Senior Promissory Note

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO RULE 144 OR UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING
SUCH NOTE OR THE COMPANY RECEIVES AN OPINION OF COUNSEL STATING (OR OTHER
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY) THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE SECURITIES ACT.

STAAR SURGICAL COMPANY

SENIOR PROMISSORY NOTE

$5,000,000 December 14, 2007

For value received, and on the terms and subject to the conditions set forth
herein, STAAR Surgical Company, a corporation formed and existing under the laws
of the State of Delaware (the “Company”), HEREBY PROMISES TO PAY to Broadwood
Partners, L.P. (the “Noteholder”), on the Maturity Date (as defined below) the
principal sum of US$5,000,000 (the “Loan”), plus any unpaid interest accrued
thereon, or such lesser amount as shall be equal to the unpaid principal amount
of the Loan plus such interest. The Company hereby promises to make principal
repayments and to pay interest on the dates and at the rate or rates provided
for herein.

The Noteholder will receive warrants (the “Warrants”) issued hereunder and under
that certain Warrant Agreement dated the date hereof between the Company and the
Noteholder (the “Warrant Agreement”) to purchase that number of shares of common
stock, par value $.01 per share (the “Common Stock”) as set forth herein and in
the Warrant Agreement at an exercise price of $4.00 (the “Exercise Price”) per
share (the “Warrant Shares”).

SECTION 1. Certain Terms Defined. The following terms for all purposes of this
Note shall have the respective meanings specified below.

“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized by law to close.

“Change of Control” means the occurrence of any of the following events:

(a) Except for Broadwood Partners, L.P., any Person or “group” (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange,
except that a Person will be deemed to have “beneficial ownership” of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than fifteen percent (15%) of the voting power of all
classes of shareholders of the Company; or

(b) During any consecutive two-year period, individuals who at the beginning of
such period constituted the board of directors of the Company (together with any
new directors whose election to such board of directors of the Company, or whose
nomination for election by the shareholders of the Company, was approved by a
vote of two thirds of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the board of directors of the Company then in office except changes
in the board of directors resulting from annual uncontested elections.

“Commission” shall mean the Securities & Exchange Commission.

“Commission Documents” has the meaning set forth in Section 9(e).

“Common Stock” has the meaning set forth in the introductory paragraphs.

“Company” has the meaning set forth in the introductory paragraphs.

“Equity Securities” has the meaning set forth in Section 10(j).

“Event of Default” has the meaning set forth in Section 8.

“Exchange Act” has the meaning set forth in Section 9(e).

“Exercise Price” has the meaning set forth in the introductory paragraphs.

“Existing Shares” shall mean the 4,396,231 shares of common stock of the Company
owned by the Noteholder as of the date hereof.

“Form 10-K” has the meaning set forth in Section 9(e).

“Form 10-Q” has the meaning set forth in Section 9(e).

“GAAP” has the meaning set forth in Section 9(e).

“Indebtedness” has the meaning set forth in Section 9(j).

“Intellectual Property Rights” has the meaning set forth in Section 9(q).

“Loan” has the meaning set forth in the introductory paragraphs.

“Maturity Date” means December 14, 2010, or such earlier date as may be provided
in Section 7; provided that if any such date is not a Business Day, then such
date shall be the next succeeding Business Day.

“Note” shall mean this Senior Promissory Note as amended, from time to time, in
accordance with the terms hereof.

“Notice” has the meaning set forth in Section 10(j).

“Noteholder” has the meaning set forth in the introductory paragraphs.

“Permitted Indebtedness” shall mean (A) guarantees by the Company of
indebtedness that is otherwise Permitted Indebtedness, (B) intercompany
indebtedness, (C) indebtedness of the Company incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including capital lease obligations and any indebtedness assumed in connection
with the acquisition of any such assets or secured by a lien on any such assets
prior to the acquisition thereof, and any extensions, renewals and replacements
of any such indebtedness that do not increase the outstanding principal amount
thereof, impose any new liens on any assets of the Company, (D) indebtedness in
respect of any surety bond, performance bond, bankers’ acceptance, trade letter
of credit, warehouse receipt or similar facilities entered into in the ordinary
course of business, (E) derivative liabilities designed to hedge against
fluctuations in interest rates, foreign exchange rates or commodities pricing
risks incurred in the ordinary course of business, (F) trade indebtedness
incurred by the Company in the ordinary course of business, (G) indebtedness
related to any deferred compensation paid by the Company to any of its
directors, officers or employees, or any deferred payments made by the Company
related to any real property lease obligations, (H) indebtedness existing on the
date hereof after giving effect to the use of the proceeds of this Note, and
extensions, renewals and replacements of any such indebtedness that do not
increase the outstanding principal amount thereof, impose any new liens on any
assets of the Company or increase the interest rate payable thereon, and
(I) other indebtedness not to exceed an aggregate principal amount of $250,000
incurred over any twelve (12) month period.

“Person” means any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

      “Securities Act” has the meaning set forth in Section 9(w).
“Subsidiary” has the meaning set forth in Section 9(f).
“Transfer” has the meaning set forth in Section 11(a).
“Warrants” has the meaning set forth in the introductory paragraphs.
“Warrant Agreement” has the meaning set forth in the introductory paragraphs.
“Warrant Shares” has the meaning set forth in the introductory paragraphs.

SECTION 2.
  Loan Drawdown.
 
   

The Noteholder shall make the Loan to the Company within twenty four hours after
the execution of this Note.

SECTION 3. Maturity Of the Loan.

The Loan shall mature, and the principal amount thereof shall become immediately
due and payable (together with unpaid interest accrued thereon) on the Maturity
Date.

SECTION 4. Interest Payments.

The unpaid principal amount of the Loan outstanding shall bear interest at a
rate equal to seven percent (7%) per annum. Notwithstanding the foregoing, upon
an Event of Default, this Note shall bear interest on and after the date of such
Event of Default at a rate equal to the lesser of (i) the maximum interest rate
permitted by applicable law and (ii) 20%.

Interest shall be payable semi-annually in arrears on the last day of the
Company’s second fiscal quarter and fourth fiscal quarter (or if any such day is
not a Business Day, then on the next succeeding Business Day) provided, however,
the first interest payment shall not be due until June 30, 2008. Interest shall
be computed on the basis of a year of 365 days and paid for the actual number of
days elapsed.

SECTION 5. Warrants. So long as this Note shall remain outstanding, the Company
shall, in addition to the Warrants issued under the Warrant Agreement, on
June 1, 2009 issue Warrants to the Noteholder for the purchase of a number of
shares of common stock equal to 700,000 times the fraction resulting when the
then outstanding principal balance on this Note is divided by $5,000,000. The
Warrants issued under this Section 5 shall have all of the same terms and
conditions (including, without limitation, Exercise Price, six (6) year term
from the date of issuance and adjustment mechanisms) as the Warrants issued
under the Warrant Agreement.

SECTION 6. Prepayments.

(a) Optional Prepayments. The Company may prepay the Loan, upon thirty (30) days
prior written notice to the Noteholder, in whole or in part at any time or from
time to time without penalty or premium by paying the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment. Any
such prepayments made under this Section 6 shall be in minimum increments of
$250,000.

(b) Mandatory Prepayments. The Company shall immediately repay the Loan, plus
any unpaid interest accrued thereon upon a Change of Control.

SECTION 7. General Provisions As To Payments.

All payments of principal and interest on the Loan by the Company hereunder
shall be made not later than 12:00 Noon (New York City time) on the date when
due either by cashier’s check, certified check or by wire transfer of
immediately available funds to the Noteholder’s account at a bank in the United
States specified by the Noteholder in writing to the Company without reduction
by reason of any set-off or counterclaim.

SECTION 8. Events Of Default.

Each of the following events shall constitute an “Event of Default”:

(a) the principal of the Loan shall not be paid when due;

(b) any interest on the Loan shall not be paid within five (5) Business Days of
when it was due;

(c) the Company breaches any covenant hereunder and such breach is not cured
within thirty (30) days after notice from the Noteholder;

(d) any representation or warranty of the Company made in this Note shall be
incorrect when made in any material respect;

(e) the Company or any Subsidiary shall default in the payment when due (subject
to any applicable grace period), whether by acceleration or otherwise, of any
material Indebtedness of the Company or any Subsidiary involving the borrowing
of money or the extension of credit in excess of $500,000, or a default shall
occur in the performance or observance of any obligation or condition with
respect to such Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness, or such default shall continue unremedied for
any applicable period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity;

(f) any judgment or order for the payment of money in excess of $500,000 shall
be rendered against the Company or any Subsidiary, shall remain unpaid, and
shall not be covered by insurance;

(g) a court shall enter a decree or order for relief in respect of the Company
or any Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or any Subsidiary or for any substantial part of the
property of the Company or any Subsidiary or ordering the winding up or
liquidation of the affairs of the Company or any Subsidiary, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or

(h) the Company or any Subsidiary shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or any Subsidiary or for any substantial part of the
property of the Company or any Subsidiary, or the Company or any Subsidiary
shall make any general assignment for the benefit of creditors.

If an Event of Default described in (g) or (h) above shall occur, the principal
of and accrued interest on the Loan shall become immediately due and payable
without any declaration or other act on the part of the Noteholder. Immediately
upon the occurrence of any Event of Default described in (g) or (h) above, or
upon failure to pay this Note on the Maturity Date, the Noteholder, without any
notice to the Company, which notice is expressly waived by the Company, may
proceed to protect, enforce, exercise and pursue any and all rights and remedies
available to the Noteholder under this Note, or at law or in equity.

If any Event of Default in (a) – (f) above shall occur for any reason, whether
voluntary or involuntary, and be continuing, the Noteholder may by notice to the
Company declare all or any portion of the outstanding principal amount of the
Loan to be due and payable, whereupon the full unpaid amount of the Loan which
shall be so declared due and payable shall be and become immediately due and
payable without further notice, demand or presentment.

SECTION 9. Representations.

The Company hereby represents and warrants to the Noteholder, as follows:

(a) The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power to own, lease and operate its properties and assets and to conduct its
business as it is now being conducted. The Company does not have any
Subsidiaries except as set forth on Schedule 1 hereto. Each Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of organization and has the requisite corporate power
to own, lease and operate its properties and assets and to conduct its business
as it is now being conducted. The Company and each such Subsidiary is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary.

(b) The Company has the requisite legal and corporate power and authority to
enter into, issue and perform this Note and the Warrant Agreement in accordance
with the terms hereof and thereof. The execution, delivery and performance of
this Note and the Warrant Agreement by the Company and the consummation by it of
the transactions contemplated hereby or thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company, its board of directors or stockholders is
required. When executed and delivered by the Company, this Note and the Warrant
Agreement shall constitute valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application.

(c) The execution, delivery and performance of this Note, the Warrant Agreement
and the consummation by the Company of the transactions contemplated hereby or
thereby, do not and will not (i) violate or conflict with any provision of the
Company’s certificate of incorporation or bylaws, each as amended to date, or
any Subsidiary’s comparable charter documents, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries’ respective properties or assets are bound, or
(iii) result in a violation of any federal, state, local or foreign statute,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected. Neither the Company nor any of its
Subsidiaries is required under federal, state, foreign or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Note or Warrant
Agreement.

(d) The Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental agency or
any regulatory or self-regulatory agency or any other person in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Note or Warrant Agreement, in each case in accordance with the terms hereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.

(e) The common stock of the Company is registered pursuant to Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the Company has timely filed (within either the original deadline or an
extension period pursuant to Rule 12b-25 under the Exchange Act) all reports,
schedules, forms, statements and other documents required to be filed by it with
the Commission pursuant to the reporting requirements of the Exchange Act during
the past two years (all of the foregoing, including filings incorporated by
reference therein, being referred to herein as the “Commission Documents”). At
the times of their respective filings, the Form 10-K for the fiscal year ended
December 29, 2006 (the “Form 10-K”) and each subsequently filed Form 10-Q
(collectively, the “Form 10-Q”) complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such documents, and the Form 10-Q and Form 10-K did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in the
Commission Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission or other applicable rules and regulations with respect thereto.
Such consolidated financial statements have been prepared in accordance with
generally accepted accounting principles (“GAAP”) applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
consolidated financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the consolidated financial position of the Company and its Subsidiaries
as of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).

(f) Schedule 1 hereto sets forth each active Subsidiary of the Company, showing
the jurisdiction of its incorporation or organization and showing the percentage
of each person’s ownership of the outstanding stock or other interests of such
Subsidiary. For the purposes of this Agreement, “Subsidiary” shall mean any
corporation or other entity of which at least a majority of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other Subsidiaries. All of the outstanding shares of capital stock of
each Subsidiary have been duly authorized and validly issued, and are fully paid
and nonassessable. Except for the rights granted to the Noteholder under the
Promissory Note and Warrant, each dated March 21, 2007, there are no outstanding
preemptive, conversion or other rights, options, warrants or agreements granted
or issued by or binding upon any Subsidiary for the purchase or acquisition of
any shares of capital stock of any Subsidiary or any other securities
convertible into, exchangeable for or evidencing the rights to subscribe for any
shares of such capital stock. Neither the Company nor any Subsidiary is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence. Except as set forth in the Commission Documents, neither the Company
nor any Subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
Subsidiary.

(g) Except as set forth in the Commission Documents, since December 29, 2006,
the Company has not experienced or suffered any material adverse effect and the
Company is not aware of any fact or circumstance that is reasonably likely to
have a material adverse effect on the Company.

(h) Except as set forth in the Commission Documents, neither the Company nor any
of its Subsidiaries has incurred any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) other than those incurred in the ordinary course of the
Company’s or its Subsidiaries respective businesses.

(i) Since December 29, 2006, no event or circumstance has occurred or exists
with respect to the Company or its Subsidiaries or their respective businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed.

(j) Except as set forth in the Commission Documents, neither the Company nor any
Subsidiary has any outstanding secured or unsecured Indebtedness outside the
ordinary course of business. For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the ordinary course of
business) and (b) all guaranties, endorsements and other contingent obligations
in respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto).

(k) Except as set forth in the Commission Documents, there is no Indebtedness of
the Company that is senior to or ranks pari passu with this Note in right of
payment, whether with respect of payment of redemptions, interest, damages or
upon liquidation or dissolution or otherwise.

(l) Except as set forth in the Commission Documents, each of the Company and the
Subsidiaries has good and valid title to all of its real and personal property,
free and clear of any mortgages, pledges, charges, liens, security interests or
other encumbrances. Any leases of the Company and each of its Subsidiaries are
valid and subsisting and in full force and effect.

(m) The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor
any such Subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a material
adverse effect.

(n) Except as set forth in the Commission Documents, (i) there is no action,
suit, claim, investigation, arbitration, alternate dispute resolution proceeding
or other proceeding pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary which questions the validity of this Note
or any of the transactions contemplated hereby or any action taken or to be
taken pursuant hereto, (ii) there is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the knowledge of the Company, threatened against or involving the
Company, any Subsidiary or any of their respective properties or assets that
could after application of insurance proceeds have a material adverse effect on
the Company and its Subsidiaries taken as a whole and (iii) there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company or any
Subsidiary or any officers or directors of the Company or Subsidiary in their
capacities as such.

(o) Except as set forth in the Commission Documents, (i) the business of the
Company and the Subsidiaries has been and is presently being conducted in
compliance with all applicable federal, state and local governmental laws,
rules, regulations and ordinances and (ii) the Company and each of its
Subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it.

(p) Except as set forth in the Commission Documents, (i) the Company and each of
the Subsidiaries has accurately prepared and filed all federal, state and other
tax returns required by law to be filed by it, has paid or made provisions for
the payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the consolidated financial
statements of the Company and the Subsidiaries for all current taxes and other
charges to which the Company or any Subsidiary is subject and which are not
currently due and payable. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
of any nature whatsoever, whether pending or threatened against the Company or
any Subsidiary for any period, nor of any basis for any such assessment,
adjustment or contingency.

(q) The Company and the Subsidiaries own or possess adequate rights or licenses
to use all trademarks, service marks, and all applications and registrations
therefor, trade names, patents, patent rights, copyrights, original works of
authorship, inventions, licenses, approvals, governmental authorizations, trade
secrets and other intellectual property rights (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted. Except as
disclosed in the Commission Documents, none of the Company’s Intellectual
Property Rights have expired or terminated, or are expected to expire or
terminate, within two years from the date of this Agreement. The Company does
not have any knowledge of any material infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no material
claim, action or proceeding pending, or to the knowledge of the Company, being
threatened, against the Company or its Subsidiaries regarding its Intellectual
Property Rights. The Company is unaware of any material facts or circumstances
which might give rise to any of the foregoing infringements or claims, actions
or proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
material Intellectual Property Rights.

(r) Except as disclosed in the Commission Documents, the Company and each of its
Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all
capital securities of their respective Subsidiaries.

(s) There are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions between
(a) the Company, any Subsidiary or any of their respective customers or
suppliers on the one hand, and (b) on the other hand, any officer, employee,
consultant or director of the Company, or any of its Subsidiaries, or any person
owning at least 5% of the outstanding capital stock of the Company or any
Subsidiary or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder which, in each case, is required to be disclosed in the
Commission Documents or in the Company’s most recently filed definitive proxy
statement on Schedule 14A, that is not so disclosed in the Commission Documents
or in such proxy statement.

(t) The records and documents of the Company and its Subsidiaries accurately
reflect in all material respects the information relating to the business of the
Company and the Subsidiaries, the location and collection of their assets, and
the nature of all transactions giving rise to the obligations or accounts
receivable of the Company or any Subsidiary. Except as set forth in the
Commission Documents, the Company and each of its Subsidiaries maintain a system
of internal accounting controls sufficient, in the judgment of the Company’s
management, to provide reasonable assurance 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 conformity 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 actions are taken with respect to any
differences.

(u) The Company is in compliance with the applicable provisions of the
Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated
thereunder.

(v) The Company is not in violation of the listing requirements of the Nasdaq
Global Market and has no knowledge of any facts which would reasonably lead to
delisting or suspension of its common stock in the foreseeable future.

(w) The Warrant when issued and delivered will be duly and validly issued and
will be free of all liens and restrictions on transfer other than any
restrictions on transfer under the Securities Act of 1933, as amended (the
“Securities Act”).

(x) The Warrant Shares have been duly reserved for issuance by the Company in
sufficient number to cover the exercise of all of the Warrants. The issuance of
the Warrant Shares upon exercise of the Warrant has been duly authorized by the
Company and the Warrant Shares when delivered in accordance with the Warrant,
will be validly issued, fully paid and non-assessable, and free of all liens and
restrictions on transfer other than any restrictions on transfer under the
Securities Act.

(y) The offer, issuance, sale and delivery of the Warrant and Warrant Shares
will not under current laws and regulations require compliance with the
prospectus delivery or registration requirements of the Securities Act.

SECTION 10. Affirmative Covenants.

(a) The Company and each Subsidiary shall maintain its existence and authority
to conduct its business as presently contemplated to be conducted;

(b) The Company shall comply, and cause each Subsidiary to comply, with all
applicable laws, rules, regulations and orders applicable to the Company and
each Subsidiary;

(c) The Company shall keep and cause each Subsidiary to keep adequate records
and books of account, in which complete entries will be made in accordance with
GAAP consistently applied, reflecting all financial transactions of the Company
and its Subsidiaries, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made;

(d) The Company shall not enter into any agreement in which the terms of such
agreement would restrict or impair the right or ability to perform of the
Company or any Subsidiary under this Note;

(e) The Company and its Subsidiaries shall maintain insurance with responsible
companies in such amounts and against such risks as is currently carried by the
Company and its Subsidiaries;

(f) Company shall pay all applicable taxes as they come due;

(g) The Company shall maintain its listing on the Nasdaq Global Market and
neither the Company nor any of its Subsidiaries shall take any action which
would be reasonably expected to result in the delisting or suspension of the
Company’s common stock on the Nasdaq Global Market;

(h) The net proceeds from this Note shall be used by the Company to pay the cash
consideration, legal fees and associated costs of the acquisition of the
remaining shares of Canon Staar Co., Inc.;

(i) The Company shall timely file all reports required to be filed with the
Commission pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination; and

(j) If the Company shall at any time offer to sell Equity Securities to any
person other than the Noteholder, then the Company shall ensure that the
Noteholder will be permitted to participate (the “Participation Right”) on a pro
rata basis in any such offering until the later of (A) one year from the
execution of this Note or (B) such time when this Note is no longer outstanding.
For the purposes hereof, the Noteholder shall be able to include all shares and
warrants (assuming the exercise therof) owned in any pro rata calculation with
respect to this paragraph as of the closing date of any such offering. The term
“Equity Securities” shall mean (i) any shares of any class of capital stock of
the Company, and (ii) any debt or equity outstanding or similar instrument
convertible into or exercisable or exchangeable for, with or without
consideration, any shares of any class of capital stock of the Company.
Notwithstanding the foregoing, the Participation Right shall not apply to any
offering for the sole purpose of issuing Equity Securities: (i) to directors,
officers, employees, consultants, advisors or other service providers,
(ii) pursuant to the conversion or exercise of convertible or exercisable
securities outstanding on the date hereof, (iii) in connection with a bona fide
acquisition of or by the Company, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise, (iv) in connection with any
stock split, stock dividend, recapitalization, reclassification or similar
event, (v) to banks, financial institutions, leasing companies, or other credit
providers solely for the purposes of obtaining credit or lease financing or debt
securities or securitizations, and (vi) to strategic or commercial partners or
persons or entities with which the Company has business relationships.

If after the Company has delivered to the Noteholder a notice (the “Notice”)
stating its intention to offer Equity Securities, the number of Equity
Securities offered to the Noteholder to maintain its pro rata share of all
Equity Securities, and the price and terms relating thereto, Noteholder does not
elect to purchase all of Noteholder’s pro rata share of all Equity Securities by
written notice received by the Company within three (3) days of the Company
having delivered the Notice to the Noteholder, the Company shall be free to
offer the remaining portion of Noteholder’s pro rata share of all Equity
Securities to any other person or entity.

SECTION 11. Negative Covenants.

(a) Neither the Company nor any Subsidiary shall sell or otherwise dispose of
any of its properties, assets and rights including, without limitation, its
Intellectual Property Rights (a “Transfer”), to any person except for sales of
obsolete assets and sales to customers in the ordinary course of business or
with the prior written consent of the Noteholder. For the avoidance of doubt, a
Transfer does not include any license entered into by the Company with respect
to its Intellectual Property Rights other than any license arrangement that
makes an immediate disposition of all or substantially all of the economic value
of any material Intellectual Property Rights;

(b) Neither the Company nor any Subsidiary shall grant, create, incur, assume or
suffer to exist any lien, encumbrance, charge or other security interest on any
Intellectual Property Rights without the prior written consent of the
Noteholder;

(c) Neither the Company nor any Subsidiary will become a party to any
transaction with any person who is an affiliate of the Company or any
Subsidiary, except transactions in the ordinary course of business or upon fair
and reasonable terms that are fully disclosed to the Noteholder and are no less
favorable to the Company or such Subsidiary than would be obtained in a
comparable arm’s length transaction with a person not an affiliate of the
Company or such Subsidiary;

(d) Neither the Company nor any Subsidiary shall merge or consolidate with any
other person or entity, or sell or transfer all or substantially all of its
assets without prior written consent of the Noteholder;

(e) Neither the Company nor any of the Subsidiaries will liquidate or dissolve
or instruct or grant resolutions to any liquidator of the Company or any
Subsidiary; and

(f) The Company shall not incur, assume or guarantee any senior or pari passu
Indebtedness without the prior written consent of the Noteholder other than
Permitted Indebtedness.

SECTION 12. Transfers.

The Company may not transfer or assign this Note nor any right or obligation
hereunder to any person or entity without the prior written consent of the
Noteholder. The Noteholder may transfer or assign this Note without the prior
consent of the Company.

SECTION 13. Powers And Remedies Cumulative; Delay Or Omission Not Waiver Of
Event Of Default.

No right or remedy herein conferred upon or reserved to the Noteholder is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

No delay or omission of the Noteholder to exercise any right or power accruing
upon any Event of Default occurring and continuing as aforesaid shall impair any
such right or power or shall be construed to be a waiver of any Event of Default
or an acquiescence therein; and every power and remedy given by this Note or by
law may be exercised from time to time, and as often as shall be deemed
expedient, by the Noteholder.

SECTION 14. Modification.

This Note may be modified only with the written consent of both the Company and
the Noteholder.

SECTION 15. Attorneys Fees/Enforcement Costs.

(a) The Company will reimburse the Noteholder for reasonable legal fees and
expenses (i) in connection with the transactions contemplated hereby, including
without limitation the negotiation, documentation and execution of the
confidentiality agreement, term sheet, Note and Warrant not to exceed $20,000
and (ii) any amendments to any of the documents contemplated in (i) above, and

(b) In the event that this Note is collected by law or through attorneys at law,
or under advice therefrom, the Company agrees to pay all costs of collection,
including reasonable attorneys’ fees, whether or not suit is brought, and
whether incurred in connection with collection, trial, appeal, bankruptcy or
other creditors’ proceedings or otherwise.

SECTION 16. Indemnification

The Company agrees to indemnify and hold harmless the Noteholder (and their
respective directors, officers, managers, partners, members, shareholders,
affiliates, agents, successors and assigns, (an “Indemnified Party”) from and
against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys’ fees, charges and
disbursements) incurred by such Indemnified Party as a result of any inaccuracy
in or breach of the representations, warranties or covenants made by the Company
herein.

SECTION 17. Registration Rights.

The Company agrees to register the Noteholder’s Existing Shares with the
Commission on the same terms and conditions as set forth in the Warrant
Agreement.

SECTION 18. Miscellaneous.

(a) The parties hereto hereby waive presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of or any default under this Note, except as
specifically provided herein.

(b) Any provision of this Note which is illegal, invalid, prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such illegality, invalidity, prohibition or unenforceability
without invalidating or impairing the remaining provisions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.

(c) This Note shall bind the Company and its successors and permitted assigns.
The rights under and benefits of this Note shall inure to the Noteholder and its
successors and assigns.

(d) The Section headings herein are for convenience only and shall not affect
the construction hereof.

(e) All notices, requests, demands, consents, instructions or other
communications required or permitted hereunder shall in writing and faxed,
mailed or delivered to each party at the respective addresses of the parties, or
at such other address or facsimile number as the Company shall have furnished to
Noteholder in writing. All such notices and communications will be deemed
effectively given the earlier of (i) when received, (ii) when delivered
personally, (iii) one business day after being delivered by facsimile (with
receipt of appropriate confirmation), (iv) one business day after being
deposited with an overnight courier service of recognized standing or (v) on
receipt of confirmation of delivery.

(f) In the event any interest is paid on this Note, which is deemed to be in
excess of the then legal maximum rate, then that portion of the interest payment
representing an amount in excess of the then legal maximum rate shall be deemed
a payment of principal and applied against the principal of this Note.

THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY
LITIGATION ARISING HEREUNDER. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

BY ITS ACCEPTANCE OF THIS NOTE THE NOTEHOLDER AND THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE NOTEHOLDER OR THE
COMPANY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE NOTEHOLDER MAKING THE LOAN EVIDENCED HEREBY.

1

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
on the date indicated above.

STAAR SURGICAL COMPANY

By: /s/Deborah Andrews
Name: Deborah Andrews
Title: Vice President, Chief Financial
Officer

SCHEDULE 1

Active Subsidiaries

STAAR Surgical AG (Switzerland)
100% owned by STAAR Surgical Company

Domilens Vertrieb Fuer Medizinische Produkte GmbH (Germany)
100% owned by STAAR Surgical AG

Circuit Tree Medical, Inc. (U.S.)
80% owned by STAAR Surgical Company

Concept Vision Plc (Australia)
100% owned by STAAR Surgical Company

2