus delivery requirement under the Securities Act, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate officer's certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, all federal laws and requirements, including without limitation the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company determines the use of the prospectus forming a part of the Registration Statement should be suspended until such time as an amendment or supplement to the Registration Statement or the Prospectus has been filed by the Company and any such amendment to the Registration Statement is declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the

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Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares.

    6.3  Authorization.  The Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) upon the execution and delivery of this Agreement, this Agreement shall constitute a valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Purchaser in Section 9 hereof may be legally unenforceable.

    6.4  Restriction on Sales, Short Sales and Hedging Transactions.  Purchaser represents and agrees that during the period of five business days immediately prior to the execution of this Agreement by Purchaser, Purchaser did not, and from such date through the effectiveness of the Registration Statement (as defined below), Purchaser will not, directly or indirectly, execute or effect or cause to be executed or effected any short sale, option or equity swap transactions in or with respect to the Common Stock or any other derivative security transaction the purpose or effect of which is to hedge or transfer to a third party all or any part of the risk of loss associated with the ownership of the Shares by the Purchaser.

    6.5  No Legal, Tax or Investment Advice.  Purchaser understands that nothing in the Private Placement Memorandum, the Agreement, the Opinion Letter or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

    6.6  Further Agreements of Purchaser.

    (a) The Purchaser understands that the Shares are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act, the rules and regulations promulgated thereunder, and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares.

    (b) The Purchaser understands that its investment in the Shares involves a significant degree of risk and that the market price of the Common Stock has been volatile and that no representation is being made as to the future value of the Common Stock. The Purchaser has the knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of an investment in the Shares.

    (c) The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

    (d) The Purchaser understands that, until such time as the Registration Statement has been declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the

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Shares will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the Shares):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, that registration is not required under said Act or unless sold pursuant to Rule 144 under said Act."

    (e) The Purchaser's principal executive offices are in the jurisdiction set forth immediately below the Purchaser's name on the signature pages hereto.

    (f)  The Purchaser hereby covenants with the Company not to make any sale of the Shares under the Registration Statement without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i) in the form of Appendix II hereto, (ii) executed by an officer of, or other authorized person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in accordance with the Registration Statement, the Securities Act and any applicable state securities or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied. The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser further covenants to notify the Company promptly of the sale of any or all of its Shares and the Purchaser hereby covenants that it will thereafter solely utilize said amended or supplemented prospectus for the sale of Shares.

    7.  Survival of Representations, Warranties and Agreements.  Notwithstanding any investigation made by any party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

    8.  Covenants.

    8.1  Registration Procedures and Expenses.

    (a) The Company shall:

    (1) as soon as practicable after the Closing, but in no event later than two (2) weeks following the Closing, prepare and file with the Commission the Registration Statement relating to the sale of the Shares by the Purchaser from time to time through the automated quotation system of the Nasdaq National Market or the facilities of any national securities exchange on which the Company's Common Stock is then traded or in privately-negotiated transactions;

    (2) use its reasonable efforts subject to receipt of necessary information from the Purchasers, to cause the Commission to notify the Company of the Commission's willingness to declare the

9

Registration Statement effective within 60 days after the Registration Statement is filed by the Company;

    (3) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the earlier of (i) twenty-four (24) months after the effective date of the Registration Statement or (ii) the date on which the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect;

    (4) furnish to the Purchaser with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchaser; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the Purchaser that the Purchaser will comply with the applicable provisions of the Securities Act and of such other securities or blue sky laws as may be applicable in connection with any use of such prospectuses;

    (5) file documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; and

    (6) bear all expenses in connection with the procedures in paragraphs (1) through (5) of this Section 8.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any.

    (b) The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Purchaser, make publicly available other information), and it will take such further action as any Purchaser may reasonably request, all to the extent required from time to time to enable such Purchaser to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Purchaser, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.

    8.2  Transfer of Shares After Registration.  The Purchaser agrees that it will not effect any disposition of the Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act, except as contemplated in the Registration Statement referred to in Section 8.1, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its Plan of Distribution.

    8.3  Termination of Conditions and Obligations.  The restrictions imposed by Section 6 or this Section 8 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the passage of twenty-four months from the effective date of the Registration Statement covering such Shares or at such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

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    8.4  Information Available.  So long as the Registration Statement is effective covering the resale of Shares owned by the Purchaser, the Company will furnish to the Purchaser:

    (1) upon request, as soon as practicable after available (but in the case of the Company's Annual Report to Stockholders, within 120 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in accordance with generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, its Annual Report on Form 10-K, (iii) if not included in substance in its Quarterly Reports to Shareholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits);

    (2) upon the reasonable request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in the Registration Statement covering the Shares subject to appropriate confidentiality limitations.

    9.  Indemnification.  For the purpose of this Section 9 only:

    (1) the term "Purchaser" shall include the Purchaser and any affiliate of such Purchaser; and the term "Registration Statement" shall include any final prospectus, exhibit, supplement or amendment included in or relating to the Registration Statement referred to in Section 8.1.

    (2) The Company agrees to indemnify and hold harmless each of the Purchasers and each person, if any, who controls any Purchaser within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities or expenses, joint or several, to which such Purchasers or such controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the prospectus, financial statements and schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement (the "Prospectus"), or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them, in light of the circumstances under which they were made, not misleading, or arise out of or are based in whole or in part on any inaccuracy in the representations and warranties of the Company contained in this Agreement, or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such controlling person for any legal and other expenses as such expenses are reasonably incurred by such Purchaser or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, or (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting sale of the Shares, or (iii) the inaccuracy of any representations made by such Purchaser herein or (iv) any statement or

11

omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser.

    (3) Each Purchaser will severally indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 6.2 or 8.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of any representation made by such Purchaser herein or (iii) any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.

    (4) Promptly after receipt by an indemnified party under this Section 9 of notice of the threat or commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 9 promptly notify the indemnifying party in writing thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 9 or to the extent it is not materially prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently reasonably incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance

12

with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by such indemnifying party in the case of paragraph (2), representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party.

    (5) If the indemnification provided for in this Section 9 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under paragraphs (2), (3) or (4) of this Section 9 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the placement of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The respective relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the "Difference") between the amount such Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (3) of this Section 9, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in paragraph (3) of this Section 9 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is to be made under this paragraph (5); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under paragraph (4) for purposes of indemnification. The Company and each Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined solely by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 9, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 9 are several and not joint.

    10.  Broker's Fee.  The Purchaser acknowledges that the Company intends to pay to the Placement Agent a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser.

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    11.  Notices.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

    (1) if to the Company, to:

Andrew F. Pollet
Chairman
STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

      with a copy to:

Pollet & Richardson
10900 Wilshire Boulevard
Suite 500
Los Angeles, California 90024
Attention: Andrew F. Pollet, Esq.

or to such other person at such other place as the Company shall designate to the Purchaser in writing; and

    (2) if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.

    12.  Changes.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by an authorized representative of the Company and the Purchaser.

    13.  Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

    14.  Severability.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

    15.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws and the federal law of the United States of America.

    16.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

    [Signature Page Follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

STAAR SURGICAL COMPANY

/s/ ANDREW F. POLLET By: Andrew F. Pollet
Its: Chairman

Invesco Global Health Service Fund Name of Purchaser (Individual or Institution)	Ronald L. Grooms Name of Individual representing Purchaser (if an Institution)
Treasurer Title of Individual representing Purchaser (if an Institution)	/s/ RONALD L. GROOMS Signature of Individual Purchaser or Individual representing Purchaser
	Address:  7800 E. Union Ave # 400Telephone: 303-930-2524
	Telecopier: 303-930-2416

Number to Be Purchased	Price Per Share In Dollars	Aggregate Price
475,000	$14.00	$

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EX-10.70

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PROMISSORY NOTE
(Secured by Deed of Trust)

$125,000 September 5, 2000
Monrovia, California

FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged, Andrew F. Pollet ("Maker"), hereby promises to pay to STAAR Surgical Company, or order ("Holder"), at the address designated on the signature page of this Note, or at such other place as Holder may designate by written notice to Maker, the principal sum hereinbelow described ("Principal Amount"), together with interest thereon, in the manner and at the times provided and subject to the terms and conditions described herein.

    1.  Principal Amount.

    The Principal Amount means the sum of one hundred twenty-five thousand dollars ($125,000).

    2.  Interest.

    Interest on the Principal Amount from time-to-time remaining unpaid shall accrue from the date of this Note at the lower of: (i) the rate of seven percent (7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Interest shall be computed on the basis of a three hundred sixty (360) day year and a thirty (30) day month.

    3.  Payment of Principal and Interest.

    Subject to paragraph 8, below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note five (5) years from the date of this Note, on September 4, 2005.

    4.  Security/Release of Security.

    Maker shall pledge as security for the repayment of all sums payable under this Note the real property commonly known as 10934 Alto Court, Oak View, California. Maker shall execute a deed of trust of even date herewith evidencing Holder's security interest in the real property. If, for a period of fifteen (15) consecutive days, the fair market value of the real property falls below all sums unpaid under this Note and the unpaid balance of all promissory notes or other obligations secured thereby, then Maker will be required to transfer to Holder, upon receipt of Holder's written request, additional security, in any form acceptable to Holder, in an amount equal to the difference between all sums due under this Note and such other notes or obligations and the fair market value of the real property.

    5.  Prepayments.

    Maker shall have the right to prepay any portion of the Principal Amount without prepayment penalty or premium or discount.

    6.  Manner of Payments/Crediting of Payments.

    Payments of any amount required hereunder shall be made in lawful money of the United States or in such other property as Holder, in its sole and absolute discretion, may accept, without deduction or offset, and shall be credited first against accrued but unpaid late charges, if any, thereafter against accrued but unpaid interest, if any, and thereafter against the unpaid balance of the Principal Amount.

    7.  Interest on Delinquent Payments.

    Any payment under this Note not paid when due shall bear interest at the same rate and method as interest is charged on the Principal Amount from the due date until paid.

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    8.  Acceleration Upon Default.

    At the option of Holder, all or any part of the indebtedness of Maker hereunder shall immediately become due and payable, irrespective of any agreed maturity date, upon the happening of any of the following events of default:

    (a) If any part of the Principal Amount and/or interest thereon under this Note are not paid when due, provided, however, Maker shall be entitled to a grace period of ten (10) days following written notice of such event of default to cure said event of default;

    (b) If Maker shall breach any non-monetary condition or obligation imposed on Maker pursuant to the terms of this Note, provided, however, that if any such breach is reasonably susceptible of being cured, Maker shall be entitled to a grace period of thirty (30) days following written notice of such event of default to cure;

    (c) If Maker shall make an assignment for the benefit of creditors;

    (d) If a custodian, trustee, receiver, or agent is appointed or takes possession of substantially all of the property of Maker;

    (e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing Maker's inability to pay Maker's debts as they become due;

    (f)  If Maker shall apply for or consent to the appointment of a custodian, trustee, receiver, intervenor, liquidator or agent of Maker, or commence any proceeding related to Maker under any bankruptcy or reorganization statute, or under any arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect;

    (g) If any petition is filed against Maker under the Bankruptcy Code and either (A) the Bankruptcy Court orders relief against Maker, or (B) such petition is not dismissed by the Bankruptcy Court within thirty (30) days of the date of filing; or

    (h) If any attachment, execution, or other writ is levied on substantially all of the assets of Maker and remains in effect for more than five (5) days.

Maker shall notify Holder immediately if any event of default which is described in sub-paragraph (c) through sub-paragraph (h), above, occurs.

    9.  Collection Costs and Attorneys' Fees.

    Maker agrees to pay Holder all costs and expenses, including reasonable attorneys' fees, paid or incurred by Holder in connection with the collection or enforcement of this Note or any instrument securing payment of this Note, including without limitation, defending the priority of such instrument or conducting a trustee sale thereunder. In the event any litigation is initiated concerning the enforcement, interpretation or collection of this Note, the prevailing party in any proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

    10.  Notice.

    Any notice to either party under this Note shall be given by personal delivery or by express mail, Federal Express, DHL or similar airborne/overnight delivery service, or by mailing such notice by first class or certified mail, return receipt requested, addressed to such party at the address set forth below, or to such other address as either party from time to time may designate by written notice. Notices delivered by overnight delivery service shall be deemed delivered the next business day following consignment for such delivery service. Mailed notices shall be deemed delivered and received in accordance with this provision three (3) days after deposit in the United States mail.

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    11.  Usury Compliance.

    All agreements between Maker and Holder are expressly limited, so that in no event or contingency whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance, or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable usury laws. If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, Holder shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of the unpaid Principal Amount under this Note and not to the payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note, such excess shall be refunded to Maker. This provision shall control every other provision of all agreements between Maker and Holder.

    12.  Jurisdiction; Venue.

    This Note shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of California. Any action to enforce payment of this Note shall be filed and heard solely in Los Angeles County, California.

MAKER:

/s/ ANDREW F. POLLETAndrew F. Pollet

MAKER'S ADDRESS:

c/o 10900 Wilshire Boulevard, Suite 500
Los Angeles, California 90024

HOLDER'S ADDRESS:

STAAR SURGICAL COMPANY
1911 Walker Avenue
Monrovia, California 91016
Attn.: Chief Financial Officer

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PROMISSORY NOTE (Secured by Deed of Trust)

EX-10.71

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE

    This Settlement Agreement and Mutual Release ("Agreement") is entered into effective October 27, 2000 by and between STAAR Surgical Company, a Delaware corporation, the definition of which includes STAAR Surgical Company, its subsidiaries and affiliates (the "Company") and Vladimir Feingold, the definition of whom includes himself as an individual as well as any person or entity that Feingold directly or indirectly, through one or more intermediaries, controls, including, without limitation, Bionica Pty Ltd., ("Feingold"), all of whom are sometimes hereinafter referred to collectively as the "Parties" or individually as a "Party," with reference to the following facts.

RECITALS

WHEREAS, there is now pending in the Superior Court of the State of California, County of Los Angeles, a lawsuit between the Parties entitled Vladimir Feingold v. STAAR Surgical Company, et al., and its related cross-complaint, numbered BC 216184 (the "Action") concerning the terms of Feingold's employment agreement (the "Employment Agreement") with the Company, and any modifications that may exist relating to said Employment Agreement, and also concerning Feingold's participation on the Canon-STAAR Board of Directors. There is also pending in the Superior Court of the State of California, County of Los Angeles, a lawsuit between the Parties entitled STAAR Surgical Company v. Bionica Pty Ltd., et al., numbered GC 024218 concerning the terms of an Overseas Manufacturer's Distributor Agreement (the "OMD Action"). There exist other controversies between the Parties relating to Feingold's claim of interest, vis a vis the Company, of certain microkeratome technology and the obligations under that certain Right of First Refusal Agreement dated October 1, 1996 between Bionica Pty Ltd. and the Company (the "Right of First Refusal"). All of the above-stated controversies and disputes, including the Action and the OMD Action, are hereafter described as the "Disputed Matters".

WHEREAS, both Feingold and the Company wish to resolve their differences and to settle and terminate the Disputed Matters which now exist between them or for their benefit. By this Agreement, the Parties to this Agreement intend to fully and completely resolve any and all differences between them, or for their benefit, including any and all claims known and unknown, which may exist between them relating to the Disputed Matters. Each Party will take appropriate steps to effectuate the spirit of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Feingold agree as follows:

AGREEMENT

    1.  Incorporation of Recitals.  The recitals to this Agreement are an integral part of this Agreement and are hereby incorporated as a part of this Agreement as if set forth in it.

    2.  Termination of Employment Agreement, Overseas Manufacturer's Distributor Agreement and Right of First Refusal.  Upon execution of this Agreement, the Employment Agreement, and any and all amendments to it, shall be deemed to have been terminated in its entirety and to be of no further force and effect as of September 2, 1999. Upon execution of this Agreement, the Right of First Refusal and the Overseas Manufacturer's Distributor Agreement shall be deemed to be terminated in their entirety and be of no further force and effect as of the date hereof.

    3.  Consideration from the Company.  In exchange for Feingold's release of the Company from any past, present, and future obligations, whether monetary or otherwise, owed by the Company to Feingold, including any such past, present or future obligations owed by the Company to Feingold relating to the Disputed Matters, the Company shall pay to Feingold or provide for Feingold the following:

    (a)  Lump Sum Payment.  The Company shall pay to Feingold the sum of six hundred thousand dollars ($600,000), which payment shall be transferred electronically by the Company to

the "Green & Adams, LLP, Attorney Client Trust Account", account number 0207545801, at First Security Bank (formerly Marine National Bank) located at 18401 Von Karman Avenue, Irvine, California 92612, routing number 1222237683 ("Wire Transfer") on or before the close of business on October 27, 2000.

    (b)  Issuance of Stock.  Upon receipt of the sum of one hundred forty five thousand eight hundred thirty-one dollars and twenty-five cents ($145,831.25) from Feingold (the "Exercise Price"), the Company shall deliver to the Escrow Agent a certificate for twenty-three thousand three hundred thirty-three (23,333) shares of the Company's fully registered, non-restricted, free-trading common stock (the "Stock"), pursuant to that certain Escrow Agreement attached hereto as Exhibit A (the "Escrow Agreement").

    (c)  Delivery of Documents.  The Company shall deliver to Feingold, c/o Mark S. Adams, Esq., an executed copy of this Agreement and the Escrow Agreement. The Company shall transmit via facsimile an executed copy of the Escrow Agreement to the Escrow Agent. Upon receipt of written confirmation from the Escrow Agent that the Exercise Price is immediately available in good funds, the Company shall transmit, via facsimile, the "Joint Escrow Instructions" attached to the Escrow Agreement as Exhibit 1.

    (d)  Agreement Not to Divulge Trade Secrets.  The Company acknowledges that, during the past several years, Feingold has designed and developed an ophthalmic knife, or microkeratome, the methods and intellectual property regarding same (the "Microkeratome Technology"). During such time, the Company had, or may have had, access to certain materials relating to the Microkeratome Technology. The Company acknowledges that the Microkeratome Technology belongs to Feingold and not the Company. The Company expressly disclaims any right, title and interest in the Microkeratome Technology. The Company agrees that the Microkeratome Technology is a part of Feingold's trade secrets as defined in California Civil Code Section 3426 et seq. The Company agrees that it is subject to the laws of the State of California that protect Feingold's trade secrets and the Company promises and agrees that it will always act in compliance with those laws as they relate to Feingold's trade secrets. The Company agrees that a violation of the laws of the State of California that protect Feingold's trade secrets constitutes unfair competition.

    (e)  Non-Disparagement.  The Company agrees not to criticize, denigrate, or otherwise disparage Feingold.

    (f)  Request for Dismissal.  The Parties will promptly execute and the Company's counsel will promptly file a Request for Dismissal with Prejudice of the Action and the OMD Action and will serve a conformed copy of the Request for Dismissal with Prejudice on Feingold's counsel.

    4.  Waiver of All Other Claims.  Feingold agrees that Feingold is not entitled to receive, will not claim and expressly waives any entitlement to rights, benefits, reimbursement, indemnification, or compensation from the Company, whether or not such entitlements are claimed through the Employment Agreement or not, other than as expressly set forth in this Agreement.

    5.  Complete Release by Feingold.

    (a)  Release.  Feingold irrevocably and unconditionally releases all of the claims described in subparagraph 5(b) that Feingold may now have, or has ever had, against the following persons or entities (the "Releasees"): The Company (including its subsidiaries and affiliates), all related companies and all of the Company's (its subsidiaries' and affiliates') or such related companies' predecessors and successors; and, with respect to each such entity, all of its past and present employees, officers, directors, stockholders, owners, representatives, assigns, attorneys, agents, insurers, employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs) and any other persons acting by, through, under or in concert with any of the persons or entities listed in this subparagraph.

    (b)  Claims Released.  The claims released include all claims, promises, obligations, debts, causes of action or similar rights of any type or nature Feingold has or had which in any way relate to (1) Feingold's employment with the Company as an officer and/or director, or the termination of that employment, such as claims for compensation, bonuses, commissions, lost wages or unused accrued vacation or sick pay, (2) the design or administration of any employee benefit program or Feingold's entitlement to benefits under any such program, (3) any claims to attorneys' fees and/or other legal costs, (4) the Action and the OMD Action, (5) the Disputed Matters, and (6) any other claims or demands Feingold may have on any basis whatsoever. The claims released include, but are not limited to, claims arising under any of the following statutes or common law doctrines:

    (1)  Anti-Discrimination Statutes,  such as the Age Discrimination in Employment Act (ADEA), which prohibits age discrimination in employment; the Civil Rights Act of 1991, Title VII of the Civil Rights Act of 1964, and §1981 of the Civil Rights Act of 1866, which prohibit discrimination based on race, color, national origin, religion or sex; the Equal Pay Act, which prohibits paying men and women unequal pay for equal work; the Americans With Disabilities Act (ADA), which prohibits discrimination against the disabled; the California Fair Employment and Housing Act (FEHA), which prohibits discrimination in employment based upon race, color, national origin, ancestry, physical or mental disability, medical condition, martial status, sex, or age; and any other federal, state or local laws or regulations prohibiting employment discrimination.

    (2)  Federal Employment Statutes,  such as the Employee Retirement Income Security Act of 1974, which, among other things, protects pension or health plan benefits; and the Fair Labor Standards Act of 1938, which regulates wage and hour matters.

    (3)  Other Laws,  such as any federal, state or local laws restricting an employer's right to terminate employees or otherwise regulating employment; any federal, state or local law relating to wages, or enforcing express or implied employment contracts or requiring an employer to deal with employees fairly or in good faith; and any other federal, state or local statutory or common laws providing recourse for alleged wrongful discharge, physical or personal injury, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation and similar or related claims. The laws referred to in this paragraph include statutes, regulations, other administrative guidance and common law doctrines.

    (4)  Federal and State Securities Laws,  such as the Securities Act of 1933, the Securities Exchange Act of 1934 and the California Corporations Code and the rules and regulations promulgated thereto.

    (5)  Federal and State Unfair Competition Laws,  such as California Business and Professions Code section 17200, et seq and the Lanham Act.

    (c)  Release Extends to Both Known and Unknown Claims.  This release covers both claims that Feingold knows about and those Feingold does not know about. Feingold understands the significance of his release of unknown claims and his waiver of any statutory protection against a release of unknown claims. Feingold expressly waives the protection of any such governmental statutes or regulations.

    More particularly, and without limitation, Feingold acknowledges that Feingold has read and is familiar with and understands the provisions of Section 1542 of the California Civil Code, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

    (d)  Ownership of Claims.  Feingold represents that Feingold has not assigned or transferred, or purported to assign or transfer, all or any part of any claim released by this Agreement.

    6.  No Pursuit of Released Claims.  Feingold promises never to file or prosecute a lawsuit, administrative complaint or charge, or other complaint or charge asserting any claims that are released by the Agreement. Feingold represents that Feingold has not filed or caused to be filed any lawsuit, complaint or charge with respect to any claim this Agreement releases, except for the Action and the cross-complaint in the OMD Action. Feingold further agrees to request any government agency or other body assuming jurisdiction of any complaint or charge relating to a released claim to withdraw from the matter or dismiss the matter with prejudice.

    7.  Consideration from Feingold.  In exchange for the Company's release of Feingold from any past, present, and future obligations, whether monetary or otherwise, owed by Feingold to the Company, including any such past, present or future obligations owed by Feingold to the Company relating to the Disputed Matters, Feingold agrees to the following:

    (a)  Delivery of Agreement.  Feingold shall deliver to the Company, c/o Robert C. Woodbury, Esq., an executed copy of this Agreement and the Escrow Agreement. Feingold shall deliver an executed copy of the Escrow Agreement to the Escrow Agent. Upon receipt of written confirmation from the Escrow Agent that the Exercise Price is immediately available in good funds, Feingold shall transmit, via facsimile, the "Joint Escrow Instructions" attached to the Escrow Agreement as Exhibit 1.

    (b)  Payment of the Exercise Price.  Feingold shall re-deliver that certain check number 5270 made payable to the Company, dated September 24, 1999, in the amount of the Exercise Price, as payment for the exercise of that certain stock option dated September 4, 1998.

    (c)  Agreement Not to Sell Stock.  Feingold represents, promises, and agrees that he shall not sell the Stock until January 1, 2001. Feingold agrees that this promise constitutes a material inducement to the Company to enter into this Agreement. Feingold agrees that a breach of this promise will result in a failure of consideration that will permit the Company to rescind this Agreement and seek monetary damages from Feingold as well as injunctive relief.

    (d)  Payment of Cash and Return of Property.  Feingold shall deliver to the Company, c/o Robert C. Woodbury, Esq., immediately available funds in the amount of fifteen thousand dollars ($15,000). This payment shall be by money order or cashier's check made payable to "STAAR Surgical Company and Pollet & Richardson." Furthermore, within ninety (90) days of the execution of this Agreement, Feingold shall return to the Company, c/o Robert C. Woodbury, any of the Company's unused goods and products in Feingold's possession or custody. Feingold represents and warrants that the goods and products returned by Feingold are all of the goods and products in Feingold's possession or custody.

    (e)  Agreement Not to Compete.  Feingold covenants and agrees that, for a period of two (2) years from the date of this Agreement, Feingold shall not:

     (i) directly or indirectly (whether as principal, agent, independent contractor, partner or otherwise) own, manage, operate, control, participate in, perform services for, or otherwise carry on, a business similar to or competitive with the business of the Company or any of its subsidiaries or affiliates anywhere in the world; or

    (ii) induce or attempt to persuade any employee of the Company to terminate such employment relationship in order to enter into any such relationship on behalf of Feingold or any other business organization in competition with the Company.

For purposes of this paragraph, the covenants set forth above shall be referred to as the "Non-Compete Covenants". The term "a business similar to or competitive with the business of the Company or any of its subsidiaries or affiliates" shall refer to any business that manufactures, sells or distributes the following lines of products (the "Products"):

     (i) monofocal posterior chamber intraocular lenses made from the Company's proprietary silicone RMX3;

    (ii) monofocal posterior chamber intraocular lenses made from the Company's proprietary collamer material;

    (iii) monofocal posterior chamber implantable contact lenses made from the Company's proprietary collamer material;

    (iv) collagen glaucoma drains made from the Company's proprietary cross-linked pure collagen material; and

    (v) phacoemulsification machines.

This Agreement does not restrict Feingold from working for or with any other companies that currently or in the future may develop, design, manufacture, sell or distribute the Products pursuant to a licensing agreement or similar type of arrangement with the Company.

Feingold understands and agrees that the Non-Competition Covenants represent a material inducement to the Company to enter into this Agreement and to pay the consideration it has agreed to pay. Therefore, Feingold agrees that if Feingold breaches the Non-Competition Covenants, Feingold will immediately pay to the Company the amount of money representing the difference between the Exercise Price paid to the Company for the Stock and the sale price or prices of the Stock (the "Spread"), pro-rata, based upon the number of months remaining in the two (2) year period during which the Non-Competition Covenants are in force. For example, in the event that Feingold were to breach the Non-Competition Covenants during the seventh (7th) month of the two (2) year period, Feingold would pay to the Company an amount equal to ¹⁷/24 of the Spread.

The Non-Competition Covenants shall become immediately null and void and of no further force or effect upon: (i) the dissolution or liquidation of the Company; (ii) the Company's filing of a petition in bankruptcy; or, (iii) if Feingold becomes an employee, consultant or agent of any of the following: (A) any company to which the Company sells or transfers substantially all of its business or assets; (B) any company who is the purchaser of a controlling interest in the Company by way of a purchase of the Company's capital stock (so long as such company is unrelated to the Company); or (C) the surviving entity of any merger or consolidation of the Company with another company as part of a sale or transfer of a controlling interest in the Company to an unrelated third party.

    (e)  Agreement Not to Divulge Trade Secrets.  Feingold agrees that during the term of his business relationship with the Company, Feingold had access to and became acquainted with the Company's trade secrets, as defined in California Civil Code, section 3426, et seq., which are owned by the Company and are regularly used in the operation of the Company's business. Feingold agrees that he is subject to the laws of the State of California that protect the Company's trade secrets, and Feingold promises and agrees that he will always act in compliance with those laws as they relate to the Company's trade secrets. Feingold agrees that a violation of the laws of the State of California that protect the Company's trade secrets constitutes unfair competition.

    (f)  Non-Disparagement.  Feingold agree not to criticize, denigrate, or otherwise disparage the Company or any other Releasee.

    (g)  Provisions Relating to Canon-STAAR.  Feingold agrees that the execution of this Agreement shall constitute his resignation from the Board of Directors of Canon-STAAR Co., Inc. Feingold agrees that Feingold will not seek, nor will Feingold accept, for a period of two (2) years from the execution of this Agreement, a position with Canon-STAAR Co., Inc. as a director, officer, employee or consultant. Feingold shall execute a letter of resignation resigning as a director of Canon-STAAR Co., Inc., a copy of which resignation letter is attached hereto as Exhibit B, and shall deliver said letter to the Company, c/o Robert C. Woodbury, Esq., along with the executed copy of this Agreement. Feingold agrees that, upon the request of the Company, but at no expense to Feingold, Feingold will cooperate with the Company in prosecuting or defending any action or proceeding, including any arbitration proceeding, involving Canon-STAAR Co., Inc., Canon Sales Company, Inc. or Canon, Inc. (or any subsidiary or affiliate of any such parties) and to perform any lawful acts, including, but not limited to, executing papers and oaths, giving

testimony, or producing information or documents, that in the opinion of the Company, its successors or assigns, may be necessary or desirable.

    (h)  Request for Dismissal.  The Parties will promptly execute and the Company's counsel will promptly file a Request for Dismissal with Prejudice of the Action and the OMD Action and will serve a conformed copy of the Request for Dismissal with Prejudice on Feingold's counsel.

    8.  Complete Release by the Company.

    (a)  Release.  The Company irrevocably and unconditionally releases all of the claims described in subparagraph 8(b) that the Company may now have, or has ever had, against Feingold, or any of Feingold's past and present employees, officers, directors, stockholders, owners, representatives, assigns, attorneys, agents, insurers, or any other persons or entities acting by, through, or under or in concert with any of the persons or entitles listed in this subparagraph.

    (b)  Claims Released.  The claims released include all claims, promises, debts, causes of action or similar rights of any type or nature the Company has or had which in any way relate to: (1) Feingold's employment with the Company; (2) the Action and the OMD Action; (3) the Disputed Matters; (4) any claims to attorneys' fees and/or other legal costs; and (5) any other claims or demands the Company may on any basis have.

    (c)  Release Extends to Both Known and Unknown Claims.  This release covers both claims that the Company knows about and those the Company does not know about. The Company understands the significance of this release of unknown claims and this waiver of any statutory protection against a release of unknown claims. The Company expressly waives the protection of any such governmental statutes or regulations.

    More particularly, and without limitation, the Company acknowledges that the Company has read and is familiar with and understands the provisions of Section 1542 of the California Civil Code, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

    (d)  Ownership of Claims.  The Company represents that the Company has not assigned or transferred, or purported to assign or transfer, all or any part of any claim released by this Agreement.

    9.  No Pursuit of Released Claims.  The Company promises never to file or prosecute a lawsuit, administrative complaint or charge, or other complaint or charge asserting any claims that are released by the Agreement. The Company represents that the Company has not filed or caused to be filed any lawsuit, complaint or charge with respect to any claim this Agreement releases, except for the OMD Action and the cross-complaint in the Action. The Company further agrees to request any government agency or other body assuming jurisdiction of any complaint or charge relating to a released claim to withdraw from the matter or dismiss the matter with prejudice.

    10.  Confidentiality Provisions.  The Parties agree that neither Party will issue a press release or otherwise communicate (orally or in writing) with the media (print or electronic) regarding the existence or terms of the Agreement nor will either Party provide the media (print or electronic) with a copy of the Agreement or any portion thereof. Further, subject to the conditions herein, the Parties agree that neither Party will communicate (orally or in writing) with any third party regarding the terms or existence of the Agreement nor will either Party provide any third party with a copy of the whole or any portion of the Agreement; provided however that the Parties will be entitled to disclose the existence of the Agreement and the terms hereof to their respect financial and legal advisers, Feingold will be entitled to disclose the existence and terms of the Agreement to his spouse and employers (including potential employers), and Feingold and the Company will be entitled to disclose the existence and terms of the Agreement to its investors and any acquirers (including potential investors and potential acquirers) as well as to the United States Securities and Exchange Commission and any

other local, state, federal or international governmental agencies to which either Party should or must disclose the existence and terms of the Agreement and/or the terms thereof. If a Party receives a lawfully issued subpoena or court order requiring that Party to produce the Agreement or to testify about the existence or contents of the Agreement, then that Party will give the other Party immediate written notice of the subpoena or court order together with a copy of the subpoena or court order and any correspondence related thereto in accordance with Section 16 of the Agreement so that the other Party may timely object to the production of the Agreement and/or to the dissemination of any information about the terms of the Agreement.

    11.  Consulting with Attorney.  Feingold and the Company acknowledge that each has discussed this Agreement with an attorney of his or its own choosing before signing it.

    12.  Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (i) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (ii) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law. The provisions of this Agreement are severable.

    13.  Choice of Laws/Waiver of Jury Trial.  This Agreement shall be governed by the laws of the State of California, and the Courts of the County of Los Angeles, California and the Parties specifically waive any right to a jury trial.

    14.  Authorization and Validity of Agreement.  The execution and delivery of this Agreement by the Parties, and the performance of the transactions herein contemplated, have been duly authorized by the appropriate governing authorities and no further corporate or other action on the part of either Party is necessary to authorize this Agreement or the performance of such transactions. This Agreement has been duly and validly executed and delivered by each Party and is valid and binding upon each Party in accordance with its terms, except as limited by: (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors rights generally, and (ii) general principles of equity.

    15.  Nature, Effect and Interpretation of this Agreement.

    (a)  Entire Agreement.  This Agreement is the entire agreement between Feingold and the Company relating to the subject matter herein; it may not be modified or cancelled in any manner except by a writing signed by both the Company and Feingold. The Parties have made no promises or representations to each other, other than those in this Agreement.

    (b)  Successors and Assigns.  This Agreement shall bind the Parties heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.

    (c)  Interpretation.  This Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the Parties. Unless the context indicates otherwise, the term "or" shall be deemed to include the term "and" and the singular or plural number shall be deemed to include the other. Paragraph headings used in this Agreement are intended solely for convenience of reference and shall not be used in the interpretation of any of this Agreement. It is acknowledged that neither Party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against either Party as the alleged draftsman of this Agreement.

    (d)  Counterparts and Facsimiles.  For the convenience of the Parties, this document may be executed by facsimile signatures and in counterparts which shall together constitute the agreement of the parties as one and the same instrument.

    (e)  No Waiver.  The failure to enforce any provision of this Agreement shall not be construed as a waiver of any such provision, nor prevent a Party from enforcing the provision or any other provision of this Agreement. The rights granted the Parties are cumulative, and the election of one shall not constitute a waiver of such Party's right to assert all other legal and equitable remedies available under the circumstances.

    (f)  Implementation.  The Company and Feingold both agree that, without the receipt of further consideration, they will sign and deliver any documents and do anything else that is necessary in the future to make the provisions of this Agreement effective.

    16.  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (1) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (2) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (3) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (4) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth {5th} business day following the date mailed). Notices shall be addressed to the parties as follows:

Executive:	Vladimir Feingold 31732 Isle Vista Laguna Niguel, California 92677
With copy to:	Mark Adams, Esq. c/o Green & Adams, LLP 8 Corporate Park, Suite 200 Irvine, California 92606
Company:	STAAR Surgical Company 1911 Walker Avenue Monrovia, California 91016 Attn: Mr. Andrew F. Pollet
With copy to:	Pollet & Richardson 10900 Wilshire Boulevard, Suite 500 Los Angeles, California 90024 Attention: Andrew F. Pollet, Esq.

    17.  Denial of Liability.  It is understood and agreed that nothing herein shall be construed as an admission of any liability of any kind and each Party acknowledges that the other Parties have expressly denied that they are in any way liable or obligated for damages arising from matters set forth herein.

    18.  Attorneys' Fees.  If any Party institutes or should the Parties otherwise become a party to any action or proceeding based upon or arising out of this Agreement including, without limitation, to enforce or interpret this Agreement or any provision hereof, the prevailing party in any such action or proceeding shall be entitled to receive reasonable attorneys' fees.

    PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

    Executed at Orange County, California this 26th day of October, 2000.

"FEINGOLD"

/s/ VLADIMIR FEINGOLD VLADIMIR FEINGOLD

    Executed at Los Angeles County, California, this 26th day of October, 2000.

"COMPANY"
STAAR SURGICAL COMPANY
By:	/s/ ANDREW F. POLLET ANDREW F. POLLET, Chief Executive Officer

CERTIFICATION OF ATTORNEY

    The undersigned hereby certifies that he is an Attorney at Law, duly licensed and admitted to practice in the State of California, and has been retained by Mr. Vladimir Feingold in this matter, and that he has advised Mr. Feingold with respect to this Agreement, and explained to him the meaning and effect of it, and that Mr. Feingold has acknowledged his full and complete understanding of this Agreement, and its legal consequences, and has freely and voluntarily executed the same.

    Executed at Orange County, California on the 26th day of October, 2000.

GREEN & ADAMS, LLP
By:	/s/ MARK S. ADAMS MARK S. ADAMS

EXHIBIT A

ESCROW AGREEMENT

October 25, 2000

ESCROW AGREEMENT

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    Reference is made to that certain Settlement Agreement and Mutual Release (the "Agreement") between VLADIMIR FEINGOLD, et al. ("Feingold") and STAAR SURGICAL COMPANY, a Delaware corporation, et al. ("Staar"). You have agreed to act as an independent escrow agent ("Escrow Agent") pursuant to the following:

A.  Deposit of Funds and Delivery of Certificates.

    1.  On or before October 25, 2000, Feingold will deliver to Staar that certain Check No. 5270 made payable to the order of "Staar Surgical Co." dated September 24, 1999, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25), as payment for the Twenty Three Thousand Three Hundred Thirty Three (23,333) shares (the "Check"). Staar will endorse the Check to the "Joseph M. Galosic Attorney Client Trust Account," a non-interest bearing account, and deliver said Check to you on or before 1:00 p.m. on October 26, 2000. You will deposit said Check into your attorney-client trust account (the "Escrow Deposit"). You will hold the proceeds from said Check in trust, until directed to release such funds as instructed herein.

    2.  On or before October 26, 2000, Staar will deliver to you a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock (the "Stock Certificate").

    3.  You have agreed to hold the Escrow Deposit and the Stock Certificate, in trust, on the following terms:

    (a) Upon receipt of confirmation that the Escrow Deposit is immediately available in good funds, you shall transmit this information, via facsimile to Staar, c/o Mary Ann Sapone, Esq., at (310) 208-1154 and to Feingold, c/o Mark S. Adams, Esq.

    (b) If you receive written joint instructions signed by Feingold and Staar regarding disposition of the Escrow Deposit and Stock Certificate in the form attached hereto as Exhibit "1," then you shall immediately (which term, as used herein shall mean within two business days) deliver the Stock Certificate to Feingold, and deliver to Staar a cashier's check, drawn on your attorney-client trust account, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar Surgical Company."

    (c) If you do not receive the joint instruction in (a) above, but rather you receive written joint instructions signed by Feingold and Staar in the form attached hereto as Exhibit "2," or written individual instructions signed by either of them in the form attached hereto as Exhibit "3" or Exhibit "4," to cancel this Escrow, you shall deliver to Feingold a cashier's check, drawn on your attorney-client trust account, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold," and deliver the Stock Certificate to Staar.

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B.  General Provisions.

    1.  You shall hold and dispose of the Escrow Deposit and Stock Certificate in the manner set forth above and shall have no other duties as escrow agent; your duties shall be determined only with reference to this Escrow Agreement and applicable law. If there should be a conflict between the provisions of this Escrow Agreement and applicable law, the terms of the Escrow Agreement shall control to the extent permissible and this Escrow Agreement shall be reformed only to the extent necessary to conform to applicable law. You are not charged with knowledge of, or any duties or responsibilities under, any other document or agreement. You may rely upon and shall be protected in acting or refraining from acting upon any written notice, instruction or request furnished to you under this Escrow Agreement and believed by you to be genuine and to have been signed or presented by Feingold and Staar. You shall be under no duty to inquire into or investigate the validity, accuracy or content of any such notice, instruction or request. You shall not be liable to Feingold or Staar for any actions taken or omitted by you in connection with the performance of your duties under this Escrow Agreement, except for actions or omissions arising from your own gross negligence or willful misconduct.

    2.  In the event you should at any time be confronted with inconsistent claims or demands by Feingold and Staar, you shall have the right to seek ex parte relief before Judge Paul Gutman at the Superior Court of California, County of Los Angeles, in connection with that certain case entitled Vladimir Feingold v. Staar Surgical Company, et al., and numbered BC216184 in the files of that Court, interplead the parties, and request that the court determine the respective rights of the parties with respect to this Escrow Agreement. You shall be indemnified and held harmless by Feingold and Staar, jointly and severally, as a consequence of your interpretation of the rights of the parties hereunder and you shall automatically shall be released from any obligation or liability as a consequence of any such claims or demands, except with respect to your own gross negligence or willful misconduct. Feingold and Staar further agree that you shall be under no duty whatsoever to institute or defend any proceedings involving any conflict or claims of any nature whatsoever between Feingold and Staar.

    3.  This Escrow Agreement cannot be changed or terminated orally and may be changed only with your written consent and the written consent of Feingold and Staar. This Escrow Agreement and your duties hereunder shall terminate when all amounts of the Escrow Deposit and Stock Certificate have been delivered to Feingold and Staar in accordance with this Escrow Agreement.

    4.  Any notice or other communication under this Escrow Agreement shall be in writing and shall be considered given when delivered personally or four days after being mailed by registered mail, return receipt requested, or on the date of transmission if delivered by confirmed telecopy, to the parties at the following addresses or facsimile numbers (or at such other address as a party may specify by notice to the other):

    (a) If to the Escrow Agent, to him at:


Joseph M. Galosic, Esq.
8 Corporate Park, Suite 200
Irvine, California 92606
Telephone: (949) 476-0500
Fax: (949) 476-5059

    (b) If to Feingold, to him at:


Vladimir Feingold
31732 Isle Vista
Laguna Niguel, California 92677

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With copy to:
Mark S. Adams, Esq.
Green & Adams, LLP
8 Corporate Park, Suite 200
Irvine, California 92606
Telephone: (949) 862-1030
Fax: (949) 862-1031

    (c) If to Staar, to it at:


Andrew F. Pollet
President
Staar Surgical Company
1911 Walker Avenue, Suite 500
Monrovia, California 91016

With copy to:
Robert C. Woodbury, Esq.
Pollet & Woodbury
10900 Wilshire Blvd., Ste. 500
Los Angeles, California 90024
Telephone: (310) 208-1182
Fax: (310) 208-1154

    5.  This Escrow Agreement shall be governed by and construed in accordance with the law of the State of California applicable to agreements made and to be performed in California. All parties hereto agree that any controversy that may arise between the parties shall be adjudicated before Judge Paul Gutman in the Superior Court of California, County of Los Angeles. In the event of any dispute that may arise between the parties as to their respective rights, duties and obligations hereunder, the prevailing party in such dispute shall be entitled to recover its costs and expenses (including reasonable attorney fees) incurred by such party in connection with such dispute.

    6.  This Escrow Agreement shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties hereto.

    7.  This Escrow Agreement and any instructions referenced herein may be executed in one or more counterparts, but all such counterparts shall constitute but one and the same instrument.

    * * * *

    IN WITNESS WHEREOF, the parties hereto agree that this Escrow Agreement shall be effective on the date that the Escrow Agent executes this Escrow Agreement.

"FEINGOLD"

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

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"STAAR"

STAAR SURGICAL COMPANY
a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

    The undersigned agrees to act as escrow agent in accordance with the terms set forth above.

By:

Name/Title: Joseph M. Galosic, Esq.

Date:

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EXHIBIT "1"

October   , 2000

JOINT ESCROW INSTRUCTIONS
For Delivery of Check and Stock Certificate

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to:

    1.  Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606; and

    2.  Immediately deliver to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar Surgical Company."

    After completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions.

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

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EXHIBIT "2"

October   , 2000

JOINT ESCROW INSTRUCTIONS
For Cancellation of Escrow and Delivery of Check and Stock Certificate

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to:

    1.  Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024; and

    2.  Immediately deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold."

    After completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions.

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

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EXHIBIT "3"

October   , 2000

ESCROW INSTRUCTION BY STAAR
For Cancellation of Escrow and Delivery of Stock Certificate

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby instructed by Staar Surgical Company, a Delaware corporation ("Staar") to:

    Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024.

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

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EXHIBIT "4"

October   , 2000

ESCROW INSTRUCTION BY FEINGOLD
Cancellation of Escrow and Delivery of Check

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby instructed by Vladimir Feingold ("Feingold") to:

    Immediately deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold."

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

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EXHIBIT B
VLADIMIR FEINGOLD
31732 Isle Vista
Laguna Niguel, California 92677

VIA HAND DELIVERY

Board of Directors
Canon-STAAR Co., Inc.
c/o STAAR Surgical Company
1911 Walker Avenue
Monrovia, California 91016

Gentlemen:

    The undersigned, Vladimir Feingold, hereby resigns from any position he holds with Canon-STAAR Co., Inc., including as a director. This resignation shall be effective immediately.

Dated: October 27, 2000

/s/ VLADIMIR FEINGOLD


Vladimir Feingold

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE
RECITALS
AGREEMENT
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EXHIBIT A ESCROW AGREEMENT
ESCROW AGREEMENT

EX-10.72

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Exhibit 10.72

WELLS FARGO BANK	REVOLVING LINE OF CREDIT NOTE
$7,000,000.00	West Covina, California October 31, 2000

    FOR VALUE RECEIVED, the undersigned Staar Surgical Company ("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at San Gabriel Valley RCBO, 1000 Lakes Drive, Suite 250, West Covina, CA 91790, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of $7,000,000.00, or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein.

INTEREST:

    (a)  Interest.  The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a rate per annum equal to the Prime Rate in effect from time to time. The "Prime Rate" is a base rate that Bank from time to time establishes and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. Each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank.

    (b)  Payment of Interest.  Interest accrued on this Note shall be payable on the 1st day of each month, commencing November 1, 2000.

    (c)  Default Interest.  From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to 4% above the rate of interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

    (a)  Borrowing and Repayment.  Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with or governing this Note; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount stated above. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for any Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on April 1, 2001.

    (b)  Advances.  Advances hereunder, to the total amount of the principal sum available hereunder, may be made by the holder at the oral or written request of (i) John Santos, any one acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of such authority is received by the holder at the office designated above, or (ii) any person, with respect to advances deposited to the credit of any deposit account of any Borrower, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of each Borrower regardless of the fact that persons other than those authorized to

1

request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance is or has been authorized by any Borrower.

    (c)  Application of Payments.  Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof.

    (d)  Governing Law.  This Note shall be governed by and construed in accordance with the laws of the State of California.

    IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

STAAR SURGICAL COMPANY
By:	/s/ JOHN SANTOS John Santos, Chief Financial Officer

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EXHIBIT "A"

WELLS FARGO BANK	REVOLVING LINE OF CREDIT NOTE
$7,000,000.00	West Covina, California October 31, 2000

    FOR VALUE RECEIVED, the undersigned Staar Surgical Company ("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at San Gabriel Valley RCBO, 1000 Lakes Drive, Suite 250, West Covina, CA 91790, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of $7,000,000.00, or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein.

INTEREST:

    (a)  Interest.  The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a rate per annum equal to the Prime Rate in effect from time to time. The "Prime Rate" is a base rate that Bank from time to time establishes and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. Each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank.

    (b)  Payment of Interest.  Interest accrued on this Note shall be payable on the 1st day of each month, commencing November 1, 2000.

    (c)  Default Interest.  From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to 4% above the rate of interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

    (a)  Borrowing and Repayment.  Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with or governing this Note; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount stated above. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for any Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on April 1, 2001.

    (b)  Advances.  Advances hereunder, to the total amount of the principal sum available hereunder, may be made by the holder at the oral or written request of (i) John Santos, any one acting alone, who are authorized to request advances and direct the disposition of any advances until written notice of the revocation of such authority is received by the holder at the office designated above, or (ii) any person, with respect to advances deposited to the credit of any deposit account of any Borrower, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of each Borrower regardless of the fact that persons other than those authorized to

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request advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an advance is or has been authorized by any Borrower.

    (c)  Application of Payments.  Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof.

EVENTS OF DEFAULT:

    The occurrence of any of the following shall constitute an "Event of Default" under this Note:

    (a) The failure to pay any principal, interest, fees or other charges when due hereunder or under any contract, instrument or document executed in connection with this Note.

    (b) The filing of a petition by or against any Borrower, any guarantor of this Note or any general partner or joint venturer in any Borrower which is a partnership or a joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a "Third Party Obligor") under any provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time, or under any similar or other law relating to bankruptcy, insolvency, reorganization or other relief for debtors; the appointment of a receiver, trustee, custodian or liquidator of or for any part of the assets or property of any Borrower or Third Party Obligor; any Borrower or Third Party Obligor becomes insolvent, makes a general assignment for the benefit of creditors or is generally not paying its debts as they become due; or any attachment or like levy on any property of any Borrower or Third Party Obligor.

    (c) The death or incapacity of any individual Borrower or Third Party Obligor, or the dissolution or liquidation of any Borrower or Third Party Obligor which is a corporation, partnership, joint venture or other type of entity.

    (d) Any default in the payment or performance of any obligation, or any defined event of default, under any provisions of any contract, instrument or document pursuant to which any Borrower or Third Party Obligor has incurred any obligation for borrowed money, any purchase obligation, or any other liability of any kind to any person or entity, including the holder.

    (e) Any financial statement provided by any Borrower or Third Party Obligor to Bank proves to be incorrect, false or misleading in any material respect.

    (f)  Any sale or transfer of all or a substantial or material part of the assets of any Borrower or Third Party Obligor other than in the ordinary course of its business.

    (g) Any violation or breach of any provision of, or any defined event of default under, any addendum to this Note or any loan agreement, guaranty, security agreement, deed of trust, mortgage or other document executed in connection with or securing this Note.

MISCELLANEOUS:

    (a)  Remedies.  Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by each Borrower, and the obligation, if any, of the holder to extend any further credit hereunder shall immediately cease and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of the holder's in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note,

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including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or entity.

    (b)  Obligations Joint and Several.  Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several.

    (c)  Governing Law.  This Note shall be governed by and construed in accordance with the laws of the State of California.

    IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

STAAR SURGICAL COMPANY
By:	/s/ JOHN SANTOS John Santos, Chief Financial Officer

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San Gabriel Valley RCBO
1000 Lakes Drive, Suite 250
West Covina, CA 91790

WELLS
FARGO

October 31, 2000

John Santos, Chief Financial Officer
Staar Surgical Company
1911 Walker Avenue
Monrovia, CA 91016

Dear Mr. Santos:

    This letter is to confirm that WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank"), subject to all terms and conditions contained herein, has agreed to make available the credit accommodation described below to STAAR SURGICAL COMPANY ("Borrower"). This letter shall be deemed to amend and restate the prior letter loan agreement between Borrower and Bank dated as of June 1, 1998, as amended (the "Prior Letter Agreement"), and any credit accommodation under the Prior Letter Agreement which is not continued hereunder shall be deemed cancelled hereby.

    Borrower shall continue to have a revolving line of credit under which Bank will make advances to Borrower from time to time up to and including April 1, 2001, not to exceed at any time the maximum principal amount of Seven Million Dollars ($7,000,000.00) ("Line of Credit"), the proceeds of which shall be used to finance Borrower's working capital requirements. Outstanding advances under the "Line of Credit" under the Prior Letter Agreement shall be deemed outstanding hereunder.

I.

CREDIT TERMS:

1.

LINE OF CREDIT:

    (a)  Line of Credit Note.  Borrower's obligation to repay advances under the Line of Credit shall be evidenced by a promissory note substantially in the form of Exhibit A attached hereto ("Line of Credit Note"), all terms of which are incorporated herein by this reference. The line of credit note that had been executed by Borrower and delivered to Bank to evidence advances under the "Line of Credit" under the Prior Letter Agreement shall be deemed amended and restated by the Line of Credit Note hereunder.

    (b)  Letter of Credit Subfeature.  As a subfeature under the Line of Credit, Bank agrees from time to time during the term thereof to issue standby letters of credit for the account of Borrower to finance performance requirements (each, a "Letter of Credit" and collectively, "Letters of Credit"); provided however, that the form and substance of each Letter of Credit shall be subject to approval by Bank, in its sole discretion; and provided further, that the aggregate undrawn amount of all outstanding Letters of Credit shall not at any time exceed Five Million Dollars ($5,000,000.00). Each Letter of Credit shall be issued for a term not to exceed three hundred sixty-five (365) days, as designated by Borrower; provided however, that no Letter of Credit shall have an expiration date subsequent to the maturity date of the Line of Credit. The undrawn amount of all Letters of Credit shall be reserved under the Line of Credit and shall not be available for borrowings thereunder. Outstanding standby letters of credit issued for the account of Borrower under the Prior Letter Agreement, if any, shall be deemed outstanding Letters of Credit hereunder. Each Letter of Credit shall be subject to the additional terms and conditions of the Letter of Credit Agreement and related documents, if any, required by Bank in connection with the issuance thereof. Each draft paid by Bank under a Letter of Credit shall be deemed an advance under the Line of Credit and shall be repaid by Borrower in accordance with the terms and conditions of this letter applicable to such advances; provided however, that if advances

under the Line of Credit are not available, for any reason, at the time any draft is paid by Bank, then Borrower shall immediately pay to Bank the full amount of such draft, together with interest thereon from the date such amount is paid by Bank to the date such amount is fully repaid by Borrower, at the rate of interest applicable to advance under the Line of Credit. In such event Borrower agrees that Bank, in its sole discretion, may debit any deposit account maintained by Borrower with Bank for the amount of any such draft.

    (c)  Borrowing and Repayment.  Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.

2.

COLLATERAL:

    As security for all indebtedness of Borrower to Bank subject hereto, Borrower hereby grants to Bank security interest of first priority in all Borrower's accounts receivable, rights to payment, general intangibles, patents, copyrights, trademarks, deposit accounts, chattel paper, instruments, documents, inventory and equipment. All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for all costs and expenses incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance.

    Borrower acknowledges that it is obligated to reimburse Bank for all fees, costs, expenses and charges incurred by Bank in connection with Bank's prior engagement of Ernst & Young LLP in connection with Borrower's patent portfolio.

    Borrower acknowledges that notwithstanding the fact that Bank is suspending Ernst & Young's work for Bank in connection with Borrower's patent portfolio, such patents continue to be part of Bank's collateral and Borrower continues to be obligated to furnish Bank with such security agreements and other documents as Bank may require to obtain a perfected security of first priority therein.

3.

COLLATERAL EXAM AND BORROWING BASE EXAM:

    At Bank's request, Nigro, Karlin & Segal ("NKS") conducted a collateral examination. Bank desires to have NKS conduct a supplemental borrowing base examination hereafter and make recommendations to Bank with respect to the use of Borrower's accounts receivable and inventory as a borrowing base to support advances under the Line of Credit. Such examination and recommendations are to be set forth in a written report by NKS to Bank which is to be in form, detail and substance satisfactory to Bank (such report, when completed in form, detail and substance satisfactory to Bank, is referred to herein as the "Borrowing Base Report"). The Borrowing Base Report shall include, without limitation, recommendations regarding what to include as eligible accounts receivable and inventory and what advance rates to use against such eligible collateral, and a calculation of, or such information as will allow Bank to calculate, the value of such eligible collateral at those advance rates as of a date on or after 09-29-00, 2000 (the "Borrowing Base Collateral Value"). Borrower agrees to provide Bank and NKS such information and access to Borrower's property as may be required for the completion of the Borrowing Base Report prior to December 1, 2000 or such later date as may be approved by Bank. Borrower shall reimburse Bank for all fees, costs, expenses and charges incurred by Bank in connection with the collateral examination heretofore conducted by NKS and with the preparation and review of the Borrowing Base Report.

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    Promptly after its receipt and review of the Borrowing Base Report, Bank shall notify Borrower of the Borrowing Base Collateral Value. Borrower agrees that an Event of Default shall exist hereunder if the Borrowing Base Collateral Value is less than Five Million Dollars ($5,000,000.00).

II.

INTEREST/FEES:

    1.  Interest.  The outstanding principal balance of the Line of Credit shall bear interest at the rate of interest set forth in the Line of Credit Note.

    2.  Computation and Payment.  Interest shall be computed on the basis of a 360-day year, actual days elapsed. Interest shall be payable at the times and place set forth in each promissory or other instrument required hereby.

    3.  Letter of Credit Fees.  Borrower shall pay to Bank (a) fees upon the issuance of each Letter of Credit equal to one percent (1%) per annum (computed on the basis of a 360-day year, actual days elapsed) of the face amount thereof, and (b) fees upon the payment or negotiation by Bank of each draft under any Letter of Credit and fees upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank's standard fees and charges then in effect for such activity.

    4.  Collection of Payments.  Borrower authorizes Bank to collect all principal, interest and fees due under each credit subject hereto by charging Borrower's deposit account number 4159-251172 with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof. Should there be insufficient funds in any such deposit account to pay all such sums when due, for the full amount of such deficiency shall be immediately due and payable by Borrower.

III. REPRESENTATIONS AND WARRANTIES:

    Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this letter and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this letter.

    1.  Legal Status.  Borrower is a corporation, duly organized and existing and in good standing under the laws of the State of Delaware, and is qualified or licensed to do business in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower.

    2.  Authorization and Validity.  This letter and each promissory note, contract, instrument and other document deemed necessary by Bank to evidence any extension of credit to Borrower pursuant to the terms and conditions hereof, or now or at any time hereafter required by or delivered to Bank in connection with this letter (collectively, the "Loan Documents") have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms.

    3.  No Violation.  The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in a breach of or constitute a default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

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    4.  Litigation.  There are no pending, or to the best of Borrower's knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

    5.  Correctness of Financial Statement.  The financial statement of Borrower dated June 30, 2000, a true copy of which has been delivered by Borrower to Bank prior to the date hereof, (a) is complete and correct and presents fairly the financial condition of Borrower, (b) discloses all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied. Since the date of such financial statement there has been no material adverse change in the condition or operation of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing.

    6.  Income Tax Returns.  Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.

    7.  No Subordination.  There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower's obligations subject to this letter to any other obligation of Borrower.

    8.  Permits, Franchises.  Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and all rights to trademarks, trade names, patents and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.

    9.  ERISA.  Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event, as defined in ERISA, has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.

    10.  Other Obligations.  Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

    11.  Environmental Matters.  Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower's operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time. None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the

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environment. Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

IV. CONDITIONS:

    1.  Conditions of Initial Extension of Credit.  The obligation of Bank to extend any credit contemplated by this letter is subject to fulfillment to Bank's satisfaction of all of the following conditions:

    (a)  Documentation.  Bank shall have received each of the Loan Documents, duly executed and in form and substance satisfactory to Bank.

    (b)  Financial Condition.  There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower.

    (c)  Insurance.  Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower's property, in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank.

    2.  Conditions of Each Extension of Credit.  The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions:

    (a)  Compliance.  The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this letter and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no default hereunder, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such a default, shall have occurred and be continuing or shall exist.

    (b)  Documentation.  Bank shall have received all additional documents which may be required in connection with such extension of credit.

V.  COVENANTS:

    Borrower covenants that so long Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:

    1.  Punctual Payment.  Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein.

    2.  Accounting Records.  Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same and inspect the properties of Borrower.

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    3.  Financial Statements.  Provide to Bank all of the following, in form and detail satisfactory to Bank:

    (a) not later than 120 days after and as of the end of each fiscal year, an audited financial statement of Borrower, prepared by a certified public accountant acceptable to Bank, to include a balance, income statement and state of cash flows;

    (b) not later than 60 days after and as of the end of each fiscal quarter, a financial statement of Borrower, prepared by Borrower, to include a balance sheet and income statement;

    (c) not later than 15 days after and as of the end of each month, a securities portfolio or brokerage statement covering Borrower's cash, cash equivalents and marketable securities; and

    (d) from time to time such other information as Bank may reasonably request.

    4.  Compliance.  Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence and with the requirements of all laws, rules, regulations and orders of a governmental agency applicable to Borrower and/or its business.

    5.  Insurance.  Maintain and keep in force insurance of the types and in amounts customarily carried in lines of business similar to that of Borrower, including but not limited to fire, extended coverage, public liability, flood, property damage and workers' compensation, with all such insurance carried with companies and in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank's request schedules setting forth all insurance then in effect.

    6.  Facilities.  Keep all properties useful or necessary to Borrower's business in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

    7.  Taxes and Other Liabilities.  Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, expect (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which borrower has made provision, to Bank's satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

    8.  Litigation.  Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower with a claim in excess of $500,000.

    9.  Financial Condition.  Maintain Borrower's financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

    (a) Tangible Net Worth not less than $39,000,000.00 as of December 31, 2000 (the end of Borrower's current fiscal year), with "Tangible Net Worth" defined as the aggregate of total stockholders' equity plus subordinated debt less any intangible assets.

    (b) Net income after taxes not less than $1.00 on a quarterly basis, determined as of the end of each fiscal quarter commencing with the fiscal quarter ending December 31, 2000.

    10.  Liquidity.  Maintain unencumbered liquid assets (defined as cash, cash equivalents and/or publicly- traded/quoted marketable securities acceptable to Bank) with banks and/or brokers within the

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U.S. and with have an aggregate fair market value not at any time less than Three Million Five Hundred Thousand Dollars ($3,500,000.00).

    11.  Capital Expenditures.  Not make investments in fixed assets in excess of $5,000,000 in the aggregate in the fiscal year ending December 31, 2000 or in excess of $5,000,000 in the aggregate in any fiscal year thereafter.

    12.  Lease Expenditures.  Not incur operating lease expense in excess of an aggregate of $3,000,000 in the fiscal year ending December 31, 2000 or in excess of $3,000,000 in the aggregate in any fiscal year thereafter.

    13.  Other Indebtedness.  Not create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, (b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof, and (c) purchase money indebtedness incurred in connection with the purchase of equipment hereafter, so long as outstanding purchase money indebtedness incurred in connection with the purchase of equipment, whether before or after the date hereof, at no time exceeds $3,000,000 in the aggregate.

    14.  Merger, Consolidation, Transfer of Assets.  Not merge into or consolidate with any other entity; nor make any substantial change in the nature of Borrower's business as conducted as of the date hereof; nor acquire all or substantially all of the assets of any other entity; nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower's assets except in the ordinary course of its business.

    15.  Guaranties.  Not guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank.

    16.  Loans, Advances, Investments.  Not make any loans or advances to or investments in any person or entity, except any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof.

    17.  Pledge of Assets.  Not mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of Borrower's assets now owned or hereafter acquired, except any of the foregoing in favor of Bank or which are existing as of, and disclosed to Bank in writing prior to, the date hereof.

VI. DEFAULT, REMEDIES:

    1.  Default Remedies.  Upon the violation of any term or condition of any of the Loan Documents, or upon the occurrence of any default or defined event of default under any of the Loan Documents: (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank's option and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of

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Bank may be exercised at any time by Bank and from time to time after the occurrence of any such breach or default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

    2.  No Waiver.  No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power, or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

VII. MISCELLANEOUS:

    1.  Notices.  All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this letter must be in writing delivered to each party at its address first set forth above, or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

    2.  Costs, Expenses and Attorneys' Fees.  Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel), expended or incurred by Bank in connection with (a) the negotiation and preparation of this letter and the other Loan Documents, Bank's continued administration hereof and thereof, and the preparation of amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to any Borrower or any other person or entity.

    3.  Successors, Assignment.  This letter shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interest hereunder without Bank's prior written consent. Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank's rights and benefits under each of the Loan Documents. In connection therewith Bank may disclose all documents and information which Bank now has or hereafter may acquire relating to any credit subject hereto, Borrower or its business, or any collateral required hereunder.

    4.  Entire Agreement; Amendment.  This letter and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof. This letter may be amended or modified only in writing signed by each party hereto.

    5.  No Third Party Beneficiaries.  This letter is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person

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or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this letter or any other of the Loan Documents to which it is not a party.

    6.  Severability of Provisions.  If any provision of this letter shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition of invalidity without invalidating the remainder of such provision or any remaining provisions of this letter.

    7.  Governing Law.  This letter shall be governed by and construed in accordance with the laws of the State of California.

    8.  Arbitration.

    (a)  Arbitration.  Upon the demand of any party, any Dispute shall be resolved by binding arbitration in accordance with the terms of this letter. A "Dispute" shall mean any action, dispute, claim or controversy of any kind, whether in contract or tort, statutory or common law, legal or equitable, now existing or hereafter arising under or in connection with, or in any way pertaining to, any of the Loan Documents, or any past, present or future extensions of credit and other activities, transactions or obligations of any kind related directly or indirectly to any of the Loan Documents, including without limitation, any of the foregoing arising in connection with the exercise of any self-help, ancillary or other remedies pursuant to any of the Loan Documents. Any party may by summary proceedings bring an action in court to compel arbitration of a Dispute. Any party who fails or refuses to submit to arbitration following a lawful demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any Dispute.

    (b)  Governing Rules.  Arbitration proceedings shall be administered by the American Arbitration Association ("AAA") or such other administrator as the parties shall mutually agree upon in accordance with the AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be resolved in accordance with the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the Loan Documents. The arbitration shall be conducted at a location in California selected by the AAA or other administrator. If there is any inconsistency between the terms hereof and any such rules, the terms and procedures set forth herein shall control. All statutes of limitation applicable to any Dispute shall apply to any arbitration proceeding. All discovery activities shall be expressly limited to matters directly relevant to the Dispute being arbitrated. Judgment upon any award rendered in an arbitration may be entered in any court having jurisdiction; provided however, that nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or any similar applicable state law.

    (c)  No Waiver; Provisional Remedies, Self-Help and Foreclosure.  No provision hereof shall limit the right of any party to exercise self-help remedies such as setoff, foreclosure against or sale of any real or personal property collateral or security, or to obtain provisional or ancillary remedies, including without limitation injunctive relief, sequestration, attachment, garnishment or the appointment of a receiver, from a court of competent jurisdiction before, after or during the pendency of any arbitration or other proceeding. The exercise of any such remedy shall not waive the right of any party to compel arbitration or reference hereunder.

    (d)  Arbitrator Qualifications and Powers; Awards.  Arbitrators must be active members of the California State Bar or retired judges of the state or federal judiciary of California, with expertise in the substantive law applicable to the subject matter of the Dispute. Arbitrators are empowered to resolve Disputes by summary rulings in response to motions filed prior to the final arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance with the substantive law of the

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State of California, (ii) may grant any remedy or relief that a court of the State of California could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award, and (iii) shall have the power to award recovery of all costs and fees, to impose sanctions and to take such other actions as they deem necessary to the same extent a judge could pursuant to the Federal rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law. Any Dispute in which the amount in controversy is $5,000,000 or less shall be decided by a single arbitrator who shall not render an award of greater than $5,000,000 (including damages, costs, fees and expenses). By submission to a single arbitrator, each party expressly waives any right or claim to recover more than $5,000,000. Any Dispute in which the amount in controversy exceeds $5,000,000 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.

    (e)  Real Property Collateral; Judicial Reference.  Notwithstanding anything herein to the contrary, no Dispute shall be submitted to arbitration if the Dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such Dispute is not submitted to arbitration, the Dispute shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638. A referee with the qualifications required herein for arbitrators shall be selected pursuant to the AAA's selection procedures. Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645.

    (f)  Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the Dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to exercise any judicial review rights set forth herein. If more than one agreement for arbitration by or between the parties potentially applies to a Dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the Dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

    Your acknowledgement of this letter shall constitute acceptance of the foregoing terms and conditions. Bank's commitment to extend any credit to Borrower pursuant to the terms of this letter

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shall terminate on November __, 2000, unless this letter is acknowledged by Borrower and returned to bank on or before that date.

		Sincerely,
		WELLS FARGO BANK, NATIONAL ASSOCIATION
		By:	/s/ NANCY MARTORANO Nancy Martorano Vice President
Acknowledged and accepted as of 11/8/00:
STAAR SURGICAL COMPANY
By:	/s/ JOHN SANTOS John Santos Chief Financial Officer

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Exhibit 10.72
EXHIBIT "A"

EX-10.73

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PROMISSORY NOTE
Secured by Deed of Trust

$465,625 October 23, 2000
Monrovia, California

FOR VALUE RECEIVED, the receipt and sufficiency of which is acknowledged, Andrew F. Pollet ("Maker"), hereby promises to pay to STAAR Surgical Company, or order ("Holder"), at the address designated on the signature page of this Note, or at such other place as Holder may designate by written notice to Maker, the principal sum hereinbelow described ("Principal Amount"), together with interest thereon, in the manner and at the times provided and subject to the terms and conditions described herein.

    1.  Principal Amount.

    The Principal Amount means the sum of four hundred sixty-five thousand six hundred twenty-five dollars ($465,625).

    2.  Interest.

    Interest on the Principal Amount from time-to-time remaining unpaid shall accrue from the date of this Note at the lower of: (i) the rate of seven percent (7%) per annum, compounded annually; or (ii) at the lowest rate that may accrue without causing the imputation of interest under the Internal Revenue Code. Interest shall be computed on the basis of a three hundred sixty (360) day year and a thirty (30) day month.

    3.  Payment of Principal and Interest.

    Subject to paragraph 8, below, Maker shall pay the Principal Amount and all accrued and unpaid interest on the Principal Amount and all other indebtedness due under this Note on June 1, 2005.

    4.  Security/Release of Security.

    Maker shall pledge as security for the repayment of all sums payable under this Note the real property commonly known as 10934 Alto Court, Oak View, California. Maker has executed and recorded a deed of trust dated September 5, 2000 evidencing Holder's security interest in the real property. If, for a period of fifteen (15) consecutive days, the fair market value of the real property falls below all sums unpaid under this Note and the unpaid balance of all promissory notes or other obligations secured thereby, then Maker will be required to transfer to Holder, upon receipt of Holder's written request, additional security, in any form acceptable to Holder, in an amount equal to the difference between all sums due under this Note and such other notes or obligations and the fair market value of the real property.

    5.  Prepayments.

    Maker shall have the right to prepay any portion of the Principal Amount without prepayment penalty or premium or discount.

    6.  Manner of Payments/Crediting of Payments.

    Payments of any amount required hereunder shall be made in lawful money of the United States or in such other property as Holder, in its sole and absolute discretion, may accept, without deduction or offset, and shall be credited first against accrued but unpaid late charges, if any, thereafter against accrued but unpaid interest, if any, and thereafter against the unpaid balance of the Principal Amount.

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    7.  Interest on Delinquent Payments.

    Any payment under this Note not paid when due shall bear interest at the same rate and method as interest is charged on the Principal Amount from the due date until paid.

    8.  Acceleration Upon Default.

    At the option of Holder, all or any part of the indebtedness of Maker hereunder shall immediately become due and payable, irrespective of any agreed maturity date, upon the happening of any of the following events of default:

    (a) If any part of the Principal Amount and/or interest thereon under this Note are not paid when due, provided, however, Maker shall be entitled to a grace period of ten (10) days following written notice of such event of default to cure said event of default;

    (b) If Maker shall breach any non-monetary condition or obligation imposed on Maker pursuant to the terms of this Note, provided, however, that if any such breach is reasonably susceptible of being cured, Maker shall be entitled to a grace period of thirty (30) days following written notice of such event of default to cure;

    (c) If Maker shall make an assignment for the benefit of creditors;

    (d) If a custodian, trustee, receiver, or agent is appointed or takes possession of substantially all of the property of Maker;

    (e) If Maker shall be adjudicated bankrupt or insolvent or admit in writing Maker's inability to pay Maker's debts as they become due;

    (f)  If Maker shall apply for or consent to the appointment of a custodian, trustee, receiver, intervenor, liquidator or agent of Maker, or commence any proceeding related to Maker under any bankruptcy or reorganization statute, or under any arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect;

    (g) If any petition is filed against Maker under the Bankruptcy Code and either (A) the Bankruptcy Court orders relief against Maker, or (B) such petition is not dismissed by the Bankruptcy Court within thirty (30) days of the date of filing; or

    (h) If any attachment, execution, or other writ is levied on substantially all of the assets of Maker and remains in effect for more than five (5) days.

Maker shall notify Holder immediately if any event of default which is described in sub-paragraph (c) through sub-paragraph (h), above, occurs.

    9.  Collection Costs and Attorneys' Fees.

    Maker agrees to pay Holder all costs and expenses, including reasonable attorneys' fees, paid or incurred by Holder in connection with the collection or enforcement of this Note or any instrument securing payment of this Note, including without limitation, defending the priority of such instrument or conducting a trustee sale thereunder. In the event any litigation is initiated concerning the enforcement, interpretation or collection of this Note, the prevailing party in any proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

    10.  Notice.

    Any notice to either party under this Note shall be given by personal delivery or by express mail, Federal Express, DHL or similar airborne/overnight delivery service, or by mailing such notice by first class or certified mail, return receipt requested, addressed to such party at the address set forth below,

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or to such other address as either party from time to time may designate by written notice. Notices delivered by overnight delivery service shall be deemed delivered the next business day following consignment for such delivery service. Mailed notices shall be deemed delivered and received in accordance with this provision three (3) days after deposit in the United States mail.

    11.  Usury Compliance.

    All agreements between Maker and Holder are expressly limited, so that in no event or contingency whatsoever, whether by reason of the consideration given with respect to this Note, the acceleration of maturity of the unpaid Principal Amount and interest thereon, or otherwise, shall the amount paid or agreed to be paid to Holder for the use, forbearance, or detention of the indebtedness which is the subject of this Note exceed the highest lawful rate permissible under the applicable usury laws. If, under any circumstances whatsoever, fulfillment of any provision of this Note shall involve transcending the highest interest rate permitted by law which a court of competent jurisdiction deems applicable, then the obligations to be fulfilled shall be reduced to such maximum rate, and if, under any circumstances whatsoever, Holder shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to the reduction of the unpaid Principal Amount under this Note and not to the payment of interest, or, if such excessive interest exceeds the unpaid balance of the Principal Amount under this Note, such excess shall be refunded to Maker. This provision shall control every other provision of all agreements between Maker and Holder.

    12.  Jurisdiction; Venue.

    This Note shall be governed by, interpreted under and construed and enforced in accordance with the laws of the State of California. Any action to enforce payment of this Note shall be filed and heard solely in Los Angeles County, California.

    13.  Replacement Note.

    This Note replaces and supersedes that certain Promissory Note in the amount of $753,625 executed by Maker in favor of Holder on June 2, 2000.

MAKER:
	/s/ ANDREW F. POLLETAndrew F. Pollet
MAKER'S ADDRESS:
c/o 10900 Wilshire Boulevard, Suite 500 Los Angeles, California 90024
HOLDER'S ADDRESS:
STAAR SURGICAL COMPANY 1911 Walker Avenue Monrovia, California 91016 Attn.: Chief Financial Officer

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PROMISSORY NOTE Secured by Deed of Trust

EX-10.74

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE

    This Settlement Agreement and Mutual Release ("Agreement") is entered into effective December 4, 2000 (the "Effective Date") by and between STAAR Surgical Company, a Delaware corporation (the "Company") and William C. Huddleston, an individual ("Huddleston"), all of whom are sometimes hereinafter referred to collectively as the "Parties" or individually as a "Party", with reference to the following facts.

RECITALS

WHEREAS, the Company and Huddleston wish to memorialize their agreement regarding (i) (A) the termination of Huddleston's employment with the Company and (B) the termination of any consulting arrangement Huddleston has or may have with the Company, and (ii) the severance benefits that are to be transferred or paid to Huddleston as a result of the termination of his employment and any consulting arrangement with the Company; and

WHEREAS, the Company and Huddleston wish to memorialize their agreement regarding Huddleston's waiver of all rights and claims which he may have against the Company, if any.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Huddleston agree as follows:

AGREEMENT

    1.  Incorporation of Recitals.  The recitals to this Agreement are an integral part of this Agreement and are hereby incorporated as a part of this Agreement as if set forth in it.

    2.  Termination of Employment Agreement and Consulting Arrangements.  Upon execution of this Agreement, the Employment Agreement entered into by and between the Company and Huddleston on October 1, 1999, including any and all amendments to it, and any and all consulting arrangements between the Company and Huddleston, shall be deemed to have been terminated and to be of no further force and effect as of the Effective Date.

    3.  Obligations of the Company.  In exchange for Huddleston's release of the Company from any past, present, and future obligations (including obligations for the performance of consulting services by Huddleston), whether monetary or otherwise, owed by the Company to Huddleston, the Company shall pay to Huddleston or provide for Huddleston the following:

    (a)  Cash Payment.  The Company shall pay to Huddleston, or to Huddleston's wholly-owned personal service corporation, the sum of five hundred forty thousand dollars ($540,000), which shall be transferred electronically to Huddleston, pursuant to his written instructions, on the following dates: on January 2, 2001, the sum of four hundred forty thousand dollars ($440,000), and on April 2, 2001, the sum of one hundred thousand dollars ($100,000).

    (b)  Forgiveness of Loans.  The Company shall forgive the payment of any and all loans made to Huddleston by the Company if there is a Change in Control that occurs prior to December 31, 2002. For purposes of this Agreement, a "Change in Control" shall be defined as any of the following transactions: (i) the sale by the Company of substantially all of its business or assets to a third party, or (ii) the acquisition of the Company's capital stock by a third party in connection with the transfer of a controlling interest of the Company's capital stock to such party, or (iii) the merger or consolidation of the Company with another corporation as part of a transfer of a controlling interest of the Company's capital stock to a third party. A "controlling interest of the Company's capital stock" shall be defined as a transfer or acquisition by a third party of at least thirty percent (30%) of the Company's capital stock in one or a series of transactions. A

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"third party" shall not include any employee benefit plan maintained by the Company or any corporation or entity in which the Company holds fifty percent (50%) of more of the voting securities.

    (c)  Acceleration and Vesting of Stock Options.  Subject to regulatory considerations, and irrespective of the terms of any agreement memorializing them, the vesting conditions imposed on any stock options subject to vesting shall be accelerated and shall vest on the Effective Date. Unless a greater period of time is permitted in any agreement memorializing a stock option (in which case the stock option agreement will govern), Huddleston shall be entitled to exercise said stock options until December 31, 2001, provided, however, that the remaining terms and conditions of the agreements governing the stock options shall remain in full force and effect and shall be binding upon Huddleston.

    (d)  Transfer of Painting and Equipment.  The Company will transfer to Huddleston the painting of the Bern Bell Tower. The Company acknowledges that Huddleston has possession of a lap top computer and a fax machine belonging to the Company. By executing this Agreement, the Company transfers the lap top computer and the fax machine to Huddleston.

    (e)  Indemnity.  So long as Huddleston's actions were taken in good faith and in furtherance of the Company's business and within the scope of his duties and authority, the Company shall defend (with counsel of the Company's choosing at the Company's expense), indemnify and hold Huddleston harmless from any and all claims, losses and expenses sustained by Huddleston in connection with any and all claims by stockholders or other third parties which are based upon or relate to any such actions. The Company shall permit Huddleston to participate in the defense of any claim through counsel chosen by him, provided that the fees and expenses of such counsel shall be borne by Huddleston.

    (f)  Delivery of this Agreement.  The Company shall deliver to Huddleston an executed copy of this Agreement.

    (g)  Non-Disparagement.  The Company agrees not to criticize, denigrate, or otherwise disparage Huddleston.

    4.  Waiver of All Other Claims.  Huddleston agrees that Huddleston is not entitled to receive, will not claim and expressly waives any entitlement to rights, benefits, reimbursement, indemnification, or compensation from the Company, whether or not such entitlements are claimed through the Employment Agreement, the consulting arrangement, or otherwise, other than as expressly set forth in this Agreement.

    5.  Complete Release by Huddleston.

    (a)  Release.  Huddleston irrevocably and unconditionally releases all of the claims described in subparagraph 5(b) that Huddleston may now have, or has ever had, against the following persons or entities (the "Releasees"): The Company (including its subsidiaries and affiliates), all related companies and all of the Company's (its subsidiaries' and affiliates') or such related companies' predecessors and successors; and, with respect to each such entity, all of its past and present employees, officers, directors, stockholders, owners, representatives, assigns, attorneys, agents, insurers, employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs) and any other persons acting by, through, under or in concert with any of the persons or entities listed in this subparagraph.

    (b)  Claims Released.  The claims released include all claims, promises, debts, causes of action or similar rights of any type or nature Huddleston has or had which in any way relate to (1) Huddleston's employment with the Company as an officer and/or director with the Company, or the termination of that employment, such as claims for compensation, bonuses, commissions,

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lost wages or unused accrued vacation or sick pay; (2) any consulting arrangement Huddleston has or had with the Company, and the termination of that consulting arrangement; (3) the design or administration of any employee benefit program or Huddleston's entitlement to benefits under any such program; (4) any claims to attorneys' fees and/or other legal costs; and (5) any other claims or demands Huddleston may have on any basis whatsoever. The claims released include, but are not limited to, claims arising under any of the following statutes or common law doctrines:

(1) Anti-Discrimination Statutes, such as the Age Discrimination in Employment Act (ADEA), which prohibits age discrimination in employment; the Civil Rights Act of 1991, Title VII of the Civil Rights Act of 1964, and §1981 of the Civil Rights Act of 1866, which prohibit discrimination based on race, color, national origin, religion or sex; the Equal Pay Act, which prohibits paying men and women unequal pay for equal work; the Americans With Disabilities Act, which prohibits discrimination against the disabled; the California Fair Employment and Housing Act, which prohibits discrimination in employment based upon race, color, national origin, ancestry, physical or mental disability, medical condition, martial status, sex, or age; and any other federal, state or local laws or regulations prohibiting employment discrimination.

(2) Federal Employment Statutes, such as the Employee Retirement Income Security Act of 1974, which, among other things, protects pension or health plan benefits; and the Fair Labor Standards Act of 1938, which regulates wage and hour matters.

(3) Other Laws, such as any federal, state or local laws restricting an employer's right to terminate employees or otherwise regulating employment; any federal, state or local law enforcing express or implied employment contracts or requiring an employer to deal with employees fairly or in good faith; and any other federal, state or local laws providing recourse for alleged wrongful discharge, physical or personal injury, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation and similar or related claims. The laws referred to in this paragraph include statutes, regulations, other administrative guidance and common law doctrines.

    (c)  Release Extends to Both Known and Unknown Claims.  This release covers both claims that Huddleston knows about and those Huddleston does not know about. Huddleston understands the significance of his release of unknown claims and his waiver of any statutory protection against a release of unknown claims. Huddleston expressly waives the protection of any such governmental statutes or regulations.

    More particularly, and without limitation, Huddleston acknowledges that Huddleston has read and is familiar with and understands the provisions of Section 1542 of the California Civil Code, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

HUDDLESTON EXPRESSLY WAIVES ANY RIGHT OR CLAIM OF RIGHT HUDDLESTON MAY HAVE UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE.

HUDDLESTON'S INITIALS: WCH 12/4/00

    (d)  Ownership of Claims.  Huddleston represents that Huddleston has not assigned or transferred, or purported to assign or transfer, all or any part of any claim released by this Agreement.

    6.  No Pursuit of Released Claims.  Huddleston promises never to file or prosecute a lawsuit, administrative complaint or charge, or other complaint or charge asserting any claims that are released

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by the Agreement. Huddleston represents that Huddleston has not filed or caused to be filed any lawsuit, complaint or charge with respect to any claim this Agreement releases. Huddleston further agrees to request any government agency or other body assuming jurisdiction of any complaint or charge relating to a released claim to withdraw from the matter or dismiss the matter with prejudice.

    7.  Obligations of Huddleston.  To induce the Company to enter into this Agreement, Huddleston agrees to the following:

    (a)  Delivery of Agreement.  Huddleston shall deliver to the Company an executed copy of this Agreement.

    (b)  Non-Disparagement.  Huddleston agrees not to criticize, denigrate, or otherwise disparage the Company or any other Releasee. Nothing herein shall prevent Huddleston from making statements or testimony under compulsion of legal process, including, but not limited to, deposition proceedings.

    8.  Release by Company.

    (a)  Release.  The Company (including its subsidiaries and affiliates) irrevocably and unconditionally releases Huddleston from any and all obligations, claims or demands that the Company may now have, or has ever had, against Huddleston, with the exception of the following, which shall collectively be referred to as the "Unreleased Matters": (i) Huddleston's obligations under this Agreement, (ii) the loans described in paragraph 3(b) of this Agreement, and (iii) acts of dishonesty, fraud, or gross negligence, which acts were not taken in good faith and were not in furtherance of the Company's business. With the exception of the Unreleased Matters, this release covers both claims that the Company knows about and those that the Company does not know about. The Company understands the significance of his release of unknown claims and its waiver of any statutory protection against a release of unknown claims. The Company expressly waives the protection of any such governmental statutes or regulations.

    More particularly, and without limitation, the Company acknowledges that the Company has read and is familiar with and understands the provisions of Section 1542 of the California Civil Code, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

THE COMPANY EXPRESSLY WAIVES ANY RIGHT OR CLAIM OF RIGHT THE COMPANY MAY HAVE UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE.

COMPANY'S INITIALS: AP

    9.  Consulting with Attorney.  Huddleston and the Company acknowledge that each has discussed this Agreement with an attorney of his or its own choosing before signing it.

    10.  Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be

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affected thereby and shall continue in full force and effect to the fullest extent provided by law. The provisions of this Agreement are severable.

    11.  Choice of Laws/Waiver of Jury Trial.  This Agreement shall be governed by the laws of the State of California, and the Courts of the County of Los Angeles, California and the Parties specifically waive any right to a jury trial.

    12.  Nature, Effect and Interpretation of this Agreement.

    (a)  Entire Agreement.  This Agreement is the entire agreement between Huddleston and the Company relating to the subject matter herein; it may not be modified or cancelled in any manner except by a writing signed by both the Company and Huddleston. The Company has made no promises or representations to Huddleston other than those in this Agreement.

    (b)  Successors and Assigns.  This Agreement shall bind Huddleston's heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.

    (c)  Interpretation.  This Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against any of the parties. Unless the context indicates otherwise, the term "or" shall be deemed to include the term "and" and the singular or plural number shall be deemed to include the other. Paragraph headings used in this Agreement are intended solely for convenience of reference and shall not be used in the interpretation of any of this Agreement. It is acknowledged that neither party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against either party as the alleged draftsman of this Agreement.

    (d)  Counterparts and Facsimiles.  For the convenience of the parties to this Agreement, this document may be executed by facsimile signatures and in counterparts which shall together constitute the agreement of the parties as one and the same instrument.

    (e)  No Waiver.  The failure to enforce any provision of this Agreement shall not be construed as a waiver of any such provision, nor prevent a party from enforcing the provision or any other provision of this Agreement. The rights granted the parties are cumulative, and the election of one shall not constitute a waiver of such party's right to assert all other legal and equitable remedies available under the circumstances.

    (f)  Implementation.  The Company and Huddleston both agree that, without the receipt of further consideration, they will sign and deliver any documents and do anything else that is necessary in the future to make the provisions of this Agreement effective.

    13.  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (1) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (2) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (3) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (4) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be

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deemed to have been given upon the fifth {5th} business day following the date mailed). Notices shall be addressed to the parties as follows:

Huddleston:	William C. Huddleston 363 Timken Road Anaheim, California 92808
With copy to:	Hugh Verano, Esq. 2301 Dupont Drive Irvine, California 92612
Company:	STAAR Surgical Company 1911 Walker Avenue Monrovia, California 91016 Attn: Mr. Andrew F. Pollet
With copy to:	Pollet & Richardson 10900 Wilshire Boulevard, Suite 500 Los Angeles, California 90024 Attention: Andrew F. Pollet, Esq.

    14.  Attorney's Fees.  In the event any legal or equitable action or proceeding is initiated concerning the enforcement or interpretation of this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all costs and expenses including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding.

PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

    Executed at Orange County, California this    day of December, 2000.

"HUDDLESTON"

/s/ WILLIAM C. HUDDLESTON WILLIAM C. HUDDLESTON

    Executed at Los Angeles County, California, this 19th day of December, 2000.

"COMPANY"
STAAR SURGICAL COMPANY
By:	/s/ ANDREW F. POLLET ANDREW F. POLLET, Chief Executive Officer

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October 25, 2000

ESCROW AGREEMENT

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    Reference is made to that certain Settlement Agreement and Mutual Release (the "Agreement") between VLADIMIR FEINGOLD, et al. ("Feingold") and STAAR SURGICAL COMPANY, a Delaware corporation, et al. ("Staar"). You have agreed to act as an independent escrow agent ("Escrow Agent") pursuant to the following:

A.  Deposit of Funds and Delivery of Certificates.

    1.  On or before October 25, 2000, Feingold will deliver to Staar that certain Check No. 5270 made payable to the order of "Staar Surgical Co." dated September 24, 1999, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25), as payment for the Twenty Three Thousand Three Hundred Thirty Three (23,333) shares (the "Check"). Staar will endorse the Check to the "Joseph M. Galosic Attorney Client Trust Account," a non-interest bearing account, and deliver said Check to you on or before 1:00 p.m. on October 26, 2000. You will deposit said Check into your attorney-client trust account (the "Escrow Deposit"). You will hold the proceeds from said Check in trust, until directed to release such funds as instructed herein.

    2.  On or before October 26, 2000, Staar will deliver to you a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock (the "Stock Certificate").

    3.  You have agreed to hold the Escrow Deposit and the Stock Certificate, in trust, on the following terms:

    (a) Upon receipt of confirmation that the Escrow Deposit is immediately available in good funds, you shall transmit this information, via facsimile to Staar, c/o Mary Ann Sapone, Esq., at (310) 208-1154 and to Feingold, c/o Mark S. Adams, Esq.

    (b) If you receive written joint instructions signed by Feingold and Staar regarding disposition of the Escrow Deposit and Stock Certificate in the form attached hereto as Exhibit "1," then you shall immediately (which term, as used herein shall mean within two business days) deliver the Stock Certificate to Feingold, and deliver to Staar a cashier's check, drawn on your attorney-client trust account, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar Surgical Company."

    (c) If you do not receive the joint instruction in (a) above, but rather you receive written joint instructions signed by Feingold and Staar in the form attached hereto as Exhibit "2," or written individual instructions signed by either of them in the form attached hereto as Exhibit "3" or Exhibit "4," to cancel this Escrow, you shall deliver to Feingold a cashier's check, drawn on your attorney-client trust account, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold," and deliver the Stock Certificate to Staar.

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B.  General Provisions

    1.  You shall hold and dispose of the Escrow Deposit and Stock Certificate in the manner set forth above and shall have no other duties as escrow agent; your duties shall be determined only with reference to this Escrow Agreement and applicable law. If there should be a conflict between the provisions of this Escrow Agreement and applicable law, the terms of the Escrow Agreement shall control to the extent permissible and this Escrow Agreement shall be reformed only to the extent necessary to conform to applicable law. You are not charged with knowledge of, or any duties or responsibilities under, any other document or agreement. You may rely upon and shall be protected in acting or refraining from acting upon any written notice, instruction or request furnished to you under this Escrow Agreement and believed by you to be genuine and to have been signed or presented by Feingold and Staar. You shall be under no duty to inquire into or investigate the validity, accuracy or content of any such notice, instruction or request. You shall not be liable to Feingold or Staar for any actions taken or omitted by you in connection with the performance of your duties under this Escrow Agreement, except for actions or omissions arising from your own gross negligence or willful misconduct.

    2.  In the event you should at any time be confronted with inconsistent claims or demands by Feingold and Staar, you shall have the right to seek ex parte relief before Judge Paul Gutman at the Superior Court of California, County of Los Angeles, in connection with that certain case entitled Vladimir Feingold v. Staar Surgical Company, et al., and numbered BC216184 in the files of that Court, interplead the parties, and request that the court determine the respective rights of the parties with respect to this Escrow Agreement. You shall be indemnified and held harmless by Feingold and Staar, jointly and severally, as a consequence of your interpretation of the rights of the parties hereunder and you shall automatically shall be released from any obligation or liability as a consequence of any such claims or demands, except with respect to your own gross negligence or willful misconduct. Feingold and Staar further agree that you shall be under no duty whatsoever to institute or defend any proceedings involving any conflict or claims of any nature whatsoever between Feingold and Staar.

    3.  This Escrow Agreement cannot be changed or terminated orally and may be changed only with your written consent and the written consent of Feingold and Staar. This Escrow Agreement and your duties hereunder shall terminate when all amounts of the Escrow Deposit and Stock Certificate have been delivered to Feingold and Staar in accordance with this Escrow Agreement.

    4.  Any notice or other communication under this Escrow Agreement shall be in writing and shall be considered given when delivered personally or four days after being mailed by registered mail, return receipt requested, or on the date of transmission if delivered by confirmed telecopy, to the parties at the following addresses or facsimile numbers (or at such other address as a party may specify by notice to the other):

    (a) If to the Escrow Agent, to him at:


Joseph M. Galosic, Esq.
8 Corporate Park, Suite 200
Irvine, California 92606
Telephone: (949) 476-0500
Fax: (949) 476-5059

    (b) If to Feingold, to him at:


Vladimir Feingold
31732 Isle Vista
Laguna Niguel, California 92677

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With copy to:
Mark S. Adams, Esq.
Green & Adams, LLP
8 Corporate Park, Suite 200
Irvine, California 92606
Telephone: (949) 862-1030
Fax: (949) 862-1031

    (c) If to Staar, to it at:


Andrew F. Pollet
President
Staar Surgical Company
1911 Walker Avenue, Suite 500
Monrovia, California 91016

With copy to:
Robert C. Woodbury, Esq.
Pollet & Woodbury
10900 Wilshire Blvd., Ste. 500
Los Angeles, California 90024
Telephone: (310) 208-1182
Fax: (310) 208-1154

    5.  This Escrow Agreement shall be governed by and construed in accordance with the law of the State of California applicable to agreements made and to be performed in California. All parties hereto agree that any controversy that may arise between the parties shall be adjudicated before Judge Paul Gutman in the Superior Court of California, County of Los Angeles. In the event of any dispute that may arise between the parties as to their respective rights, duties and obligations hereunder, the prevailing party in such dispute shall be entitled to recover its costs and expenses (including reasonable attorney fees) incurred by such party in connection with such dispute.

    6.  This Escrow Agreement shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties hereto.

    7.  This Escrow Agreement and any instructions referenced herein may be executed in one or more counterparts, but all such counterparts shall constitute but one and the same instrument.

    * * * *

    IN WITNESS WHEREOF, the parties hereto agree that this Escrow Agreement shall be effective on the date that the Escrow Agent executes this Escrow Agreement.

"FEINGOLD"
VLADIMIR FEINGOLD
By:	/s/ VLADIMIR FEINGOLD
Name/Title: Vladimir Feingold
Date:	October 26, 2000

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"STAAR"
STAAR SURGICAL COMPANY a Delaware corporation
By:	/s/ ANDREW F. POLLET
Name/Title: Andrew Pollet, President
Date:	October 25, 2000

    The undersigned agrees to act as escrow agent in accordance with the terms set forth above.

By:	/s/ JOSEPH M. GALOSIC
Name/Title: Joseph M. Galosic, Esq.
Date:	October 26, 2000

10

EXHIBIT "1"

October   , 2000

JOINT ESCROW INSTRUCTIONS
For Delivery of Check and Stock Certificate

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to:

    1.  Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606; and

    2.  Immediately deliver to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar Surgical Company."

    After completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions.

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

11

EXHIBIT "2"

October   , 2000

JOINT ESCROW INSTRUCTIONS
For Cancellation of Escrow and Delivery of Check and Stock Certificate

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to:

    1.  Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024; and

    2.  Immediately deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold."

    After completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions.

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

12

EXHIBIT "3"

October   , 2000

ESCROW INSTRUCTION BY STAAR
For Cancellation of Escrow and Delivery of Stock Certificate

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby instructed by Staar Surgical Company, a Delaware corporation ("Staar") to:

    Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024.

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

13

EXHIBIT "4"

October   , 2000

ESCROW INSTRUCTION BY FEINGOLD
Cancellation of Escrow and Delivery of Check

To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby instructed by Vladimir Feingold ("Feingold") to:

    Immediately deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold."

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

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EXHIBIT "1"

October   , 2000

JOINT ESCROW INSTRUCTIONS
For Delivery of Check and Stock Certificate

     To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to:

    1.  Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606; and

    2.  Immediately deliver to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar Surgical Company."

    After completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions.

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

15

EXHIBIT "2"

October   , 2000

JOINT ESCROW INSTRUCTIONS
For Cancellation of Escrow and Delivery of Check and Stock Certificate

     To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to:

    1.  Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024; and

    2.  Immediately deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold."

    After completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions.

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

16

EXHIBIT "3"

October   , 2000

ESCROW INSTRUCTION BY STAAR
For Cancellation of Escrow and Delivery of Stock Certificate

     To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25 and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby instructed by Staar Surgical Company, a Delaware corporation ("Staar") to:

    Immediately (the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024.

STAAR SURGICAL COMPANY

a Delaware corporation

By:

Name/Title: Andrew Pollet, President

Date:

17

EXHIBIT "4"

October   , 2000

ESCROW INSTRUCTION BY FEINGOLD
Cancellation of Escrow and Delivery of Check

     To: Joseph M. Galosic, Esq.

Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear Mr. Galosic:

    You are hereby instructed by Vladimir Feingold ("Feingold") to:

    Immediately deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold."

VLADIMIR FEINGOLD

By:

Name/Title: Vladimir Feingold

Date:

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QuickLinks

SETTLEMENT AGREEMENT AND MUTUAL RELEASE
RECITALS
AGREEMENT
ESCROW AGREEMENT
EXHIBIT "1" October , 2000 JOINT ESCROW INSTRUCTIONS For Delivery of Check and Stock Certificate
EXHIBIT "2" October , 2000 JOINT ESCROW INSTRUCTIONS For Cancellation of Escrow and Delivery of Check and Stock Certificate
EXHIBIT "3" October , 2000 ESCROW INSTRUCTION BY STAAR For Cancellation of Escrow and Delivery of Stock Certificate
EXHIBIT "4" October , 2000 ESCROW INSTRUCTION BY FEINGOLD Cancellation of Escrow and Delivery of Check

EX-10.75

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EMPLOYMENT AGREEMENT

    This EMPLOYMENT AGREEMENT ("Agreement"), which is dated as of December 19, 2000, is made by and between STAAR Surgical Company, a Delaware corporation, located at 1911 Walker Avenue, Monrovia, California 91016 and hereinafter referred to as "Company", and David Bailey, whose address is            , hereinafter referred to as "Executive", based upon the following:

RECITALS

WHEREAS, Company wishes to retain the services of Executive, and Executive wishes to render services to Company, as its Chief Executive Officer and President;

WHEREAS, Company and Executive wish to set forth in this Agreement the duties and responsibilities that Executive has agreed to undertake on behalf of Company.

THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, Company and Executive (who are sometimes individually referred to as a "party" and collectively referred to as the "parties") agree as follows:

AGREEMENT

    1.  TERM.

    (a)  Term of Agreement/Renewal.  Company hereby employs Executive pursuant to the terms of this Agreement and Executive hereby accepts employment with Company pursuant to the terms of this Agreement for the period beginning on December 19, 2000 (the "Effective Date") and ending on December 31, 2003. Subject to paragraphs 12 and 13, this Agreement will be automatically be renewed for successive periods of three years after December 31, 2003. In this Agreement the word "Term" shall, depending on the context used, refer to the initial three (3) year term or to any renewal periods.

    (b)  Loss of Right to Work.  Executive shall fully cooperate with Company to obtain a permit or visa (the "Right to Work Document") that will allow Executive to work legally in the United States. If, through no fault of Executive, Company is unable to obtain the Right to Work Document, or if the Right to Work Document is not renewed, then, irrespective of subparagraph (a) above, the Term shall end twelve (12) months from the date that Company's application for the Right to Work Document is rejected (or, if Company appeals such decision, from the date that a decision regarding the appeal becomes final) or from the date that the Right to Work Document expires. In such event, Company shall pay reasonable travel-related costs for Executive, his spouse and his children to return to the United Kingdom. During such twelve (12) month period, Executive shall be entitled to render his services pursuant to this Agreement from his home country.

    2.  GENERAL DUTIES.

    Executive shall report to Company's Board of Directors. Executive shall devote his entire productive time, ability, and attention to Company's business during the Term. In his capacity as Chief Executive Officer and President, Executive shall be primarily responsible for the day-to-day supervision and control of the business and the employees of the Company. Executive shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, and such other duties as are commonly performed by an employee of his rank in a publicly traded corporation or which may, from time to time, be prescribed by the Company through its Board of Directors. Furthermore, Executive agrees to cooperate with and work to the best of his ability with Company's management team, which includes the Board of Directors and the officers and other employees, to continually improve Company's reputation in its industry for quality products and performance.

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    3.  NONSOLICITATION AND PROPRIETARY PROPERTY AND CONFIDENTIAL INFORMATION PROVISIONS.

    (a)  Nonsolicitation.

    (1)  Covenant.  Executive hereby covenants and agrees that Executive shall not, either for Executive's own account or directly or indirectly in conjunction with or on behalf of any person, partnership, corporation or other entity or venture, during the Term and for a period of one (1) year from the date this Agreement terminates or expires, solicit or employ or attempt to solicit or employ any person who is then or has, within twelve (12) months prior thereto, been an officer, partner, manager, agent, consultant or employee of Company or any affiliate of Company whether or not such a person would commit a breach of that person's contract of employment or consulting contract with Company or any affiliate of Company, if any, by reason of leaving the service of Company or any affiliate of Company (the "Nonsolicitation Covenant").

    (2)  Acknowledgement.  Each of the parties acknowledges that: (i) the covenants and the restrictions contained in the Nonsolicitation Covenant are necessary, fundamental, and required for the protection of the business of Company; (ii) such Covenant relates to matters which are of a special, unique and extraordinary value; and (iii) a breach of such Covenant will result in irreparable harm and damages which cannot be adequately compensated by a monetary award.

    (3)  Judicial Limitation.  Notwithstanding the foregoing, if at any time, despite the express agreement of Company and Executive, a court of competent jurisdiction holds that any portion of this Nonsolicitation Covenant is unenforceable by reason of its extending for too great a period of time or by reason of its being too extensive in any other respect, such Covenant shall be interpreted to extend only over the maximum period of time or to the maximum extent in all other respects, as the case may be, as to which it may be enforceable, all as determined by such court in such action.

    (b)  Proprietary Property; Confidential Information.

    (1)  "Applicable Definitions"  For purposes of this paragraph 3(b), the following capitalized terms shall have the definitions set forth below:

    i.  "Confidential Information"  —The term "Confidential Information" is collectively and severally defined as any information, matter or thing of a secret, confidential or private nature, whether or not so labeled, which is connected with Company's business or methods of operation or concerning any of Company's suppliers, customers, licensors, licensees or others with whom Company has a business relationship, and which has current or potential value to Company or the unauthorized disclosure of which could be detrimental to Company. Confidential Information shall be broadly defined and shall include, by way of example and not limitation: (i) matters of a business nature available only to management and owners of Company of which Executive may become aware (such as information concerning customers, vendors and suppliers, including their names, addresses, credit or financial status, buying or selling habits, practices, requirements, and any arrangements or contracts that Company may have with such parties, Company's marketing methods, plans and strategies, the costs of materials, the prices Company obtains or has obtained or at which Company sells or has sold its products or services, Company's manufacturing and sales costs, the amount of compensation paid to employees of Company and other terms of their employment, financial information such as financial statements, budgets and projections, and the terms of any contracts or agreements Company has entered into) and (ii) matters of a technical nature (such as product

2

information, trade secrets, know-how, formulae, innovations, inventions, devices, discoveries, techniques, formats, processes, methods, specifications, designs, patterns, schematics, data, compilation of information, test results, and research and development projects). For purposes of the foregoing, the term "trade secrets" shall mean the broadest and most inclusive interpretation of trade secrets as defined by Section 3426.1(d) of the California Civil Code (the Uniform Trade Secrets Act) and cases interpreting the scope of said Section.

    ii.  "Proprietary Property"  —The term "Proprietary Property" is collectively and severally defined as any written or tangible property owned or used by Company in connection with Company's business, whether or not such property also qualifies as Confidential Information. Proprietary Property shall be broadly defined and shall include, by way of example and not limitation, products, samples, equipment, files, lists, books, notebooks, records, documents, memoranda, reports, patterns, schematics, compilations, designs, drawings, data, test results, contracts, agreements, literature, correspondence, spread sheets, computer programs and software, computer print outs, other written and graphic records, and the like, whether originals, copies, duplicates or summaries thereof, affecting or relating to the business of Company, financial statements, budgets, projections, invoices.

    (2)  Ownership of Proprietary Property.  Executive acknowledges that all Proprietary Property which Executive may prepare, use, observe, come into possession of and/or control shall, at all times, remain the sole and exclusive property of Company. Executive shall, upon demand by Company at any time, or upon the cessation of Executive's employment, irrespective of the time, manner, cause or lack of cause of such cessation, immediately deliver to Company or its designated agent, in good condition, ordinary wear and tear and damage by any cause beyond the reasonable control of Executive excepted, all items of the Proprietary Property which are or have been in Executive's possession or under his control, as well as a statement describing the disposition of all items of the Proprietary Property beyond Executive's possession or control in the event Executive has not previously returned such items of the Proprietary Property to Company.

    (3)  Agreement Not to Use or Divulge Confidential Information.  Executive agrees that he will not, in any fashion, form or manner, unless specifically consented to in writing by Company, either directly or indirectly use, divulge, transmit or otherwise disclose or cause to be used, divulged, transmitted or otherwise disclosed to any person, firm or corporation, in any manner whatsoever (other than in Executive's performance of duties for Company or except as required by law) any Confidential Information of any kind, nature or description. The foregoing provisions shall not be construed to prevent Executive from making use of or disclosing information which is in the public domain through no fault of Executive, provided, however, specific information shall not be deemed to be in the public domain merely because it is encompassed by some general information that is published or in the public domain or in Executive's possession prior to Executive's employment with Company.

    (4)  Acknowledgement of Secrecy.  Executive acknowledges that the Confidential Information is not generally known to the public or to other persons who can obtain economic value from its disclosure or use and that the Confidential Information derives independent economic value thereby, and Executive agrees that he shall take all efforts reasonably necessary to maintain the secrecy and confidentiality of the Confidential Information and to otherwise comply with the terms of this Agreement.

    (5)  Inventions, Discoveries.  Executive acknowledges that any inventions, discoveries or trade secrets, whether patentable or not, made or found by Executive in the scope of his

3

employment with Company constitute property of Company and that any rights therein now held or hereafter acquired by Executive individually or in any capacity are hereby transferred and assigned to Company, and agrees to execute and deliver any confirmatory assignments, documents or instruments of any nature necessary to carry out the intent of this paragraph when requested by Company without further compensation therefor, whether or not Executive is at the time employed by Company. Provided, however, notwithstanding the foregoing, Executive shall not be required to assign his rights in any invention which qualifies fully under the provisions of Section 2870(a) of the California Labor Code, which provides, in pertinent part, that the requirement to assign "shall not apply to any invention that the employee developed entirely on his or her own time without using employer's equipment, supplies, facilities or trade secret information except for those inventions that either:

    (i)Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

    (ii)Result from any work performed by the employee for the employer."

    Executive understands that he bears the full burden of proving to Company that an invention qualifies fully under Section 2870(a). By signing this Agreement, Executive acknowledges receipt of a copy of this Agreement and of written notification of the provisions of Section 2870.

    4.  COMPLIANCE WITH SECURITIES LAWS.  Executive acknowledges that Executive will be subject to the provisions of Sections 10(b) and 16 of the Securities Exchange Act of 1934. Executive acknowledges that Sections 10(b) and 16 can prohibit Executive from selling or transferring his stock or securities in Company. Executive agrees that he will comply with Company's policies, as stated from time to time, relating to selling or transferring his stock or securities in Company.

    5.  COMPENSATION.

    (a)  Annual Salary.  During the first year of the Term, Company shall pay to Executive an annual base salary in the amount of three hundred thousand U.S. dollars ($300,000). During the remainder of the Term, Company shall pay to Executive an annual base salary in the amount of three hundred fifty thousand U.S. dollars ($350,000). The salary paid during the Term shall be referred to in this Agreement as the "Annual Salary". The Annual Salary shall be subject to any tax withholdings and/or employee deductions that are applicable. The Annual Salary shall be paid to Executive in equal installments in accordance with the periodic payroll practices of the Company for executive employees. From and after December 1, 2003, the Board shall annually review Executive's Annual Salary to determine whether or not an increase is merited.

    (b)  Annual Bonus.  Executive and the Compensation Committee of the Board of Directors shall meet to establish performance standards and goals to be met by Executive, which standards and goals shall be based upon earnings, cash flows, EBITDA and other objectives that are mutually agreed to by Executive and the Compensation Committee. Company shall pay to Executive, no later than thirty (30) days after the completion of the annual anniversary of the Effective Date, a cash bonus (the "Annual Bonus") in an amount to be recommended by the Compensation Committee to the Board, and which amount may equal (but not exceed) sixty percent (60%) of the Annual Salary, for each year in which the performance standards and goals are met or exceeded by Executive. Nothing in this paragraph shall prevent Executive and the Compensation Committee from mutually agreeing to an alternative computation of the Annual Bonus, which may be implemented and paid to Executive in place of the Annual Bonus described herein. The Annual Bonus shall be subject to any applicable tax withholdings and/or employee deductions.

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    (c)  Cost of Living Adjustment.  Commencing as of January 1, 2002, and on each January 1st thereafter, the then effective Annual Salary shall be increased (but not decreased) by an amount which shall reflect the increase, if any, in the cost of living during the previous 12 months by adding to the Annual Salary an amount computed by multiplying the Annual Salary by the percentage by which the level of the Consumer Price Index for the Los Angeles, California Metropolitan Area, as reported on January 1st of the new year by the Bureau of Labor Statistics of the United States Department of Labor has increased over its level as of January 1st of the prior year.

    (d)  Participation In Employee Benefit Plans.  Executive shall have the same rights, privileges, benefits and opportunities to participate in any of Company's employee benefit plans which may now or hereafter be in effect on a general basis for executive officers or employees. Company may change any benefits contractor, in its sole discretion. During the Term Company shall provide, at Company's sole expense, (i) medical and dental benefits for Executive, his spouse and children, (ii) disability insurance which, in the event of Executive's disability, will replace 60% of the Annual Salary being paid to Executive at the time the disability occurred, and (iii) life insurance in the amount of one million seven-hundred fifty thousand U.S. dollars ($1,750,000). In the event Executive receives payments from the disability insurer, Company shall have the right to offset such payments against the Annual Salary otherwise payable to Executive during the period for which such payments are made. Executive represents and warrants that he has no reason to believe that he is not insurable with a reputable insurance company for the limits of the coverage discussed herein. If Executive is deemed to be uninsurable for any of the coverage discussed herein, Company shall not be deemed to be in breach of this Agreement for failing to provide such coverage.

    6.  STOCK OPTION GRANT.

    As an inducement to enter into this Agreement, Company grants to Executive an option to purchase five hundred thousand (500,000) shares of Company's common stock. The exercise price for the stock shall be $11.25 per share, the fair market value on the date of this Agreement. The right to purchase the common stock shall vest in equal increments, one-third on the Effective Date, one-third on the first anniversary of the Effective Date and one-third on the second anniversary of the Effective Date. Upon the sale or disposition by Company to an unrelated third party of 50% or more of its business or assets, or the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest in Company to an unrelated third party, or the merger or consolidation of Company with another corporation as part of a sale or transfer of a controlling interest in Company to an unrelated third party (any of which shall be deemed to be a "Change in Control"), any part of the option which is unvested shall immediately vest. "A controlling interest" shall be defined as 50% or more of the common stock of the Company. The grant of this option shall not prohibit Company from granting to Executive, in its discretion, additional options to purchase Company's common stock during the Term.

    7.  OTHER ALLOWANCES.

    (a)  Automobile Allowance.  Company shall pay to Executive a sum which is equivalent to the automobile allowance received by Executive from his former employer.

    (b)  Costs Associated with Obtaining the Right to Work.  Company shall pay any reasonable costs, including application fees and legal costs, relating to obtaining the Right to Work Document and subsequent permanent residency visas (such as a green card).

    (c)  Repayment of Bonus to CIBA/Novartis.  Company acknowledges that Executive received a bonus in the amount of one hundred fifty thousand U.S. dollars ($150,000) from CIBA/Novartis, Executive's prior employer, for accepting its offer of employment. Company acknowledges that

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Executive may be required to return some portion, or all, of the bonus to CIBA/Novartis as a result of his election to terminate his employment. Company agrees that it shall reimburse Executive for any amount of the bonus that Executive is required to return to CIBA/Novartis.

    (d)  Payment of Accrued Bonus.  Company acknowledges that Executive, if he continued his employment with CIBA/Novartis, would receive a bonus of one hundred thirty-two thousand U.S. dollars ($132,000) pursuant to his employment contract. Executive expects to receive no less than one hundred ten thousand U.S. dollars ($110,000) as a result of his services to CIBA/Novartis over the past ten (10) months. Company agrees that it shall pay to Executive any portion of the bonus, up to one hundred ten thousand U.S. dollars ($110,000), that CIBA/Novartis refuses to pay due to Executive's termination of his employment.

    (e)  Relocation Allowance.  Company shall reimburse Executive for all reasonable relocation expenses actually and properly incurred by Executive's move to Los Angeles, California from Atlanta, Georgia and/or the United Kingdom. Such expenses shall include:

    (i)  Moving Expenses.  All reasonably incurred expenses to move Executive's home furnishings and personal property to California, such amount not to exceed thirty thousand U.S. dollars ($30,000).

    (ii)  Disposition of Residence.  Company and Executive shall jointly choose an appraiser to appraise Executive's home in Atlanta, Georgia, and Company shall pay to Executive the equity value. The term "equity value" shall mean the difference between the appraised value and the unpaid balance of any loans secured by mortgages or deeds of trust recorded against the home. If Executive's home is sold for an amount the equity value of which exceeds the amount paid to Executive pursuant to this subsection, Company shall be entitled to keep the excess amount.

    (iii)  Expenses Related to Former Residence.  Until it is sold, Company will continue to pay all expenses related to maintaining Executive's home in Georgia, including any loans secured by mortgages or deeds of trust, taxes and insurance.

    (iv)  Interim Living Expenses.  For a period of six (6) months, Company shall pay to Executive the sum of three thousand U.S. dollars ($3,000) per month toward living expenses.

    (v)  Income Tax Consequences.  Payment and/or provision of the relocation expenses shall be subject to any federal or state withholding as may be applicable. Company shall gross-up the payment of the expenses set forth in this paragraph 7(e) to compensate Executive for any and all taxes incurred by him as a result of his receipt of the relocation allowance.

    (f)  Nomination to Board of Directors.  Executive shall be appointed to Company's Board of Directors.

    8.  REIMBURSEMENT OF BUSINESS EXPENSES.  Company shall promptly reimburse Executive for all reasonable business expenses incurred by Executive in connection with the business of Company. However, each such expenditure shall be reimbursable only if Executive furnishes to Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction.

    9.  ANNUAL VACATION/SICK LEAVE.

    Executive shall be entitled to five (5) weeks vacation time each year without loss of compensation. Executive shall be entitled to sick leave in accordance with Company's general policy for its employees.

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    10.  INDEMNIFICATION OF LOSSES.

    So long as Executive's actions were taken in good faith and in furtherance of Company's business and within the scope of Executive's duties and authority, Company shall indemnify and hold Executive harmless to the full extent of the law from any and all claims, losses and expenses sustained by Executive as a result of any action taken by him to discharge his duties under this Agreement, and Company shall defend Executive, at Company's expense, in connection with any and all claims by stockholders or third parties which are based upon actions taken by Executive to discharge his duties under this Agreement.

    11.  PERSONAL CONDUCT.

    Executive agrees promptly and faithfully to comply with all present and future policies, requirements, directions, requests and rules and regulations of Company in connection with Company's business. Executive further agrees to conform to all laws and regulations and not at any time to commit any act or become involved in any situation or occurrence tending to bring Company into public scandal, ridicule or which will reflect unfavorably on the reputation of Company.

    12.  TERMINATION FOR CAUSE.

    Company reserves the right to declare Executive in default of this Agreement if Executive willfully breaches or habitually neglects the duties which he is required to perform under the terms of this Agreement, or if Executive commits such acts of dishonesty, fraud, misrepresentation, gross negligence or willful misconduct as would prevent the effective performance of his duties or which results in material harm to Company or its business. Company may terminate this Agreement for cause by giving written notice of termination to Executive. Company also reserves the right to declare Executive in default of this Agreement if Executive fails to substantially perform his material duties and responsibilities under this Agreement after written demand for substantial performance of such duties and responsibilities is delivered to Executive. Such demand must identify the manner in which Company's Board of Directors believes that Executive has not substantially performed his duties, and Executive shall have a period of ninety (90) days to correct the deficient performance. With the exception of the covenants included in paragraph 3 above, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. Such termination shall be without prejudice to any other remedy to which Company may be entitled either at law, in equity, or under this Agreement. If Executive's employment is terminated pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    13.  TERMINATION WITHOUT CAUSE.

    (a)  Death.  Executive's employment shall terminate upon the death of Executive. Upon such termination, the obligations of Executive and Company under this Agreement shall immediately cease. With the exception of the covenants included in this sub-paragraph (a), in the event of a termination pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination.

    (b)  Disability.  Company reserves the right to terminate Executive's employment upon ten (10) days written notice if, for a period of ninety (90) days, Executive is prevented from discharging his duties under this Agreement due to any physical or mental disability. With the exception of the covenants included in paragraph 3 above and as otherwise set forth in this

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sub-paragraph (b), upon such termination, the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    (c)  Election By Executive.

    (i)  Executive's Election to Terminate.  Executive's employment may be terminated at any time by Executive upon not less than twelve (12) months written notice by Executive to the Board. With the exception of the covenants included in paragraph 3 above and as otherwise set forth in this sub-paragraph (c), upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law.

    (ii)  Company's Election to Release.  If, after receipt of Executive's notice of termination, Company elects to release Executive from his obligations under sub-paragraph (c)(i) above and notifies Executive that he need not perform services pursuant to this Agreement for the twelve (12) month period, Company shall pay to Executive (i) an amount equal to the Annual Salary due to Executive for the twelve (12) month period (or any portion of it still remaining after Company's election), in a lump sum and without discount to present value, and (ii) any options granted to Executive which are scheduled to vest over the twelve (12) month period (or any portion of it still remaining after Company's election) will vest as scheduled.

    (d)  Election By Company.  Company may terminate Executive's employment upon not less than thirty (30) days written notice by Company to Executive. With the exception of the covenants included in paragraph 3 above, upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Executive shall be entitled to receive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; (iii) business expenses incurred prior to the effective date of termination, (iv) an amount equal to three (3) years Annual Salary due to Executive as of the date of termination, in a lump sum and without discount to present value, and (v) any option held by Executive which is unvested on the date of such termination shall immediately vest. All other rights Executive has under any benefit plans and programs shall be determined in accordance with the terms and conditions of such plans and programs.

    (e)  Termination Due to a Change in Control.  If Executive's employment is terminated in connection with a Change in Control, with the exception of the covenants included in paragraph 3 above and as otherwise set forth in this sub-paragraph (e), upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Executive shall be entitled to receive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; (iii) business expenses incurred prior to the effective date of termination, (iv) an amount equal to three (3) years Annual Salary due to Executive as of the date of termination, in a lump sum and without discount to present value, and

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(v) any option held by Executive which is unvested on the date of such termination shall immediately vest. All other rights Executive has under any benefit plans and programs shall be determined in accordance with the terms and conditions of such plans and programs.

    14.  MISCELLANEOUS.

    (a)  Preparation of Agreement.  It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement.

    (b)  Cooperation.  Each party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may from time to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense.

    (c)  Interpretation.

    (i)  Entire Agreement/No Collateral Representations.  Each party expressly acknowledges and agrees that this Agreement, including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the parties with respect to the subject matter hereof; (2) supersedes any prior or contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally, the "Prior Agreements"), and that any such prior agreements are of no force or effect except as expressly set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent oral agreements. Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the modification or supplement is sought.

    (ii)  Waiver.  No breach of any agreement or provision herein contained, or of any obligation under this Agreement, may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except by written instrument signed by the party to be charged or as otherwise expressly authorized herein. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or a waiver or relinquishment of any other agreement or provision or right or power herein contained.

    (iii)  Remedies Cumulative.  The remedies of each party under this Agreement are cumulative and shall not exclude any other remedies to which such party may be lawfully entitled.

    (iv)  Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other

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than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law.

    (v)  No Third Party Beneficiary.  Notwithstanding anything else herein to the contrary, the parties specifically disavow any desire or intention to create any third party beneficiary obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights hereunder or any right of enforcement hereof.

    (vi)  Headings; References; Incorporation; Gender.  The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals thereof. Any exhibit referenced in this Agreement shall be construed to be incorporated in this Agreement. As used in this Agreement, each gender shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires.

    (d)  Enforcement.

    (i)  Applicable Law.  This Agreement and the rights and remedies of each party arising out of or relating to this Agreement (including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of California, as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California.

    (ii)  Consent to Jurisdiction; Service of Process.  Any action or proceeding arising out of or relating to this Agreement shall be filed in and heard and litigated solely before the state courts of California located within the County of Los Angeles.

    (iii)  Consent to Specific Performance and Injunctive Relief and Waiver of Bond or Security.  Each party acknowledges that Company may, as a result of Executive's breach of the covenants and obligations included in paragraph 3 of this Agreement, sustain immediate and long-term substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Each party agrees that in the event of Executive's breach or threatened breach of the covenants and obligations included in paragraph 3, Company shall be entitled to obtain equitable relief from a court of competent jurisdiction or arbitration without proof of any actual damages that have been or may be caused to Company by such breach or threatened breach and without the posting of bond or other security in connection therewith.

    (e)  No Assignment of Rights or Delegation of Duties by Executive.  Executive's rights and benefits under this Agreement are personal to him and therefore (i) no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; and (ii) Executive may not delegate his duties or obligations hereunder.

    (f)  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (C) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (D) by

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mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth {5th} business day following the date mailed). Each party, and their respective counsel, hereby agree that if Notice is to be given hereunder by such party's counsel, such counsel may communicate directly with all principals, as required to comply with the foregoing notice provisions. Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such other address as the receiving party shall have specified most recently by like Notice, with a copy to the other parties hereto. Any Notice given to the estate of a party shall be sufficient if addressed to the party as provided in this subparagraph.

    (g)  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, binding on all parties hereto. Any signature page of this Agreement may be detached from any counterpart of this Agreement and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional signature pages.

    (h)  Execution by All Parties Required to be Binding; Electronically Transmitted Documents.  This Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all parties hereto. If a copy or counterpart of this Agreement is originally executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually signed by the party whose facsimile signature appears.

    IN WITNESS WHEREOF, the parties have executed this Agreement.

Company:
STAAR Surgical Company a Delaware corporation
By:
	Andrew F. Pollet, Chairman of the Board
Executive:
David Bailey

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EX-10.76

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Exhibit 10.76

ROYALTY BUY-OUT AGREEMENT

    This Royalty Buy-Out Agreement (this "Agreement") is entered into as of this 30^th day of May, 2000, by and between Staar Surgical Company (hereinafter "Staar") and Bausch & Lomb Surgical, Inc. (hereinafter "B&L Surgical"), collectively referred to herein as the "Parties."

RECITALS

    WHEREAS Staar and Chiron Ophthalmics, Inc., (predecessor to B&L Surgical) are parties to a License Agreement made effective March 9, 1990 (hereinafter the "License Agreement"), a copy of which is attached hereto as Exhibit A and incorporated herein by this reference;

    WHEREAS, the License Agreement provides, among other things, for the payment of certain royalties by B&L Surgical, as successor to Chiron Ophthalmics, Inc., to Staar;

    WHEREAS, Staar and Chiron Vision Corporation ("CVC"), predecessor to B&L Surgical, are parties to a Term Sheet made effective February 6, 1998, a copy of which is attached hereto as Exhibit B and incorporated herein by this reference, which provides B&L Surgical, as successor to CVC, with a prepaid royalty credit, the balance of which is One Hundred Thousand Dollars ($100,000.00) as of the date hereof (the "Royalty Credit");

    WHEREAS, a dispute has arisen between Staar and B&L Surgical (hereinafter, the "Dispute") concerning the amount of royalties due and owing Staar pursuant to the License Agreement;

    WHEREAS, on or about December 2, 1999, Staar filed a lawsuit styled Staar Surgical Company v. Bausch & Lomb Surgical, in Los Angeles County Superior Court (Case No. BC 221000) (hereinafter, the "Action");

    WHEREAS, the Parties desire to resolve their Dispute concerning the amount of royalties owed to Staar and for B&L Surgical to buy out any past, present and future royalties that may become owed to Staar;

    Now, therefore, for valuable consideration, the receipt of which is hereby acknowledged, Staar and B&L Surgical agree as follows:

    1.  Royalty Buy-Out.  B&L Surgical shall buy out all past, present and future royalties owed to Staar under the License Agreement for the sum of One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) (the "Royalty Buy-Out Amount"). Payment of the Royalty Buy-Out in the form of a corporate check shall be delivered to Staar's attorney, Frank Frisenda Jr., Esq., 11755 Wilshire Boulevard, 10^th Floor, Los Angeles, CA 90025, within ten (10) days from the date that this Agreement is executed by Staar, and a copy is delivered to and received by Mark M. Tomaino, Bausch & Lomb Surgical, 555 W. Arrow Highway, Claremont, CA 91711. By payment of the Royalty Buy-Out Amount, B&L Surgical shall have a fully paid-up and irrevocable license, to the Licensed Technology Rights, and to sell Licensed Products, pursuant to the License Agreement, and B&L Surgical shall be fully and forever discharged and relieved of any and all obligations under the License Agreement for past, present and future payments of royalties to Staar. Therefore, Staar expressly waives any right to terminate the License Agreement.

    2.  No Further Accounting Obligations.  As a result of this Agreement, B&L Surgical shall have no further obligations to Staar under Section 4 of the License Agreement, including but not limited obligations to keep records or make reports, and Staar fully and forever discharges and relieves B&L Surgical from any such obligations.

    3.  Other Terms and Provisions of License Agreement.  All other terms and provisions of the License Agreement, except those expressly discharged herein, shall remain in full force and effect.

    4.  Dismissal With Prejudice.  Within five (5) days of receipt by Staar of the payment described in paragraph 1 of this Agreement, Staar shall cause its counsel to file with the court a Dismissal with Prejudice of the Action in its entirety.

    5.  Release of Claims.  Staar expressly agrees fully, completely and forever to release and discharge all claims which were, and which could have been, asserted against B&L Surgical in the Action. Subject to Section 6 hereof, B&L Surgical expressly agrees fully, completely and forever to release and discharge Staar of any claims which could have been asserted against Staar under the License Agreement prior to the date hereof, including claims related to the Royalty Credit. Staar and B&L Surgical have had the benefit of counsel, have been advised of, understand, and knowingly and specifically waive their respective rights under California Civil Code Section 1542 which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

    6.  Indemnity.

    a.  Staar agrees to defend, indemnify and hold harmless B&L Surgical and its affiliates from and against any and all causes of action, demands, liabilities, costs, damages or expenses arising as a result of or in connection with any allegation by Canon-Staar Co., Inc. ("Canon-Staar") or its affiliates that B&L Surgical or its affiliates infringe any of the Japanese patents and patent applications listed on Exhibit A attached to the Term Sheet effective as of February 6, 1998 between CVC and Cannon-Staar, a copy of which is incorporated herein by reference, attached hereto as Exhibit C.

    b.  B&L Surgical shall offer Staar reasonable cooperation in the defense of any and all claims and causes of action arising as a result or in connection with any allegation by Canon-Staar or its affiliates that B&L Surgical or its affiliates infringe any of the foregoing Japanese patents; provided that B&L Surgical shall not be required to incur any out-of-pocket costs. Staar shall at all times have full and final control of B&L Surgical's defense including the right to unilaterally make all decisions regarding such defense and any settlement of such claims and causes of action; provided that in no event shall Staar agree to any settlement that does not provide B&L Surgical with a royalty-free and/or paid-up license to practice under the foregoing Japanese patents. B&L Surgical hereby agrees to provide advance notice to Staar of any significant action it intends to take with respect to any allegations by Canon-Staar or its affiliates and B&L Surgical shall not take any such action without Staar's consent, which shall not be unreasonably withheld. B&L Surgical agrees to give prompt notice to Staar of any settlement offer made by Canon-Staar with respect to such allegations and agrees not to make any settlement offer without first receiving Staar's approval of the offer, which shall not be unreasonably withheld.

    7.  Compromise and Denial of Liability.  This Agreement is the result of a compromise among the Parties and shall never at any time or for any purpose be considered as an admission of liability and/or responsibility on the part of any party herein released, nor shall the payment of any sum of money in consideration for the execution of this Agreement constitute or be construed as an admission of any liability whatsoever by any party herein released, each of which continues to deny such liability and disclaim such responsibility.

    8.  Authority.  Each person and entity executing this Agreement does hereby personally represent that he/she has the authority to execute this Agreement on behalf of, and fully bind, such purported principal and further warrants and represents that is has not assigned, transferred or pledged any of the

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claims being released hereunder and that it is the sole owner of all such claims and has full power and authority to enter into this Agreement.

    9.  Governing Law.  This Agreement shall in all respects be interpreted, enforced and governed by and under the laws of the State of California.

    10.  Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective predecessors, successors, assigns, partners, partnerships, joint ventures, parents, subsidiaries, affiliated and related entities, officers, directors, principals, agents, servants, employees, representatives and all persons, firms, associations, and/or corporations connected with them.

    11.  Counterparts.  This Agreement may be executed in counterparts, and all such counterparts shall constitute one Agreement, which shall be binding upon all Parties hereto, notwithstanding that the signatures of the Parties' designated representatives do not appear on the same page.

    12.  Additional Documents.  The Parties agree to cooperate fully and execute any and all supplementary documents and to take all additional actions which may be necessary or appropriate to give full force and effect to the basic terms and intent of this Agreement.

    13.  Press Release.  Neither Party hereto shall issue any press release concerning the subject matter of this Agreement without the prior written consent of the other, which consent shall not be unreasonably withheld.

    14.  Entire Agreement.  This Agreement, including all exhibits attached hereto, constitutes the entire understanding between and among the Parties with regard to the matters herein set forth. There are no representations, warranties, arrangements, or undertakings, oral or written, between or among the Parties relating to the subject matter of this Agreement which are not fully expressed.

DATED:  May 30, 2000	STAAR SURGICAL COMPANY
	By:	/s/ WILLIAM C. HUDDLESTON
	Title:	President and CEO
DATED:  May 31, 2000	BAUSCH & LOMB SURGICAL, INC.
	By:	/s/ ILLEGIBLE
	Title:	President

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ROYALTY BUY-OUT AGREEMENT
RECITALS

EX-21

Exhibit 21

List of Significant Subsidiaries

Name of Significant Subsidiary	State or Other Jurisdiction of Incorporation or Organization of each such Significant Subsidiary, and Names (if any) under which Each such Significant Subsidiary does Business
STAAR Surgical AG	Switzerland
Canon STAAR	Japan
Domilens	Germany