Document:

Exhibit
10.72

     

    Amended
and Restated

     

    Senior
Secured 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
SECURED PROMISSORY NOTE

     

    
      	
              $5,000,000

            	
              April 13, 2009

            

    

     

    This
Amended and Restated Senior Secured Promissory Note amends and restates and
replaces in its entirety the Senior Promissory Note originally issued December
14, 2007 (the “Original Promissory Note”) by STAAR Surgical Company, a
corporation formed and existing under the laws of the State of Delaware, (the
“Company”) in favor of Broadwood Partners, L.P.  (the “Noteholder”) in
the face amount of US$5,000,000 (the “Loan”).  This Amended and
Restated Senior Secured Promissory Note is not executed and delivered in payment
of the indebtedness evidenced by the Original Promissory Note, but to evidence
the amended terms of that indebtedness.  The making and delivery of
this Amended and Restated Note is not a novation.

     

    For value
received, and on the terms and subject to the conditions set forth herein, the
Company HEREBY PROMISES TO PAY to the Noteholder, on the Maturity Date (as
defined below) 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.

     

    
      
         

      

      
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    “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.

     

    
      
         

      

      
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    “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 Amended and Restated Senior Secured 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).

     

    “Security
Agreement” shall mean the Security Agreement in substantially the form attached
hereto as Exhibit A.

     

    “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.

     

    
      
         

      

      
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    “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 (i) upon thirty
(30) days prior written notice to the Noteholder for any prepayment to be made
on or before June 1, 2009 and (ii) upon seven (7) days prior written notice to
the Noteholder for any prepayment to be made after June 1, 2009, in each case,
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.

     

    
      
         

      

      
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    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;

     

    (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; or

     

    
      
         

      

      
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    (i)           the
Company defaults in the performance of or compliance with any term or covenant
contained in the Security Agreement, or the Security Agreement ceases to be in
full force and effect, or is declared to be null and void in whole or in part by
a court or other governmental or regulatory authority having jurisdiction or the
validity or enforceability thereof shall be contested by the Company or it
renounces any of the same or denies that it has any or further liability
thereunder.

     

    If an
Event of Default described in (g), (h) or (i) 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), (h) or (i) 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.

     

    
      
         

      

      
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    (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).

     

    
      
         

      

      
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    (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.

     

    
      
         

      

      
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    (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.

     

    
      
         

      

      
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    (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.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (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;

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    SECTION
18.      Security
Interest.  Payment of the principal of, and interest on, this
Note, and all other amounts due hereunder, is secured by a security interest in
all of the Company’s assets as provided in the Security Agreement.

     

    SECTION
19.       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.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    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

              

      

    

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    SCHEDULE
I

    

    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

    

    STAAR
Japan, Inc. (Japan)

    100%
owned by STAAR Surgical Company

    

    Circuit
Tree Medical, Inc. (U.S.)

    80% owned
by STAAR Surgical Company

    

    Concept
Vision Plc (Australia)

    100%
owned by STAAR Surgical Company

    
      
         

      

      
        18Exhibit
10.73

     

    SECURITY
AGREEMENT

    

    THIS SECURITY AGREEMENT (the
“Agreement”)
is made as of April 13, 2009 by and among STAAR Surgical Company, a
Delaware corporation (the “Company”),
and the secured party hereto and its respective endorsees, transferees and
assigns (the “Secured
Party”).

     

    WHEREAS, in connection with
the execution and delivery of that certain Amended and Restated Senior Secured
Promissory Note dated April 13, 2009 (the “Senior Secured
Note”) made by the Company in favor of the Secured Party, the Company
agreed to execute and deliver this Agreement.

     

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

     

    1.           Certain
Definitions.  As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1.  Terms used but
not otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as “general intangibles” and “proceeds”) shall have the respective
meanings given such terms in Article 9 of the UCC.  All capitalized
terms not otherwise defined herein shall have the meaning ascribed to them in
the Senior Secured Note.

     

    a.           “Collateral”
means the collateral in which the Secured Party is granted a security interest
by this Agreement and which shall include the following, whether presently owned
or existing or hereafter acquired or coming into existence, and all additions
and accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith:

     

    i.           All
goods, including, without limitation, all machinery, equipment, computers, motor
vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items, owned by the Company and used in connection with
the Company’s businesses and all improvements thereto; and

     

    ii.          All
inventory of the Company; and

     

    iii.         All
of the Company’s contract rights and general intangibles, including, without
limitation, all partnership interests, stock or other securities, licenses,
distribution and other agreements, computer software development rights,
employee non-compete, non-disclosure and assignment of rights agreements,
leases, franchises, customer lists, quality control procedures, grants and
rights, goodwill, deposit accounts, and income tax refunds; and

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

    

    

     

    iv.          All
receivables of the Company including, without limitation, all insurance
proceeds, and rights to refunds or indemnification whatsoever owing, together
with all instruments, all documents of title representing any of the foregoing,
all rights in any merchandising, goods, equipment, motor vehicles and trucks
which any of the same may represent, and all right, title, security and
guaranties with respect to each receivable, including any right of stoppage in
transit; and

     

    v.           All
of the Company’s Intellectual Property; and

     

    vi.          All
of Company’s equity interest in its Subsidiaries (as defined in the Senior
Secured Note) and certificates evidencing such equity interest, and any shares
of stock (including, without limitation, a distribution in connection with any
reclassification, increase or reduction of capital or in connection with any
reorganization), or any option or right to acquire shares of stock, in
substitution of, or in exchange for, any of such equity interest, or any stock
dividend or split with respect to such equity interest, and any distributions,
whether dividend or liquidating or otherwise, of any cash or property with
respect to such equity interest; and

     

    vii.         All
of the Company’s documents, instruments and chattel paper, files, records, books
of account, business papers, computer programs and the products and proceeds of
all of the foregoing Collateral set forth in paragraphs (i) through (vi),
inclusive, above.

     

    Notwithstanding
the foregoing, except for the Key Collateral, “Collateral” shall exclude any of
the Company’s right, title and interest in property to the extent that, under applicable law or the terms or provisions of a written agreement,
document or instrument by which the Company is bound as of the date hereof, the Company is expressly
prohibited from granting a security interest therein or such law or agreement, document or instrument provides for
the involuntary forfeiture of the property in the event a security interest is
granted therein without the consent of the appropriate governmental
authority or contract counterparty, or at all.

     

    b.           “Copyrights”
shall mean all of the following in which the Company now holds or hereafter
acquires any interest (i) all copyrights, whether registered or unregistered,
held pursuant to the laws of the United States, any State thereof or any other
country; (ii) registrations, applications and recordings in the United States
Copyright Office or in any similar office or agency of the United States, any
State thereof or any other country; (iii) any continuations, renewals or
extensions thereof; (iv) any registrations to be issued in any pending
applications; (v) prior versions of works covered by copyright and all works
based upon, derived from or incorporating such works; (vi) income, royalties,
damages, claims and payments now and hereafter due and/or payable with respect
to copyrights, including, without limitation, damages, claims and recoveries for
past, present or future infringement; (vii) rights to sue for past, present and
future infringements of any copyright; (viii) any rights in any material which
is copyrightable or which is protected by common law, United States copyright
laws or similar laws, or any law of any State, and (ix) any other rights
corresponding to any of the foregoing rights throughout the
world.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    c.           “Copyright
License” shall mean any agreement, written or oral, in which the Company
now holds or hereafter acquires any interest, granting any right in or to any
Copyright or Copyright registration (whether the Company is the licensee or the
licensor thereunder) including, without limitation, licenses pursuant to which
the Company has obtained the exclusive right to use a copyright owned by a third
party.

     

    d.           “Intellectual
Property” shall mean, collectively, the Software Intellectual Property,
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses and Trade Secrets.

     

    e.           “Key
Collateral” shall mean all of the Company’s equity interest in the
Subsidiaries identified on Schedule A, attached hereto,
and those certain Patents that the Company has represented to the Secured Party
are key to the business of the Company.

     

    f.           “Obligations”
means all of the Company’s obligations under this Agreement and the Senior
Secured Note, in each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later decreased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from the Secured Party as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted, extended
or modified from time to time.

     

    g.           “Patents”
shall mean all of the following in which the Company now holds or hereafter
acquires any interest: (i) all patents of the United States or any other
country, all registrations and recordings thereof and all applications for
patents of the United States or any other country, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country; (ii) all reissues, divisions,
continuations, renewals, continuations in part or extensions thereof; (iii) all
patents to issue in any such applications; (iv) income, royalties, damages,
claims and payments now and hereafter due and/or payable with respect to
patents, including, without limitation, damages, claims and recoveries for past,
present or future infringement; and (v) rights to sue for past, present and
future infringements of any patent.

     

    h.           “Patent
License” shall mean any agreement, whether written or oral, in which the
Company now holds or hereafter acquires any interest, granting any right with
respect to any Patent (whether the Company is the licensee or the licensor
thereunder).

     

    i.           “Software
Intellectual Property” shall mean (i) all software programs (including,
without limitation, all source code, object code and all related applications
and data files), whether now owned, upgraded, enhanced, licensed or leased or
hereafter acquired by the Company; (ii) all computers and electronic data
processing hardware and firmware associated therewith; (iii) all documentation
(including, without limitation, flow charts, logic diagrams, manuals, guides and
specifications) with respect to such software, hardware and firmware described
in the preceding subclauses (i) and (ii); and (iv) all rights with respect to
all of the foregoing, including, without limitation, any and all upgrades,
modifications, copyrights, licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications and substitutions, replacements,
additions, or model conversions of any of the foregoing.

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

     

    j.           “Trademarks”
shall mean any of the following in which the Company now holds or hereafter
acquires any interest: (i) any trademarks, tradenames, corporate names, company
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature, now existing
or hereafter adopted or acquired, all registrations and recordings thereof and
any applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country (collectively, the “Marks”);
(ii) any reissues, extensions or renewals thereof, (iii) the goodwill of the
business symbolized by or associated with the Marks, (iv) income, royalties,
damages, claims and payments now and hereafter due and/or payable with respect
to the Marks, including, without limitation, damages, claims and recoveries for
past, present or future infringement and (v) rights to sue for past, present and
future infringements of the Marks.

     

    k.           “Trademark
License” shall mean any agreement, written or oral, in which the Company
now holds or hereafter acquires any interest, granting any right in and to any
Trademark or Trademark registration (whether the Company is the licensee or the
licensor thereunder).

     

    l.           “Trade
Secrets” shall mean common law and statutory trade secrets and all other
confidential or proprietary or useful information and all know-how obtained by
or used in or contemplated at any time for use in the business of the Company
(all of the foregoing being collectively called a “Trade
Secret”), whether or not such Trade Secret has been reduced to a writing
or other tangible form, including, without limitation, all documents and things
embodying, incorporating or referring in any way to such Trade Secret, all Trade
Secret Licenses, and including, without limitation, the right to sue for and to
enjoin and to collect damages for the actual or threatened misappropriation of
any Trade Secret and for the breach or enforcement of any such Trade Secret
license.

     

    m.           “UCC” means
the Uniform Commercial Code, as the same may, from time to time, be in effect in
the State of New York; provided, however, in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Secured Party’s security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection of
priority and for purposes of definitions related to such
provisions.

     

    2.           Grant of
Security Interest.  As a further inducement for the Secured
Party to accept the Senior Secured Note and to secure the complete and timely
payment, performance and discharge in full, as the case may be, of all of the
Obligations, the Company hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Party, a continuing senior security
interest in, a continuing lien upon, all of the Company’s right, title and
interest of whatsoever kind and nature in and to the Collateral (the “Security
Interest”).

    
      
         

      

      
        - 4
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    3.           Representations,
Warranties, Covenants and Agreements of the Company.  Except as
set forth on Schedule B
attached hereto, the Company represents and warrants to, and covenants and
agrees with, the Secured Party as follows:

     

    a.           The
Company has the requisite corporate power and authority to enter into this
Agreement and otherwise carry out its obligations thereunder.  The
execution, delivery and performance by the Company of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of the Company and no further action is required by the
Company.  This Agreement constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditor’s rights
generally.

     

    b.           The
Company represents and warrants that it has no place of business or offices
where its respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places where the
Collateral is stored or located.

     

    c.           The
Company is the sole owner of the Collateral (except for non-exclusive licenses
granted by the Company in the ordinary course of business), free and clear of
any liens, security interests, encumbrances, rights or claims, and is fully
authorized to grant the Security Interest in and to pledge the
Collateral.  There is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than
those that have been filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral.

     

    d.           No
part of the Collateral or rights in connection therewith has been judged, by any
governmental body with proper jurisdiction, to be invalid or
unenforceable.  No written claim has been received alleging the
Company’s use of any Collateral violates the rights of any third party. There
has been no adverse decision to the Company’s claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Company’s
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or threatened before any court,
judicial body, administrative or regulatory agency, arbitrator or other
governmental authority.

     

    e.           The
Company shall at all times maintain its books of account and records relating to
the Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule
B attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Party at least thirty
(30) days prior to such relocation (i) written notice of such relocation and the
new location thereof (which must be within the United States) and
(ii) evidence that appropriate financing statements and other necessary
documents have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Secured Party valid,
perfected and continuing first priority liens in the Collateral, except as
otherwise permitted hereby.

    
      
         

      

      
        - 5
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    f.           This
Agreement creates in favor of the Secured Party a valid security interest in the
Collateral securing the payment and performance of the Obligations and, upon
making the filings described in the immediately following sentence, a perfected
first priority security interest in such Collateral and, to the extent that it
can be perfected through such filings, the Intellectual
Property.  Except for the filing of financing statements on Form-1
under the UCC with the jurisdiction indicated on Schedule B, attached hereto,
no authorization or approval of or filing with or notice to any governmental
authority or regulatory body is required either (i) for the grant by the Company
of, or the effectiveness of, the Security Interest granted hereby or for the
execution, delivery and performance of this Agreement by the Company or (ii) for
the perfection of its rights and remedies hereunder.

     

    g.           On
or after the date hereof, the Secured Party shall be authorized to file or cause
to be filed one or more executed UCC financing statements on Form-1 with respect
to the Security Interest with the appropriate jurisdictions.  Upon
request of the Secured Party, the Company shall execute and deliver any and all
agreements, instruments, documents, and papers as the Secured Party may
reasonably request to evidence the Secured Party’ security interest in the
Intellectual Property and the goodwill and general intangibles of the Company
relating thereto or represented thereby.

     

    h.           The
execution, delivery and performance of this Agreement does not conflict with or
cause a material breach or default, or an event that with or without the passage
of time or notice, shall constitute a material breach or default, under any
agreement to which the Company is a party or by which the Company is
bound.  No consent (including, without limitation, from stockholders
or creditors of the Company) is required for the Company to enter into and
perform its obligations hereunder.

     

    i.           The
Company shall at all times safeguard, protect and maintain the Collateral for
the account of the Secured Party until this Agreement and the Security Interest
hereunder shall terminate pursuant to Section 11. Without limiting the
generality of the foregoing, the Company shall pay all governmental fees and
taxes necessary to maintain the Collateral and the Security Interest
hereunder.

     

    The
Company will not transfer, sell or otherwise dispose of any of the Key
Collateral without the prior written consent of the Secured Party.

     

    j.           The
Company shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Party promptly, in sufficient detail, of any substantial change in the
Collateral other than in the ordinary course of business, and of the occurrence
of any event which would have a material adverse effect on the value of the
Collateral or on the Secured Party’ security interest therein.

     

    k.           The
Company shall promptly execute and deliver to the Secured Party such further
assignments, security agreements, financing statements or other instruments,
documents, certificates and assurances and take such further action as the
Secured Party may from time to time request and may in its sole discretion deem
necessary to perfect, protect or enforce the Security Interest.

    
      
         

      

      
        - 6
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    l.           The
Company shall permit the Secured Party and its representatives and agents to
inspect the Collateral during normal business hours upon reasonable advance
notice and to make copies of records pertaining to the Collateral as may be
reasonably requested by the Secured Party from time to time.

     

    m.         The
Company will take commercially reasonable steps to diligently pursue and seek to
preserve, enforce and collect any rights, claims, causes of action and accounts
receivable in respect of the Collateral.

     

    n.           The
Company shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by the
Company that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Party hereunder.

     

    o.           All
information supplied to the Secured Party by or on behalf of the Company with
respect to the Collateral is accurate and complete in all material respects as
of the date hereof, and all information supplied after the date hereof to the
Secured Party shall be accurate in all material respects.

     

    p.           With
respect to any of the Company’s Intellectual Property:

     

    i.           such
Intellectual Property is subsisting and the rights in connection with such
Intellectual Property have not been adjudged invalid or unenforceable, in whole
or in part;

     

    ii.          the
rights in connection with such Intellectual Property are valid and
enforceable;

     

    iii.         no
claim has been made that the Company’s use of such Intellectual Property
infringes on the asserted rights of any third party;

     

    iv.          the
Company is the exclusive owner of the entire and unencumbered right, title and
interest in and to the Key Collateral; and

     

    v.           the
Company has performed and will continue to perform all acts and has paid all
required fees and taxes to maintain its rights with respect to each and every
item of Intellectual Property in full force and effect throughout the United
States, as applicable.

     

    q.           Except
with respect to any Patent, Trademark or Copyright that the Company shall
determine, on a commercially reasonable basis, is not of sufficient economic
value to the Company (which determination may not be made with respect to any
Key Collateral), or except as agreed in advance by the Secured Party, the
Company shall:

     

    
      
         

      

      
        - 7
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    i.           maintain
each Trademark and Copyright in full force free from any claim of abandonment
for non-use, maintain as in the past the quality of products and services
offered under such Trademark or Copyright; employ such Trademark or Copyright
with the appropriate notice of registration; not adopt or use any mark which is
confusingly similar or a colorable imitation of such Trademark or Copyright
unless the Secured Party shall obtain a perfected security interest in such mark
pursuant to this Agreement; and not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any Trademark or
Copyright may become invalidated;

     

    ii.         
 not do any act, or omit to do any act, whereby any Patent may become
abandoned; and

     

    iii.         notify
the Secured Party immediately if it knows, or has reason to know, that any
application or registration relating to any Patent, Trademark or Copyright may
become abandoned, or of any material adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any court or tribunal in the United
States) regarding its ownership of any Patent, Trademark or Copyright or its
right to register the same or to keep and maintain the same.

     

    r.           Whenever
the Company, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office or the
United States Copyright Office or acquire rights to any new Patent, Trademark or
Copyright whether or not registered, report such filing to the Secured Party
within five (5) business days after the last day of the fiscal quarter in which
such filing occurs.

     

    s.           The
Company shall take all commercially reasonable steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office or the United States Copyright Office, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the Patents, Trademarks and Copyrights, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.

     

    t.           In
the event that any Patent, Trademark or Copyright included in the Intellectual
Property is infringed, misappropriated or diluted by a third party, the Company
shall promptly notify the Secured Party after it learns thereof and shall,
unless it shall determine that such Patent, Trademark or Copyright is not of
sufficient economic value to it, which determination it shall promptly report to
the Secured Party: promptly sue for infringement, misappropriation or dilution,
to seek injunctive relief where appropriate and to recover any and all damages
for such infringement, misappropriation or dilution, or take such other actions
as it shall reasonably deem appropriate under the circumstances to protect such
Patent, Trademark or Copyright.  If the Company lacks the financial
resources to comply with this Section 3(t), the Company shall so notify the
Secured Party and shall cooperate fully with any enforcement action undertaken
by the Secured Party on behalf of the Company.

    
      
         

      

      
        - 8
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    u.           None
of such Patents, Trademarks, Copyrights and Trade Secrets is the subject of any
licensing or franchise agreement as of the date of this Agreement.  No
holding, decision or judgment has been rendered by any governmental authority
which would limit, cancel or question the validity of any License, Patent,
Trademark, Copyright and Trade Secrets.  No action or proceeding is
pending (i) seeking to limit, cancel or question the validity of any License,
Patent, Trademark, Copyright or Trade Secret, or (ii) which, if adversely
determined, would have a material adverse effect on the value of any License,
Patent, Trademark, Copyright or Trade Secret.  The Company has used
and will continue to use for the duration of this Agreement, proper statutory
notice in connection with its use of the Patents, Trademarks and Copyrights and
consistent standards of quality in products leased or sold under the Patents,
Trademarks and Copyrights.

     

    4.           Defaults.  The
following events shall be “Events of
Default”:

     

    a.           The
occurrence of an Event of Default as defined in the Senior Secured
Note;

     

    b.           If
any representation or warranty of the Company in this Agreement proves to have
been incorrect in any material respect when made; and

     

    c.           The
failure by the Company to observe or perform any of its obligations hereunder
for ten (10) business days after receipt by the Company of notice of such
failure from the Secured Party.

     

    5.           Rights
and Remedies Upon Default.  After the occurrence and during the
continuance of any Event of Default, the Secured Party shall have the right to
exercise all of the remedies conferred to the Secured Party hereunder and under
the Senior Secured Note, and the Secured Party shall have all the rights and
remedies of a secured party under the UCC and/or any other applicable law
(including the Uniform Commercial Code of any jurisdiction in which any
Collateral is then subject).  Without limitation, the Secured Party
shall have the following rights and powers:

     

    a.           to
have a third party custodian take possession of the Collateral and, for that
purpose, enter, with the aid and assistance of any person, any premises where
the Collateral, or any part thereof, is or may be placed and remove the same so
long as the same can be accomplished without breach of the peace and otherwise
in compliance with applicable law, and the Company shall assemble the Collateral
and make it available to the Secured Party for the benefit of the Secured Party
at places which the Secured Party shall reasonably select, whether at the
Company’s premises or elsewhere, and make available to the Secured Party,
without rent, all of the Company’s respective premises and facilities for the
purpose of the Secured Party taking possession of, removing or putting the
Collateral in saleable or disposable form; and

     

    b.           to
operate the business of the Company using the Collateral and shall have the
right to assign, sell, lease or otherwise dispose of and deliver all or any part
of the Collateral, at public or private sale or otherwise, either with or
without special conditions or stipulations, for cash or on credit or for future
delivery, in such parcel or parcels and at such time or times and at such place
or places, and upon such terms and conditions as are commercially
reasonable.  Upon each such sale, lease, assignment or other transfer
of Collateral, the Secured Party may, unless prohibited by applicable law,
purchase all or any part of the Collateral being sold, free from and discharged
of all trusts, claims, right of redemption and equities of the Company, which
are hereby waived and released.

     

    
      
         

      

      
        - 9
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    6.           Applications
of Proceeds.  The proceeds of any such sale, lease or other
disposition of the Collateral hereunder shall be applied first, to the expenses
of retaking, holding, storing, processing and preparing for sale, selling, and
the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable
attorneys’ fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Secured Party
shall pay to the Company any surplus proceeds.  If, upon the sale,
license or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which the Secured Party are legally entitled,
then the Company will be liable for the deficiency, together with interest
thereon, plus interest at the Default Rate as set forth in the Senior Secured
Note, and the reasonable fees of any attorneys employed by the Secured Party to
collect such deficiency.  To the extent permitted by applicable law,
the Company waives all claims, damages and demands against the Secured Party
arising out of the repossession, removal, retention or sale of the
Collateral.

     

    7.           Costs and
Expenses. The Company agrees
to pay all out-of-pocket fees, costs and expenses incurred in connection with
any filing required hereunder, including without limitation, any financing
statements, continuation statements, partial releases and/or termination
statements related thereto or any expenses of any searches reasonably required
by the Secured Party.  The Company shall also pay all other claims and
charges which would reasonably be expected to prejudice, imperil or otherwise
affect the Collateral or the Security Interest therein.  Upon the
occurrence and continuance of an Event of Default, the Company shall upon
demand, pay to the Secured Party the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Secured Party incurs in connection with (a) the
enforcement of this Agreement, (b) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, or (c)
the exercise or enforcement of any of the rights of the Secured Party under the
Senior Secured Note, including, without limitation, costs of
collection.  Until so paid, any fees payable hereunder shall be added
to the principal amount of the Senior Secured Note and shall bear interest as
set forth in the Senior Secured Note.

     

    8.           Indemnification.  The
Company agrees to indemnify and hold harmless the Secured Party and its
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.

    
      
         

      

      
        - 10
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    9.           Responsibility
for Collateral.  The Company assumes all liabilities and
responsibility in connection with all Collateral, and the obligations of the
Company hereunder or under the Senior Secured Note shall in no way be affected
or diminished by reason of the loss, destruction, damage or theft of any of the
Collateral or its unavailability for any reason.

     

    10.           Security
Interest Absolute.  All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
regardless of: (a) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the Senior
Secured Note or any other agreement entered into in connection with the
foregoing; (b) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guaranty, or any other security, for all
or any of the Obligations; or (c) any action by the Secured Party to
obtain, adjust, settle and cancel in its sole discretion any insurance claims or
matters made or arising in connection with the Collateral.  The
Company expressly waives presentment, protest and notice of
protest.  In the event that at any time any transfer of any Collateral
or any payment received by the Secured Party hereunder shall be deemed by final
order of a court of competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of the United
States, or shall be deemed to be otherwise due to any party other than the
Secured Party, then, in any such event, the Company’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or
satisfied by any prior payment thereof and/or cancellation of this Agreement,
but shall remain a valid and binding obligation enforceable in accordance with
the terms and provisions hereof.  The Company waives all right to
require the Secured Party to proceed against any other person or to apply any
Collateral which the Secured Party may hold at any time, or to marshal assets,
or to pursue any other remedy.

     

    11.           Term of
Agreement.  This Agreement and the Security Interest shall
terminate on the date on which all payments under the Senior Secured Note have
been indefeasibly made in full and all other Obligations have been indefeasibly
paid.

     

    12.           Power of
Attorney; Further Assurances.

     

    a.           The
Company authorizes the Secured Party, and does hereby make, constitute and
appoint it, and its respective officers, agents, successors or assigns with full
power of substitution, as the Company’s true and lawful attorney-in-fact, with
power, in its own name or in the name of the Company, to, after the occurrence
and during the continuance of an Event of Default, (i) endorse any notes,
checks, drafts, money orders, or other instruments of payment (including,
without limitation, payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the
Secured Party; (ii) to sign and endorse any UCC financing statement or any
invoice, freight or express bill, bill of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to pay
or discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and sue for monies due in respect of
the Collateral; and (v) generally, to do, at the option of the Secured
Party, and at the Company’s expense, at any time, or from time to time, all acts
and things which the Secured Party deems necessary to protect, preserve and
realize upon the Collateral and the Security Interest granted therein in order
to effect the intent of this Agreement and the Senior Secured Note, all as fully
and effectually as the Company might or could do; and the Company hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof.  This power of attorney is coupled with an interest and shall
be irrevocable for the term of this Agreement and thereafter as long as any of
the Obligations shall be outstanding.

    
      
         

      

      
        - 11
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    b.           On
a continuing basis, the Company will cooperate in good faith with the Secured
Party to make, execute, acknowledge, deliver, file and record, as the case may
be, in the proper filing and recording places in any applicable jurisdiction,
all such instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Secured Party, to
perfect the Security Interest granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and confirming to the
Secured Party the grant or perfection of a security interest in all the
Collateral.

     

    13.           Notices.  All
notices, requests, demands and other communications hereunder shall be in
writing, with copies to all the other parties hereto, and shall be deemed to
have been duly given (i) if delivered by hand, (ii) upon receipt of proof
of sending thereof if sent by facsimile, (iii) upon receipt if sent by
nationally recognized overnight delivery service (receipt requested), the next
business day, or (iv) if mailed by first-class registered or certified
mail, return receipt requested, postage prepaid, four days after posting in the
U.S. mails, in each case if delivered to the following addresses:
(A)  if to the Company, to the address set forth immediately below the
Company’s name on the signature pages hereto; and (B) if to the Investor, to the
address set forth immediately below the Investor’s name on the signature pages
hereto.  Each party shall provide notice to all of the other parties
of any change in address.

     

    14.           Other
Security.  To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party’ rights and
remedies hereunder.

     

    15.           Miscellaneous.

     

    a.           No
course of dealing between the Company and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under the Senior Secured Note shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege.

     

    b.           All
of the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Senior Secured Note or by any other
agreements, instruments or documents or by law shall be cumulative and may be
exercised singly or concurrently.

    
      
         

      

      
        - 12
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    c.           This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto, including the prior
Agreement.  Any term of this Agreement may be terminated or amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
written consent of the Company and the holder of the Senior Secured
Note.  Any termination, amendment or waiver effected in accordance
with this paragraph shall be binding upon each future holder of the Senior
Secured Note, its successors and assigns, and the Company.

     

    d.           In
the event that any provision of this Agreement is held to be invalid, prohibited
or unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable.  If, notwithstanding the foregoing, any provision of
this Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.

     

    e.           No
waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
or right, whether of the same or similar nature or otherwise.

     

    f.           This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.

     

    g.           Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.

     

    h.           The
validity and interpretation of this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New
York.  Each of the parties hereto hereby consents to the exclusive
jurisdiction and venue of the Courts of the State of New York, located in the
City and County of New York and the United States District Court, Southern
District, for the State of New York with respect to any matter relating to this
Agreement and performance of the parties’ obligations hereunder, the documents
and instruments executed and delivered concurrently herewith or pursuant hereto
and performance of the parties’ obligations thereunder and each of the parties
hereto hereby consents to the personal jurisdiction of such courts and shall
subject itself to such personal jurisdiction.  Any action, suit or
proceeding relating to such matters shall be commenced, pursued, defended and
resolved only in such courts and any appropriate appellate court having
jurisdiction to hear an appeal from any judgment entered in such
courts.  The parties irrevocably waive the defense of an inconvenient
forum to the maintenance of such suit or proceeding.  Service of
process in any action, suit or proceeding relating to such matters may be made
and served within or outside the State of New York by registered or certified
mail to the parties and their representatives at their respective addresses
specified in Section 13 hereof, provided that a reasonable time, not less than
thirty (30) days, is allowed for response.  Service of process may
also be made in such other manner as may be permissible under the applicable
court rules.

    
      
         

      

      
        - 13
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    i.           Each
party hereto hereby agrees to waive its respective rights to a jury trial of any
claim or cause of action based upon or arising out of this
Agreement.  The scope of this waiver is intended to be all
encompassing of any disputes that may be filed in any court and that relate to
the subject mater of this Agreement, including without limitation contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims.  Each party hereto acknowledges that this waiver is
a material inducement for each party to enter into a business relationship, that
each party has relied on this waiver in entering into this Agreement and that
each party will continue to rely on this waiver in their related future
dealings.  Each party further warrants and represents that it has
reviewed this waiver with its legal counsel, and that such party has knowingly
and voluntarily waives its rights to a jury trial following such
consultation.  This waiver is irrevocable, meaning that,
notwithstanding anything herein to the contrary, it may not be modified either
orally or in writing, and this waiver shall apply to any subsequent amendments,
renewals and supplements or modifications to this agreement.  In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.

     

    16.           Counterparts.  This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.

     

    17.           Facsimile
Signature.  In the event that any signature is delivered by
facsimile transmission, PDF, electronic signature or other similar electronic
means, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such signature page were an original thereof.

     

    [remainder of page intentionally left
blank]

    
      
         

      

      
        - 14
-

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have caused this Security Agreement to be duly executed on the
day and year first above written.

     

    COMPANY:

     

    STAAR
SURGICAL COMPANY

    

    

    
      
        	
                By:

              	
                /s/ Deborah Andrews

              
	 
      	 
      
	
                Name:

              	
                Deborah
      Andrews

              
	 
      	 
      
	
                Title:

              	
                Vice
      President and Chief Financial
Officer

              

      

    

    

    

    
      	
              Notices:

            	
              STAAR
      Surgical Company

            

    

    1911
Walker Avenue

    Monrovia, California 91016 

    Attn:
Charles Kaufman, Esq.

    General
Counsel

    Telephone:
(626) 303-7902 

    Facsimile:
(626) 358-3049

    

    with
copies to (which shall not constitute notice):

    Morrison
& Foerster LLP

    555 West
Fifth Street, Suite 3500

    Los
Angeles, California 90013

    Attn:
Kathryn I. Johnstone, Esq.

    Telephone:
(213) 892-5662

    Facsimile:
(213) 892-5454

    
      
         

      

      
        - 15
-

        
          

        

      

      
         

      

    

    ADDITIONAL
SIGNATURE PAGE TO SECURITY AGREEMENT

    

    SECURED
PARTY:

    

    BROADWOOD
PARTNERS, L.P.

    

    
      
        
          	
                  By:

                	
                  /s/Neal
      C. Bradsher

                
	 
      	 
      
	
                  Name:

                	
                  Neal
      C. Bradsher

                
	 
      	 
      
	
                  Title:

                	
                  President of Broadwood Capital, Inc., the General Partner

                

        

         

      

    

    
      	
              Notices:

            	
              Broadwood
      Partners, L.P.,

            

    

    c/o
Broadwood Capital, Inc.

    724 Fifth
Avenue, 9th Floor

    New York,
NY 10019

    Attn:
Neal C. Bradsher

    Telephone:
(212) 508-5735

    Facsimile:
(212) 508-5756

    

    with
copies to (which shall not constitute notice):

    Anslow
& Jaclin LLP

    195 Route
9 South, 2nd Floor

    Manalapan,
NJ 07726

    Attn:
Joseph M. Lucosky, Esq.

    Telephone:
(732) 409 1212

    Facsimile:
(732) 577 1188

    
      
         

      

      
        - 16
-

        
          

        

      

      
         

      

    

    Schedules
and exhibits have been omitted, and will be provided to the Commission upon
request.  

    
      
         

      

      
        - 17
-

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