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SETTLEMENT AGREEMENT AND MUTUAL RELEASE    
  

    This Settlement Agreement and Mutual Release ("Agreement") is entered into effective December 4, 2000 (the "Effective Date") by and between STAAR
Surgical Company, a Delaware corporation (the "Company") and William C. Huddleston, an individual ("Huddleston"), all of whom are sometimes hereinafter referred to collectively as the "Parties" or
individually as a "Party", with reference to the following facts. 

 
 

RECITALS    
  

    WHEREAS, the Company and Huddleston wish to memorialize their agreement regarding (i) (A) the
termination of Huddleston's employment with the Company and (B) the termination of any consulting arrangement Huddleston has or may have with the Company, and (ii) the severance benefits
that are to be transferred or paid to Huddleston as a result of the termination of his employment and any consulting arrangement with the Company; and 

    WHEREAS, the Company and Huddleston wish to memorialize their agreement regarding Huddleston's waiver of all rights and claims which he
may have against the Company, if any. 

    NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Huddleston agree as follows: 

 
 

AGREEMENT    
  

    1.  Incorporation of Recitals.  The recitals to this Agreement are an integral part of this Agreement and
are hereby incorporated as a part of this Agreement as if set forth in it. 

    2.  Termination of Employment Agreement and Consulting Arrangements.  Upon execution of this Agreement,
the Employment Agreement entered into by and between the Company and Huddleston on October 1, 1999, including any and all amendments to it, and any and all consulting arrangements between the
Company and Huddleston, shall be deemed to have been terminated and to be of no further force and effect as of the Effective Date. 

    3.  Obligations of the Company.  In exchange for Huddleston's release of the Company from any past,
present, and future obligations (including obligations for the performance of consulting services by Huddleston), whether monetary or otherwise, owed by the Company to Huddleston, the Company shall
pay to Huddleston or provide for Huddleston the following: 

    (a)  Cash Payment.  The Company shall pay to Huddleston, or to Huddleston's wholly-owned personal service
corporation, the sum of five hundred forty thousand dollars ($540,000), which shall be transferred electronically to Huddleston, pursuant to his written instructions, on the following dates: on
January 2, 2001, the sum of four hundred forty thousand dollars ($440,000), and on April 2, 2001, the sum of one hundred thousand dollars ($100,000). 

    (b)  Forgiveness of Loans.  The Company shall forgive the payment of any and all loans made to Huddleston
by the Company if there is a Change in Control that occurs prior to December 31, 2002. For purposes of this Agreement, a "Change in Control" shall be defined as any of the following
transactions: (i) the sale by the Company of substantially all of its business or assets to a third party, or (ii) the acquisition of the Company's capital stock by a third party in
connection with the transfer of a controlling interest of the Company's capital stock to such party, or (iii) the merger or consolidation of the Company with another corporation as part of a
transfer of a controlling interest of the Company's capital stock to a third party. A "controlling interest of the Company's capital stock" shall be defined as a transfer or acquisition by a third
party of at least thirty percent (30%) of the Company's capital stock in one or a series of transactions. A 

1

 

"third party" shall not include any employee benefit plan maintained by the Company or any corporation or entity in which the Company holds fifty percent (50%) of more of the voting securities. 

    (c)  Acceleration and Vesting of Stock Options.  Subject to regulatory considerations, and irrespective
of the terms of any agreement memorializing them, the vesting conditions imposed on any stock options subject to vesting shall be accelerated and shall vest on the Effective Date. Unless a greater
period of time is permitted in any agreement memorializing a stock option (in which case the stock option agreement will govern), Huddleston shall be entitled to exercise said stock options until
December 31,
2001, provided, however, that the remaining terms and conditions of the agreements governing the stock options shall remain in full force and effect and
shall be binding upon Huddleston. 

    (d)  Transfer of Painting and Equipment.  The Company will transfer to Huddleston the painting of the
Bern Bell Tower. The Company acknowledges that Huddleston has possession of a lap top computer and a fax machine belonging to the Company. By executing this Agreement, the Company transfers the lap
top computer and the fax machine to Huddleston. 

    (e)  Indemnity.  So long as Huddleston's actions were taken in good faith and in furtherance of the
Company's business and within the scope of his duties and authority, the Company shall defend (with counsel of the Company's choosing at the Company's expense), indemnify and hold Huddleston harmless
from any and all claims, losses and expenses sustained by Huddleston in connection with any and all claims by stockholders or other third parties which are based upon or relate to any such actions.
The Company shall permit Huddleston to participate in the defense of any claim through counsel chosen by him, provided that the fees and expenses of such counsel shall be borne by Huddleston. 

    (f)  Delivery of this Agreement.  The Company shall deliver to Huddleston an executed copy of this
Agreement. 

    (g)  Non-Disparagement.  The Company agrees not to criticize, denigrate, or otherwise
disparage Huddleston. 

    4.  Waiver of All Other Claims.  Huddleston agrees that Huddleston is not entitled to receive, will not
claim and expressly waives any entitlement to rights, benefits, reimbursement, indemnification, or compensation from the Company, whether or not such entitlements are claimed through the Employment
Agreement, the consulting arrangement, or otherwise, other than as expressly set forth in this Agreement. 

    5.  Complete Release by Huddleston.  

    (a)  Release.  Huddleston irrevocably and unconditionally releases all of the claims described in
subparagraph 5(b) that Huddleston may now have, or has ever had, against the following persons or entities (the "Releasees"): The Company (including its subsidiaries and affiliates), all related
companies and all of the Company's (its subsidiaries' and affiliates') or such related companies' predecessors and successors; and, with respect to each such entity, all of its past and present
employees, officers,
directors, stockholders, owners, representatives, assigns, attorneys, agents, insurers, employee benefit programs (and the trustees, administrators, fiduciaries and insurers of such programs) and any
other persons acting by, through, under or in concert with any of the persons or entities listed in this subparagraph. 

    (b)  Claims Released.  The claims released include all claims, promises, debts, causes of action or
similar rights of any type or nature Huddleston has or had which in any way relate to (1) Huddleston's employment with the Company as an officer and/or director with the Company, or the
termination of that employment, such as claims for compensation, bonuses, commissions, 

2

 

lost wages or unused accrued vacation or sick pay; (2) any consulting arrangement Huddleston has or had with the Company, and the termination of that consulting arrangement; (3) the
design or administration of any employee benefit program or Huddleston's entitlement to benefits under any such program; (4) any claims to attorneys' fees and/or other legal costs; and
(5) any other claims or demands Huddleston may have on any basis whatsoever. The claims released include, but are not limited to, claims arising under any of the following statutes or common
law doctrines: 

    (1) Anti-Discrimination Statutes, such as the Age Discrimination in Employment Act (ADEA), which prohibits
age discrimination in employment; the Civil Rights Act of 1991, Title VII of the Civil Rights Act of 1964, and §1981 of the Civil Rights Act of 1866, which prohibit discrimination based on
race, color, national origin, religion or sex; the Equal Pay Act, which prohibits paying men and women unequal pay for equal work; the Americans With Disabilities Act, which prohibits discrimination
against the disabled; the California Fair Employment and Housing Act, which prohibits discrimination in employment based upon race, color, national origin, ancestry, physical or mental disability,
medical condition, martial status, sex, or age; and any other federal, state or local laws or regulations prohibiting employment discrimination. 

    (2) Federal Employment Statutes, such as the Employee Retirement Income Security Act of 1974, which, among other things,
protects pension or health plan benefits; and the Fair Labor Standards Act of 1938, which regulates wage and hour matters. 

    (3) Other Laws, such as any federal, state or local laws restricting an employer's right to terminate employees or
otherwise regulating employment; any federal, state or local law enforcing express or implied employment contracts or requiring an employer to deal with employees fairly or in good faith; and any
other federal, state or local laws providing recourse for alleged wrongful discharge, physical or personal injury, emotional distress, fraud, negligent misrepresentation, libel, slander, defamation
and similar or related claims. The laws referred to in this paragraph include statutes, regulations, other administrative guidance and common law doctrines. 

    (c)  Release Extends to Both Known and Unknown Claims.  This release covers both claims that Huddleston
knows about and those Huddleston does not know about. Huddleston understands the significance of his release of unknown claims and his waiver of any statutory protection against a release of unknown
claims. Huddleston expressly waives the protection of any such governmental statutes or regulations. 

    More
particularly, and without limitation, Huddleston acknowledges that Huddleston has read and is familiar with and understands the provisions of Section 1542 of the
California Civil Code, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH, IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

    HUDDLESTON EXPRESSLY WAIVES ANY RIGHT OR CLAIM OF RIGHT HUDDLESTON MAY HAVE UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE.

HUDDLESTON'S INITIALS: WCH 12/4/00  

     (d)  Ownership of Claims.  Huddleston represents that Huddleston has not assigned or transferred, or purported to assign or
transfer, all or any part of any claim released by this Agreement. 

    6.  No Pursuit of Released Claims.  Huddleston promises never to file or prosecute a lawsuit,
administrative complaint or charge, or other complaint or charge asserting any claims that are released 

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by the Agreement. Huddleston represents that Huddleston has not filed or caused to be filed any lawsuit, complaint or charge with respect to any claim this Agreement releases. Huddleston further
agrees to request any government agency or other body assuming jurisdiction of any complaint or charge relating to a released claim to withdraw from the matter or dismiss the matter with prejudice. 

    7.  Obligations of Huddleston.  To induce the Company to enter into this Agreement, Huddleston agrees to
the following: 

    (a)  Delivery of Agreement.  Huddleston shall deliver to the Company an executed copy of this Agreement. 

    (b)  Non-Disparagement.  Huddleston agrees not to criticize, denigrate, or otherwise
disparage the Company or any other Releasee. Nothing herein shall prevent Huddleston from making statements or testimony under compulsion of legal process, including, but not limited to, deposition
proceedings. 

    8.  Release by Company.  

    (a)  Release.  The Company (including its subsidiaries and affiliates) irrevocably and unconditionally
releases Huddleston from any and all obligations, claims or demands that the Company may now have, or has ever had, against Huddleston, with the exception of the following, which shall collectively be
referred to as the "Unreleased Matters": (i) Huddleston's obligations under this Agreement, (ii) the loans described in paragraph 3(b) of this Agreement, and (iii) acts of
dishonesty, fraud, or gross negligence, which acts were not taken in good faith and were not in furtherance of the Company's business. With the exception of the Unreleased Matters, this release covers
both claims that the Company knows about and those that the Company does not know about. The Company understands the significance of his release of unknown claims and its waiver of any statutory
protection against a release of unknown claims. The Company expressly waives the protection of any such governmental statutes or regulations. 

    More
particularly, and without limitation, the Company acknowledges that the Company has read and is familiar with and understands the provisions of Section 1542 of the
California Civil Code, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH, IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

    THE COMPANY EXPRESSLY WAIVES ANY RIGHT OR CLAIM OF RIGHT THE COMPANY MAY HAVE UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE.

COMPANY'S INITIALS: AP  

    9.  Consulting with Attorney.  Huddleston and the Company acknowledge that each has discussed this Agreement with an attorney of
his or its own choosing before signing it. 

    10.  Severability.  If any term or provision of this Agreement or the application thereof to any person
or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event:
(A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into
this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held
invalid, illegal or unenforceable) shall not be 

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affected thereby and shall continue in full force and effect to the fullest extent provided by law. The provisions of this Agreement are severable. 

    11.  Choice of Laws/Waiver of Jury Trial.  This Agreement shall be governed by the laws of the State of
California, and the Courts of the County of Los Angeles, California and the Parties specifically waive any right to a jury trial. 

    12.  Nature, Effect and Interpretation of this Agreement.  

    (a)  Entire Agreement.  This Agreement is the entire agreement between Huddleston and the Company
relating to the subject matter herein; it may not be modified or cancelled in any manner except by a writing signed by both the Company and Huddleston. The Company has made no promises or
representations to Huddleston other than those in this Agreement. 

    (b)  Successors and Assigns.  This Agreement shall bind Huddleston's heirs, administrators,
representatives, executors, successors and assigns, and shall inure to the benefit of all Releasees and their respective heirs, administrators, representatives, executors, successors and assigns. 

    (c)  Interpretation.  This Agreement shall be construed as a whole according to its fair meaning, and not
strictly for or against any of the parties. Unless the context indicates otherwise, the term "or" shall be deemed to include the term "and" and the singular or plural number shall be deemed to include
the other. Paragraph headings used in this Agreement are intended solely for convenience of reference and shall not be used in the interpretation of any of this Agreement. It is acknowledged that
neither party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against either party as the alleged draftsman of this Agreement. 

    (d)  Counterparts and Facsimiles.  For the convenience of the parties to this Agreement, this document
may be executed by facsimile signatures and in counterparts which shall together constitute the agreement of the parties as one and the same instrument. 

    (e)  No Waiver.  The failure to enforce any provision of this Agreement shall not be construed as a
waiver of any such provision, nor prevent a party from enforcing the provision or any other provision of this Agreement. The rights granted the parties are cumulative, and the election of one shall
not constitute a waiver of such party's right to assert all other legal and equitable remedies available under the circumstances. 

    (f)  Implementation.  The Company and Huddleston both agree that, without the receipt of further
consideration, they will sign and deliver any documents and do anything else that is necessary in the future to make the provisions of this Agreement effective. 

    13.  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests,
consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in
writing, and shall be given by: (1) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (2) by telegraph or by private airborne/overnight delivery
service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (3) by electronic or facsimile or telephonic transmission, provided the
receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (4) by mailing
in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be 

5

 

deemed to have been given upon the fifth {5th} business day following the date mailed). Notices shall be addressed to the parties as follows: 

	Huddleston:	 	William C. Huddleston

363 Timken Road

Anaheim, California 92808
	

With copy to:	
 	

Hugh Verano, Esq.

2301 Dupont Drive

Irvine, California 92612
	

Company:	
 	

STAAR Surgical Company

1911 Walker Avenue

Monrovia, California 91016

Attn: Mr. Andrew F. Pollet
	

With copy to:	
 	

Pollet & Richardson

10900 Wilshire Boulevard, Suite 500

Los Angeles, California 90024

Attention: Andrew F. Pollet, Esq.

    14.  Attorney's Fees.  In the event any legal or equitable action or proceeding is initiated concerning
the enforcement or interpretation of this Agreement, the prevailing party in any such action or proceeding shall be entitled to receive from the non-prevailing party all costs and expenses
including, without limitation, reasonable attorneys' and other fees incurred by the prevailing party in connection with such action or proceeding. 

    PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.  

    Executed at Orange County, California this    day of December, 2000. 

	 	 	"HUDDLESTON"
	

 	
 	

/s/ WILLIAM C. HUDDLESTON   
 WILLIAM C. HUDDLESTON

    Executed
at Los Angeles County, California, this 19th day of December, 2000. 

	 	 	"COMPANY"
	

 	
 	

STAAR SURGICAL COMPANY
	

 	
 	

By:	
 	

/s/ ANDREW F. POLLET   
 ANDREW F. POLLET,
 Chief Executive Officer

6

 

October 25, 2000 

 
 

ESCROW AGREEMENT    
  

To:
Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear
Mr. Galosic: 

    Reference
is made to that certain Settlement Agreement and Mutual Release (the "Agreement") between VLADIMIR FEINGOLD, et al. ("Feingold") and STAAR SURGICAL COMPANY, a
Delaware corporation, et al. ("Staar"). You have agreed to act as an independent escrow agent ("Escrow Agent") pursuant to the following: 

A.  Deposit of Funds and Delivery of Certificates.  

    1.  On
or before October 25, 2000, Feingold will deliver to Staar that certain Check No. 5270 made payable to the order of "Staar Surgical Co." dated
September 24, 1999, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25), as payment for the Twenty Three Thousand Three Hundred
Thirty Three (23,333) shares (the "Check"). Staar will endorse the Check to the "Joseph M. Galosic Attorney Client Trust Account," a non-interest bearing account, and deliver said Check to you
on or before 1:00 p.m. on October 26, 2000. You will deposit said Check into your attorney-client trust account (the "Escrow Deposit"). You will hold the proceeds from said Check in
trust, until directed to release such funds as instructed herein. 

    2.  On
or before October 26, 2000, Staar will deliver to you a Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully
registered, non-restricted, free trading Staar common stock (the "Stock Certificate"). 

    3.  You
have agreed to hold the Escrow Deposit and the Stock Certificate, in trust, on the following terms: 

    (a) Upon
receipt of confirmation that the Escrow Deposit is immediately available in good funds, you shall transmit this information, via facsimile to Staar, c/o Mary
Ann Sapone, Esq., at (310) 208-1154 and to Feingold, c/o Mark S. Adams, Esq. 

    (b) If
you receive written joint instructions signed by Feingold and Staar regarding disposition of the Escrow Deposit and Stock Certificate in the form attached hereto
as Exhibit "1," then you shall immediately (which term, as used herein shall mean within two business days) deliver the Stock Certificate to Feingold, and deliver to Staar a cashier's check, drawn on
your attorney-client trust account, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar Surgical Company." 

    (c) If
you do not receive the joint instruction in (a) above, but rather you receive written joint instructions signed by Feingold and Staar in the form attached
hereto as Exhibit "2," or written individual instructions signed by either of them in the form attached hereto as Exhibit "3" or Exhibit "4," to cancel this Escrow, you shall deliver to Feingold a
cashier's check, drawn on your attorney-client trust account, in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to
"Vladimir Feingold," and deliver the Stock Certificate to Staar. 

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B.  General Provisions  

    1.  You
shall hold and dispose of the Escrow Deposit and Stock Certificate in the manner set forth above and shall have no other duties as escrow agent; your duties
shall be determined only with reference to this Escrow Agreement and applicable law. If there should be a conflict between the provisions of this Escrow Agreement and applicable law, the terms of the
Escrow Agreement shall control to the extent permissible and this Escrow Agreement shall be reformed only to the extent necessary to conform to applicable law. You are not charged with knowledge of,
or any duties or responsibilities under, any other document or agreement. You may rely upon and shall be protected in acting or refraining from acting upon any written notice, instruction or request
furnished to you under this Escrow Agreement and believed by you to be genuine and to have been signed or presented by Feingold and Staar. You shall be under no duty to inquire into or investigate the
validity, accuracy or content of any such notice, instruction or request. You shall not be liable to Feingold or Staar for any actions taken or omitted by you in connection with the performance of
your duties under this Escrow Agreement, except for actions or omissions arising from your own gross negligence or willful misconduct. 

    2.  In
the event you should at any time be confronted with inconsistent claims or demands by Feingold and Staar, you shall have the right to seek ex parte relief
before Judge Paul Gutman at the Superior Court of California, County of Los Angeles, in connection with that certain case entitled Vladimir Feingold v. Staar Surgical
Company, et al., and numbered BC216184 in the files of that Court, interplead the parties, and request that the court determine the respective rights of the parties with
respect to this Escrow Agreement. You shall be indemnified and held harmless by Feingold and Staar, jointly and severally, as a consequence of your interpretation of the rights of the parties
hereunder and you shall automatically shall be released from any obligation or liability as a consequence of any such claims or demands, except with respect to your own gross negligence or willful
misconduct. Feingold and Staar further agree that you shall be under no duty whatsoever to institute or defend any proceedings involving any conflict or claims of any nature whatsoever between
Feingold and Staar. 

    3.  This
Escrow Agreement cannot be changed or terminated orally and may be changed only with your written consent and the written consent of Feingold and Staar. This
Escrow Agreement and your duties hereunder shall terminate when all amounts of the Escrow Deposit and Stock Certificate have been delivered to Feingold and Staar in accordance with this Escrow
Agreement. 

    4.  Any
notice or other communication under this Escrow Agreement shall be in writing and shall be considered given when delivered personally or four days after being
mailed by registered mail, return receipt requested, or on the date of transmission if delivered by confirmed telecopy, to the parties at the following addresses or facsimile numbers (or at such other
address as a party may specify by notice to the other): 

    (a) If
to the Escrow Agent, to him at:

Joseph M.
Galosic, Esq.

8 Corporate Park, Suite 200

Irvine, California 92606

Telephone: (949) 476-0500

Fax: (949) 476-5059 

    (b) If
to Feingold, to him at:

Vladimir
Feingold

31732 Isle Vista

Laguna Niguel, California 92677 

8

 

With copy to:

Mark S. Adams, Esq.

Green & Adams, LLP

8 Corporate Park, Suite 200

Irvine, California 92606

Telephone: (949) 862-1030

Fax: (949) 862-1031 

    (c) If
to Staar, to it at:

Andrew F.
Pollet

President

Staar Surgical Company

1911 Walker Avenue, Suite 500

Monrovia, California 91016 

With
copy to:

Robert C. Woodbury, Esq.

Pollet & Woodbury

10900 Wilshire Blvd., Ste. 500

Los Angeles, California 90024

Telephone: (310) 208-1182

Fax: (310) 208-1154 

    5.  This
Escrow Agreement shall be governed by and construed in accordance with the law of the State of California applicable to agreements made and to be performed in
California. All parties hereto agree that any controversy that may arise between the parties shall be adjudicated before Judge Paul Gutman in the Superior Court of California, County of Los
Angeles. In the event of any dispute that may arise between the parties as to their respective rights, duties and obligations hereunder, the prevailing party in such dispute shall be entitled to
recover its costs and expenses (including reasonable attorney fees) incurred by such party in connection with such dispute. 

    6.  This
Escrow Agreement shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties hereto. 

    7.  This
Escrow Agreement and any instructions referenced herein may be executed in one or more counterparts, but all such counterparts shall constitute but one and the
same instrument. 

    * * * *

    IN
WITNESS WHEREOF, the parties hereto agree that this Escrow Agreement shall be effective on the date that the Escrow Agent executes this Escrow Agreement. 

	 	 	"FEINGOLD"
	

 	
 	

VLADIMIR FEINGOLD
	

 	
 	

By:	
 	

/s/ VLADIMIR FEINGOLD   

	 	 	Name/Title: Vladimir Feingold
	 	 	Date:	 	October 26, 2000

9

 

	

 	
 	
"STAAR"
	

 	
 	

STAAR SURGICAL COMPANY

a Delaware corporation
	

 	
 	

By:	
 	

/s/ ANDREW F. POLLET   

	 	 	Name/Title: Andrew Pollet, President
	 	 	Date:	 	October 25, 2000

    The
undersigned agrees to act as escrow agent in accordance with the terms set forth above. 

	 	 	By:	 	/s/ JOSEPH M. GALOSIC   

	 	 	Name/Title: Joseph M. Galosic, Esq.
	 	 	Date:	 	October 26, 2000

10

 
EXHIBIT "1"  

 October   , 2000  

 JOINT ESCROW INSTRUCTIONS
For Delivery of Check and Stock Certificate  

To: Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear
Mr. Galosic: 

    You
are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to: 

    1.  Immediately
(the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a
Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Feingold, c/o Mark S. Adams, Esq.,
Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606; and 

    2.  Immediately
deliver to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024, a cashier's
check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar
Surgical Company." 

    After
completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions. 

	 	 	VLADIMIR FEINGOLD
	

 	
 	

By:	
 	

	 	 	Name/Title: Vladimir Feingold
	 	 	Date:	 	

	

 	
 	

STAAR SURGICAL COMPANY
	 	 	a Delaware corporation
	

 	
 	

By:	
 	

	 	 	Name/Title: Andrew Pollet, President
	 	 	Date:	 	

11

 
EXHIBIT "2"  

 October   , 2000  

 JOINT ESCROW INSTRUCTIONS
For Cancellation of Escrow and Delivery of Check and Stock Certificate

To:
Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear
Mr. Galosic: 

    You
are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to: 

    1.  Immediately
(the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a
Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq.,
Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024; and 

    2.  Immediately
deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check
drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold." 

    After
completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions. 

	 	 	VLADIMIR FEINGOLD
	

 	
 	

By:	
 	

	 	 	Name/Title: Vladimir Feingold
	 	 	Date:	 	

	

 	
 	

STAAR SURGICAL COMPANY
	 	 	a Delaware corporation
	

 	
 	

By:	
 	

	 	 	Name/Title: Andrew Pollet, President
	 	 	Date:	 	

12

 
EXHIBIT "3"  

 October   , 2000  

 ESCROW INSTRUCTION BY STAAR
For Cancellation of Escrow and Delivery of Stock Certificate

To:
Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear
Mr. Galosic: 

    You
are hereby instructed by Staar Surgical Company, a Delaware corporation ("Staar") to: 

    Immediately
(the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock
for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet &
Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024. 

	 	 	STAAR SURGICAL COMPANY
	 	 	a Delaware corporation
	

 	
 	

By:	
 	

	 	 	Name/Title: Andrew Pollet, President
	 	 	Date:	 	

13

 
EXHIBIT "4"  

 October   , 2000  

 ESCROW INSTRUCTION BY FEINGOLD
Cancellation of Escrow and Delivery of Check

To:
Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock

Dear
Mr. Galosic: 

    You
are hereby instructed by Vladimir Feingold ("Feingold") to: 

    Immediately
deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your
attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold." 

	 	 	VLADIMIR FEINGOLD
	

 	
 	

By:	
 	

	 	 	Name/Title: Vladimir Feingold
	 	 	Date:	 	

14

 
 
 

EXHIBIT "1"
  
    October   , 2000
  
    JOINT ESCROW INSTRUCTIONS
  For Delivery of Check and Stock Certificate
 
  

    
To: Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock  

Dear Mr. Galosic: 

    You
are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to: 

    1.  Immediately
(the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a
Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Feingold, c/o Mark S. Adams, Esq.,
Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606; and 

    2.  Immediately
deliver to Staar, c/o Robert C. Woodbury, Esq., Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024, a cashier's
check drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Staar
Surgical Company." 

    After
completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions. 

	 	 	VLADIMIR FEINGOLD
	

 	
 	

By:	
 	

	 	 	Name/Title: Vladimir Feingold
	 	 	Date:	 	

	

 	
 	

STAAR SURGICAL COMPANY
	 	 	a Delaware corporation
	

 	
 	

By:	
 	

	 	 	Name/Title: Andrew Pollet, President
	 	 	Date:	 	

15

 
 
 

EXHIBIT "2"
  
    October   , 2000
  
    JOINT ESCROW INSTRUCTIONS
  For Cancellation of Escrow and Delivery of
Check and Stock Certificate    
  

    
To: Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock  

Dear Mr. Galosic: 

    You
are hereby jointly instructed by Vladimir Feingold ("Feingold") and Staar Surgical Company, a Delaware corporation ("Staar") to: 

    1.  Immediately
(the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a
Certificate of Stock for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq.,
Pollet & Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024; and 

    2.  Immediately
deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check
drawn from your attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold." 

    After
completion of the items above, escrow shall be closed and you shall be discharged of any and all duties under the Escrow Agreement and Instructions. 

	 	 	VLADIMIR FEINGOLD
	

 	
 	

By:	
 	

	 	 	Name/Title: Vladimir Feingold
	 	 	Date:	 	

	

 	
 	

STAAR SURGICAL COMPANY
	 	 	a Delaware corporation
	

 	
 	

By:	
 	

	 	 	Name/Title: Andrew Pollet, President
	 	 	Date:	 	

16

 
 
 

EXHIBIT "3"
  
    October   , 2000
  
    ESCROW INSTRUCTION BY STAAR
  For Cancellation of Escrow and Delivery of
Stock Certificate    
  

    
To: Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25 and 23,333 Shares of Staar Surgical Company Stock  

Dear Mr. Galosic: 

    You
are hereby instructed by Staar Surgical Company, a Delaware corporation ("Staar") to: 

    Immediately
(the term "immediately" as used herein shall mean within two business days) deliver the Stock Certificate (the term "Stock Certificate" shall mean a Certificate of Stock
for Twenty Three Thousand Three Hundred Thirty Three (23,333) shares of fully registered, non-restricted, free trading Staar common stock) to Staar, c/o Robert C. Woodbury, Esq., Pollet &
Woodbury, at 10900 Wilshire Blvd., Ste. 500, Los Angeles, California 90024. 

	 	 	STAAR SURGICAL COMPANY
	 	 	a Delaware corporation
	

 	
 	

By:	
 	

	 	 	Name/Title: Andrew Pollet, President
	 	 	Date:	 	

17

 
 
 

EXHIBIT "4"
  
    October   , 2000
  
    ESCROW INSTRUCTION BY FEINGOLD
  Cancellation of Escrow and Delivery of
Check    
  

    
To: Joseph M. Galosic, Esq. 

    Re: Escrow for $145,831.25, and 23,333 Shares of Staar Surgical Company Stock  

Dear Mr. Galosic: 

    You
are hereby instructed by Vladimir Feingold ("Feingold") to: 

    Immediately
deliver to Feingold, c/o Mark S. Adams, Esq., Green & Adams, LLP, at 8 Corporate Park, Suite 200, Irvine, California 92606, a cashier's check drawn from your
attorney-client trust account in the amount of One Hundred Forty Five Thousand Eight Hundred Thirty One Dollars and Twenty Five Cents ($145,831.25) made payable to "Vladimir Feingold." 

	 	 	VLADIMIR FEINGOLD
	

 	
 	

By:	
 	

	 	 	Name/Title: Vladimir Feingold
	 	 	Date:	 	

18

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE

RECITALS

AGREEMENT

ESCROW AGREEMENT

EXHIBIT "1" October , 2000 JOINT ESCROW INSTRUCTIONS For Delivery of Check and Stock Certificate

EXHIBIT "2" October , 2000 JOINT ESCROW INSTRUCTIONS For Cancellation of Escrow and Delivery of Check and Stock Certificate

EXHIBIT "3" October , 2000 ESCROW INSTRUCTION BY STAAR For Cancellation of Escrow and Delivery of Stock Certificate

EXHIBIT "4" October , 2000 ESCROW INSTRUCTION BY FEINGOLD Cancellation of Escrow and Delivery of CheckPrepared by MERRILL CORPORATION www.edgaradvantage.com

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EMPLOYMENT AGREEMENT    
  

    This EMPLOYMENT AGREEMENT ("Agreement"), which is dated as of December 19, 2000, is made by and between  STAAR Surgical
Company, a Delaware corporation, located at 1911 Walker Avenue, Monrovia, California 91016 and hereinafter referred to as "Company", and
David Bailey, whose address is            , hereinafter referred to as "Executive", based upon the following: 

 
 

RECITALS    
  

    WHEREAS, Company wishes to retain the services of Executive, and Executive wishes to render services to
Company, as its Chief Executive Officer and President; 

    WHEREAS, Company and Executive wish to set forth in this Agreement the duties and responsibilities that Executive has agreed to
undertake on behalf of Company. 

    THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, Company and Executive (who are
sometimes individually referred to as a "party" and collectively referred to as the "parties") agree as follows: 

 
 

AGREEMENT    
  

    1.  TERM.  

    (a)  Term of Agreement/Renewal.  Company hereby employs Executive pursuant to the terms of this Agreement
and Executive hereby accepts employment with Company pursuant to the terms of this Agreement for the period beginning on December 19, 2000 (the "Effective Date") and ending on
December 31, 2003. Subject to paragraphs 12 and 13, this Agreement will be automatically be renewed for successive periods of three years after December 31, 2003. In this Agreement the
word "Term" shall, depending on the context used, refer to the initial three (3) year term or to any renewal periods. 

    (b)  Loss of Right to Work.  Executive shall fully cooperate with Company to obtain a permit or visa (the
"Right to Work Document") that will allow Executive to work legally in the United States. If, through no fault of Executive, Company is unable to obtain the Right to Work Document, or if the Right to
Work Document is not renewed, then, irrespective of subparagraph (a) above, the Term shall end twelve (12) months from the date that Company's application for the Right to Work Document
is rejected (or, if Company appeals such decision, from the date that a decision regarding the appeal becomes final) or from the date that the Right to Work Document expires. In such event, Company
shall pay reasonable travel-related costs for Executive, his spouse and his children to return to the United Kingdom. During such twelve (12) month period, Executive shall be entitled to render
his services pursuant to this Agreement from his home country. 

    2.  GENERAL DUTIES.  

    Executive
shall report to Company's Board of Directors. Executive shall devote his entire productive time, ability, and attention to Company's business during the Term. In his
capacity as Chief Executive Officer and President, Executive shall be primarily responsible for the day-to-day supervision and control of the business and the employees of the
Company. Executive shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, and such other duties as are commonly performed by an
employee of his rank in a publicly traded corporation or which may, from time to time, be prescribed by the Company through its Board of Directors. Furthermore, Executive agrees to cooperate with and
work to the best of his ability with Company's management team, which includes the Board of Directors and the officers and other employees, to continually improve Company's reputation in its industry
for quality products and performance. 

1

 

    3.  NONSOLICITATION AND PROPRIETARY PROPERTY AND CONFIDENTIAL INFORMATION PROVISIONS.    

    (a)  Nonsolicitation.  

    (1)  Covenant.  Executive hereby covenants and agrees that Executive shall not, either for Executive's
own account or directly or indirectly in conjunction with or on behalf of any person, partnership, corporation or other entity or venture, during the Term and for a period of one (1) year from
the date this Agreement terminates or expires, solicit or employ or attempt to solicit or employ any person who is then or has, within twelve (12) months prior thereto, been an officer,
partner, manager, agent, consultant or employee of Company or any affiliate of Company whether or not such a person would commit a breach of that person's contract of employment or consulting contract
with Company or any affiliate of Company, if any, by reason of leaving the service of Company or any affiliate of Company (the "Nonsolicitation
Covenant"). 

    (2)  Acknowledgement.  Each of the parties acknowledges that: (i) the covenants and the
restrictions contained in the Nonsolicitation Covenant are necessary, fundamental, and required for the protection of the business of Company; (ii) such Covenant relates to matters which are of
a special, unique and extraordinary value; and (iii) a breach of such Covenant will result in irreparable harm and damages which cannot be adequately compensated by a monetary award. 

    (3)  Judicial Limitation.  Notwithstanding the foregoing, if at any time, despite the express agreement
of Company and Executive, a court of competent jurisdiction holds that any portion of this Nonsolicitation Covenant is unenforceable by reason of its extending for too great a period of time or by
reason of its being too extensive in any other respect, such Covenant shall be interpreted to extend only over the maximum period of time or to the maximum extent in all other respects, as the case
may be, as to which it may be enforceable, all as determined by such court in such action. 

    (b)  Proprietary Property; Confidential Information.  

    (1)  "Applicable Definitions"  For purposes of this paragraph 3(b), the following capitalized
terms shall have the definitions set forth below: 

    i.  "Confidential Information"  —The term "Confidential Information" is collectively and
severally defined as any information, matter or thing of a secret, confidential or private nature, whether or not so labeled, which is connected with Company's business or methods of operation or
concerning any of Company's suppliers, customers, licensors, licensees or others with whom Company has a business relationship, and which has current or potential value to Company or the unauthorized
disclosure of which could be detrimental to Company. Confidential Information shall be broadly defined and shall include, by way of example and not limitation: (i) matters of a business nature
available only to management and owners of Company of which Executive may become aware (such as information concerning customers, vendors and suppliers, including their names, addresses, credit or
financial status, buying or selling habits, practices, requirements, and any arrangements or contracts that Company may have with such parties, Company's marketing methods, plans and strategies, the
costs of materials, the prices Company obtains
or has obtained or at which Company sells or has sold its products or services, Company's manufacturing and sales costs, the amount of compensation paid to employees of Company and other terms of
their employment, financial information such as financial statements, budgets and projections, and the terms of any contracts or agreements Company has entered into) and (ii) matters of a
technical nature (such as product 

2

 

information, trade secrets, know-how, formulae, innovations, inventions, devices, discoveries, techniques, formats, processes, methods, specifications, designs, patterns, schematics, data,
compilation of information, test results, and research and development projects). For purposes of the foregoing, the term "trade secrets" shall mean the broadest and most inclusive interpretation of
trade secrets as defined by Section 3426.1(d) of the California Civil Code (the Uniform Trade Secrets Act) and cases interpreting the scope of
said Section. 

    ii.  "Proprietary Property"  —The term "Proprietary Property" is collectively and severally
defined as any written or tangible property owned or used by Company in connection with Company's business, whether or not such property also qualifies as Confidential Information. Proprietary
Property shall be broadly defined and shall include, by way of example and not limitation, products, samples, equipment, files, lists, books, notebooks, records, documents, memoranda, reports,
patterns, schematics, compilations, designs, drawings, data, test results, contracts, agreements, literature, correspondence, spread sheets, computer programs and software, computer print outs, other
written and graphic records, and the like, whether originals, copies, duplicates or summaries thereof, affecting or relating to the business of Company, financial statements, budgets, projections,
invoices. 

    (2)  Ownership of Proprietary Property.  Executive acknowledges that all Proprietary Property which
Executive may prepare, use, observe, come into possession of and/or control shall, at all times, remain the sole and exclusive property of Company. Executive shall, upon demand by Company at any time,
or upon the cessation of Executive's employment, irrespective of the time, manner, cause or lack of cause of such cessation, immediately deliver to Company or its designated agent, in good condition,
ordinary wear and tear and damage by any cause beyond the reasonable control of Executive excepted, all items of the Proprietary Property which are or have been in Executive's possession or under his
control, as well as a statement describing the disposition of all items of the Proprietary Property beyond Executive's possession or control in the event Executive has not previously returned such
items of the Proprietary Property to Company. 

    (3)  Agreement Not to Use or Divulge Confidential Information.  Executive agrees that he will not, in any
fashion, form or manner, unless specifically consented to in writing by Company, either directly or indirectly use, divulge, transmit or otherwise disclose or cause to be used, divulged, transmitted
or otherwise disclosed to any person, firm or corporation, in any manner whatsoever (other than in Executive's performance of duties for Company or except as required by law) any Confidential
Information of any kind, nature or description. The foregoing provisions shall not be construed to
prevent Executive from making use of or disclosing information which is in the public domain through no fault of Executive, provided, however, specific information shall not be deemed to be in the
public domain merely because it is encompassed by some general information that is published or in the public domain or in Executive's possession prior to Executive's employment with Company. 

    (4)  Acknowledgement of Secrecy.  Executive acknowledges that the Confidential Information is not
generally known to the public or to other persons who can obtain economic value from its disclosure or use and that the Confidential Information derives independent economic value thereby, and
Executive agrees that he shall take all efforts reasonably necessary to maintain the secrecy and confidentiality of the Confidential Information and to otherwise comply with the terms of this
Agreement. 

    (5)  Inventions, Discoveries.  Executive acknowledges that any inventions, discoveries or trade secrets,
whether patentable or not, made or found by Executive in the scope of his 

3

 

employment with Company constitute property of Company and that any rights therein now held or hereafter acquired by Executive individually or in any capacity are hereby transferred and assigned to
Company, and agrees to execute and deliver any confirmatory assignments, documents or instruments of any nature necessary to carry out the intent of this paragraph when requested by Company without
further compensation therefor, whether or not Executive is at the time employed by Company. Provided, however, notwithstanding the foregoing, Executive shall not be required to assign his rights in
any invention which qualifies fully under the provisions of Section 2870(a) of the California Labor Code, which provides, in pertinent part, that
the requirement to assign "shall not apply to any invention that the employee developed entirely on his or her own time without using employer's equipment, supplies, facilities or trade secret
information except for those inventions that either: 

    (i)  Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer; or 

    (ii)  Result from any work performed by the employee for the employer." 

    Executive
understands that he bears the full burden of proving to Company that an invention qualifies fully under Section 2870(a). By signing this Agreement, Executive
acknowledges receipt of a copy of this Agreement and of written notification of the provisions of Section 2870. 

    4.  COMPLIANCE WITH SECURITIES LAWS.  Executive acknowledges that Executive will be subject to the
provisions of Sections 10(b) and 16 of the Securities Exchange Act of 1934. Executive acknowledges that Sections 10(b) and 16 can prohibit Executive from selling or transferring his stock or
securities in Company. Executive agrees that he will comply with Company's policies, as stated from time to time, relating to selling or transferring his stock or securities in Company. 

    5.  COMPENSATION.  

    (a)  Annual Salary.  During the first year of the Term, Company shall pay to Executive an annual base
salary in the amount of three hundred thousand U.S. dollars ($300,000). During the remainder of the Term, Company shall pay to Executive an annual base salary in the amount of three hundred fifty
thousand U.S. dollars ($350,000). The salary paid during the Term shall be referred to in this Agreement as the "Annual Salary". The Annual Salary shall be subject to any tax withholdings and/or
employee deductions that are applicable. The Annual Salary shall be paid to Executive in equal installments in accordance with the periodic payroll practices of the Company for executive employees.
From and after December 1, 2003, the Board shall annually review Executive's Annual Salary to determine whether or not an increase is merited. 

    (b)  Annual Bonus.  Executive and the Compensation Committee of the Board of Directors shall meet to
establish performance standards and goals to be met by Executive, which standards and goals shall be based upon earnings, cash flows, EBITDA and other objectives that are mutually agreed to by
Executive and the Compensation Committee. Company shall pay to Executive, no later than thirty (30) days after the completion of the annual anniversary of the Effective Date, a cash bonus (the
"Annual Bonus") in an amount to be recommended by the Compensation Committee to the Board, and which amount may equal (but not exceed) sixty percent (60%) of the Annual Salary, for each year in which
the performance standards and goals are met or exceeded by Executive. Nothing in this paragraph shall prevent Executive and the Compensation Committee from mutually agreeing to an alternative
computation of the Annual Bonus, which may be implemented and paid to Executive in place of the Annual Bonus described herein. The Annual Bonus shall be subject to any applicable tax withholdings
and/or employee deductions. 

4

 

    (c)  Cost of Living Adjustment.  Commencing as of January 1, 2002, and on each January 1st
thereafter, the then effective Annual Salary shall be increased (but not decreased) by an amount which shall reflect the increase, if any, in the cost of living during the previous 12 months by
adding to the Annual Salary an amount computed by multiplying the Annual Salary by the percentage by which the level of the Consumer Price Index for the Los Angeles, California Metropolitan Area, as
reported on January 1st of the new year by the Bureau of Labor Statistics of the United States Department of Labor has increased over its level as of January 1st of the prior year. 

    (d)  Participation In Employee Benefit Plans.  Executive shall have the same rights, privileges, benefits
and opportunities to participate in any of Company's employee benefit plans which may now or hereafter be in effect on a general basis for executive officers or employees. Company may change any
benefits contractor, in its sole discretion. During the Term Company shall provide, at Company's sole expense, (i) medical and dental benefits for Executive, his spouse and children,
(ii) disability insurance which, in the event of Executive's disability, will replace 60% of the Annual Salary being paid to Executive at the time the disability occurred, and (iii) life
insurance in the amount of one million seven-hundred fifty thousand U.S. dollars ($1,750,000). In the event Executive receives payments from the disability insurer, Company shall have the right to
offset such payments against the Annual Salary otherwise payable to Executive during the period for which such payments are made. Executive represents and warrants that he has no reason to believe
that he is not insurable with a reputable insurance company for the limits of the coverage discussed herein. If Executive is deemed to be uninsurable for any of the coverage discussed herein, Company
shall not be deemed to be in breach of this Agreement for failing to provide such coverage. 

    6.  STOCK OPTION GRANT.  

    As
an inducement to enter into this Agreement, Company grants to Executive an option to purchase five hundred thousand (500,000) shares of Company's common stock. The exercise price
for the stock shall be $11.25 per share, the fair market value on the date of this Agreement. The right to purchase the common stock shall vest in equal increments, one-third on the
Effective Date, one-third on the first anniversary of the Effective Date and one-third on the second anniversary of the Effective Date. Upon the sale or disposition by Company
to an unrelated third party of 50% or more of its business or assets, or the sale of the capital stock of Company in connection with the sale or transfer of a controlling interest in Company to an
unrelated third party, or the merger or consolidation of Company with another corporation as part of a sale or transfer of a controlling interest in Company to an unrelated third party (any of which
shall be deemed to be a "Change in Control"), any part of the option which is unvested shall immediately vest. "A controlling interest" shall be defined as 50% or more of the common stock of the
Company. The grant of this option shall not prohibit Company from granting to Executive, in its discretion, additional options to purchase Company's common stock during the Term. 

    7.  OTHER ALLOWANCES.  

    (a)  Automobile Allowance.  Company shall pay to Executive a sum which is equivalent to the automobile
allowance received by Executive from his former employer. 

    (b)  Costs Associated with Obtaining the Right to Work.  Company shall pay any reasonable costs,
including application fees and legal costs, relating to obtaining the Right to Work Document and subsequent permanent residency visas (such as a green card). 

    (c)  Repayment of Bonus to CIBA/Novartis.  Company acknowledges that Executive received a bonus in the
amount of one hundred fifty thousand U.S. dollars ($150,000) from CIBA/Novartis, Executive's prior employer, for accepting its offer of employment. Company acknowledges that 

5

 

Executive may be required to return some portion, or all, of the bonus to CIBA/Novartis as a result of his election to terminate his employment. Company agrees that it shall reimburse Executive for
any amount of the bonus that Executive is required to return to CIBA/Novartis. 

    (d)  Payment of Accrued Bonus.  Company acknowledges that Executive, if he continued his employment with
CIBA/Novartis, would receive a bonus of one hundred thirty-two thousand U.S. dollars ($132,000) pursuant to his employment contract. Executive expects to receive no less than one hundred
ten thousand U.S. dollars ($110,000) as a result of his services to CIBA/Novartis over the past ten (10) months. Company agrees that it shall pay to Executive any portion of the bonus, up to
one hundred ten thousand U.S. dollars ($110,000), that CIBA/Novartis refuses to pay due to Executive's termination of his employment. 

    (e)  Relocation Allowance.  Company shall reimburse Executive for all reasonable relocation expenses
actually and properly incurred by Executive's move to Los Angeles, California from Atlanta, Georgia and/or the United Kingdom. Such expenses shall include: 

    (i)  Moving Expenses.  All reasonably incurred expenses to move Executive's home furnishings and personal
property to California, such amount not to exceed thirty thousand U.S. dollars ($30,000). 

    (ii)  Disposition of Residence.  Company and Executive shall jointly choose an appraiser to appraise
Executive's home in Atlanta, Georgia, and Company shall pay to Executive the equity value. The term "equity value" shall mean the difference between the appraised value and the unpaid balance of any
loans secured by mortgages or deeds of trust recorded against the home. If Executive's home is sold for an amount the equity value of which exceeds the amount paid to Executive pursuant to this
subsection, Company shall be entitled to keep the excess amount. 

    (iii)  Expenses Related to Former Residence.  Until it is sold, Company will continue to pay all expenses
related to maintaining Executive's home in Georgia, including any loans secured by mortgages or deeds of trust, taxes and insurance. 

    (iv)  Interim Living Expenses.  For a period of six (6) months, Company shall pay to Executive the
sum of three thousand U.S. dollars ($3,000) per month toward living expenses. 

    (v)  Income Tax Consequences.  Payment and/or provision of the relocation expenses shall be subject to
any federal or state withholding as may be applicable. Company shall gross-up the payment of the expenses set forth in this paragraph 7(e) to compensate Executive for any and all
taxes incurred by him as a result of his receipt of the relocation allowance. 

    (f)  Nomination to Board of Directors.  Executive shall be appointed to Company's Board of Directors. 

    8.  REIMBURSEMENT OF BUSINESS EXPENSES.  Company shall promptly reimburse Executive for all reasonable
business expenses incurred by Executive in connection with the business of Company. However, each such expenditure shall be reimbursable only if Executive furnishes to Company adequate records and
other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax
deduction. 

    9.  ANNUAL VACATION/SICK LEAVE.  

    Executive
shall be entitled to five (5) weeks vacation time each year without loss of compensation. Executive shall be entitled to sick leave in accordance with Company's
general policy for its employees. 

6

 

    10.  INDEMNIFICATION OF LOSSES.  

    So
long as Executive's actions were taken in good faith and in furtherance of Company's business and within the scope of Executive's duties and authority, Company shall indemnify and
hold Executive
harmless to the full extent of the law from any and all claims, losses and expenses sustained by Executive as a result of any action taken by him to discharge his duties under this Agreement, and
Company shall defend Executive, at Company's expense, in connection with any and all claims by stockholders or third parties which are based upon actions taken by Executive to discharge his duties
under this Agreement. 

    11.  PERSONAL CONDUCT.  

    Executive
agrees promptly and faithfully to comply with all present and future policies, requirements, directions, requests and rules and regulations of Company in connection with
Company's business. Executive further agrees to conform to all laws and regulations and not at any time to commit any act or become involved in any situation or occurrence tending to bring Company
into public scandal, ridicule or which will reflect unfavorably on the reputation of Company. 

    12.  TERMINATION FOR CAUSE.  

    Company
reserves the right to declare Executive in default of this Agreement if Executive willfully breaches or habitually neglects the duties which he is required to perform under
the terms of this Agreement, or if Executive commits such acts of dishonesty, fraud, misrepresentation, gross negligence or willful misconduct as would prevent the effective performance of his duties
or which results in material harm to Company or its business. Company may terminate this Agreement for cause by giving written notice of termination to Executive. Company also reserves the right to
declare Executive in default of this Agreement if Executive fails to substantially perform his material duties and responsibilities under this Agreement after written demand for substantial
performance of such duties and responsibilities is delivered to Executive. Such demand must identify the manner in which Company's Board of Directors believes that Executive has not substantially
performed his duties, and Executive shall have a period of ninety (90) days to correct the deficient performance. With the exception of the covenants included in paragraph 3 above, upon
such termination the obligations of Executive and Company under this Agreement shall immediately cease. Such termination shall be without prejudice to any other remedy to which Company may be entitled
either at law, in equity, or under this Agreement. If Executive's employment is terminated pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual
Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the
effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit plans except to the extent provided in such plans for terminated participants, or as
may be required by applicable law. 

    13.  TERMINATION WITHOUT CAUSE.  

    (a)  Death.  Executive's employment shall terminate upon the death of Executive. Upon such termination,
the obligations of Executive and Company under this Agreement shall immediately cease. With the exception of the covenants included in this sub-paragraph (a), in the event of a
termination pursuant to this paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination;
(ii) Executive's accrued but unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. 

    (b)  Disability.  Company reserves the right to terminate Executive's employment upon ten
(10) days written notice if, for a period of ninety (90) days, Executive is prevented from discharging his duties under this Agreement due to any physical or mental disability. With the
exception of the covenants included in paragraph 3 above and as otherwise set forth in this 

7

 

sub-paragraph (b), upon such termination, the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this
paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but
unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit
plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law. 

    (c)  Election By Executive.  

    (i)  Executive's Election to Terminate.  Executive's employment may be terminated at any time by
Executive upon not less than twelve (12) months written notice by Executive to the Board. With the exception of the covenants included in paragraph 3 above and as otherwise set forth in
this sub-paragraph (c), upon such termination the obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this
paragraph, Company shall pay to Executive (i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but
unpaid Annual Bonus, if any; and (iii) business expenses incurred prior to the effective date of termination. Executive shall not be entitled to continue to participate in any employee benefit
plans except to the extent provided in such plans for terminated participants, or as may be required by applicable law. 

    (ii)  Company's Election to Release.  If, after receipt of Executive's notice of termination, Company
elects to release Executive from his obligations under sub-paragraph (c)(i) above and notifies Executive that he need not perform services pursuant to this Agreement for the
twelve (12) month period, Company shall
pay to Executive (i) an amount equal to the Annual Salary due to Executive for the twelve (12) month period (or any portion of it still remaining after Company's election), in a lump sum
and without discount to present value, and (ii) any options granted to Executive which are scheduled to vest over the twelve (12) month period (or any portion of it still remaining after
Company's election) will vest as scheduled. 

    (d)  Election By Company.  Company may terminate Executive's employment upon not less than thirty
(30) days written notice by Company to Executive. With the exception of the covenants included in paragraph 3 above, upon such termination the obligations of Executive and Company under
this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Executive shall be entitled to receive (i) Executive's accrued but unpaid Annual Salary and
vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any; (iii) business expenses incurred prior to the effective date of
termination, (iv) an amount equal to three (3) years Annual Salary due to Executive as of the date of termination, in a lump sum and without discount to present value, and (v) any
option held by Executive which is unvested on the date of such termination shall immediately vest. All other rights Executive has under any benefit plans and programs shall be determined in accordance
with the terms and conditions of such plans and programs. 

    (e)  Termination Due to a Change in Control.  If Executive's employment is terminated in connection with
a Change in Control, with the exception of the covenants included in paragraph 3 above and as otherwise set forth in this sub-paragraph (e), upon such termination the
obligations of Executive and Company under this Agreement shall immediately cease. In the event of a termination pursuant to this paragraph, Executive shall be entitled to receive
(i) Executive's accrued but unpaid Annual Salary and vacation pay through the effective date of the termination; (ii) Executive's accrued but unpaid Annual Bonus, if any;
(iii) business expenses incurred prior to the effective date of termination, (iv) an amount equal to three (3) years Annual Salary due to Executive as of the date of termination,
in a lump sum and without discount to present value, and 

8

 

(v) any option held by Executive which is unvested on the date of such termination shall immediately vest. All other rights Executive has under any benefit plans and programs shall be
determined in accordance with the terms and conditions of such plans and programs. 

    14.  MISCELLANEOUS.  

    (a)  Preparation of Agreement.  It is acknowledged by each party that such party either had separate and
independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the
drafting
hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement. 

    (b)  Cooperation.  Each party agrees, without further consideration, to cooperate and diligently perform
any further acts, deeds and things and to execute and deliver any documents that may from time to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or
carry out the intent and provisions of this Agreement, all without undue delay or expense. 

    (c)  Interpretation.  

    (i)  Entire Agreement/No Collateral Representations.  Each party expressly acknowledges and agrees that
this Agreement, including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the parties with respect to the subject matter hereof;
(2) supersedes any prior or contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, course of dealing,
warranties, interpretations or terms of any kind, oral or written (collectively and severally, the "Prior Agreements"), and that any such prior agreements are of no force or effect except as expressly
set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of Prior Agreements, or by evidence of subsequent oral agreements. Any agreement hereafter made shall be
ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the
modification or supplement is sought. 

    (ii)  Waiver.  No breach of any agreement or provision herein contained, or of any obligation under this
Agreement, may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein,
except by written instrument signed by the party to be charged or as otherwise expressly authorized herein. No waiver of any breach of any agreement or provision herein contained shall be deemed a
waiver of any preceding or succeeding breach thereof, or a waiver or relinquishment of any other agreement or provision or right or power herein contained. 

    (iii)  Remedies Cumulative.  The remedies of each party under this Agreement are cumulative and shall not
exclude any other remedies to which such party may be lawfully entitled. 

    (iv)  Severability.  If any term or provision of this Agreement or the application thereof to any person
or circumstance shall, to any extent, be determined to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event:
(A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or
unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to
such excused provision as may be possible and be legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to
persons or circumstances other 

9

 

than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law. 

    (v)  No Third Party Beneficiary.  Notwithstanding anything else herein to the contrary, the parties
specifically disavow any desire or intention to create any third party beneficiary obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have
any rights hereunder or any right of enforcement hereof. 

    (vi)  Headings; References; Incorporation; Gender.  The headings used in this Agreement are for
convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include
all amendments or renewals thereof. Any exhibit referenced in this Agreement shall be construed to be incorporated in this Agreement. As used in this Agreement, each gender shall be deemed to include
the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires. 

    (d)  Enforcement.  

    (i)  Applicable Law.  This Agreement and the rights and remedies of each party arising out of or relating
to this Agreement (including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of California, as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California. 

    (ii)  Consent to Jurisdiction; Service of Process.  Any action or proceeding arising out of or relating
to this Agreement shall be filed in and heard and litigated solely before the state courts of California located within the County of Los Angeles. 

    (iii)  Consent to Specific Performance and Injunctive Relief and Waiver of Bond or Security.  Each party
acknowledges that Company may, as a result of Executive's breach of the covenants and obligations included in paragraph 3 of this Agreement, sustain immediate and long-term
substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Each party agrees that in the event of Executive's breach or threatened breach of
the covenants and obligations included in paragraph 3, Company shall be entitled to obtain equitable relief from a court of competent jurisdiction or arbitration without proof of any actual
damages that have been or may be caused to Company by such breach or threatened breach and without the posting of bond or other security in connection therewith. 

    (e)  No Assignment of Rights or Delegation of Duties by Executive.  Executive's rights and benefits under
this Agreement are personal to him and therefore (i) no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; and (ii) Executive may not
delegate his duties or obligations hereunder. 

    (f)  Notices.  Unless otherwise specifically provided in this Agreement, all notices, demands, requests,
consents, approvals or other communications (collectively and severally called "Notices") required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in
writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery
service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (C) by electronic or facsimile or telephonic transmission, provided the
receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (D) by 

10

 

mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth {5th} business day
following the date mailed). Each party, and their respective counsel, hereby agree that if Notice is to be given hereunder by such party's counsel, such counsel may communicate directly with all
principals, as required to comply with the foregoing notice provisions. Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such
other address as the receiving party shall have specified most recently by like Notice, with a copy to the other parties hereto. Any Notice given to the estate of a party shall be sufficient if
addressed to the party as provided in this subparagraph. 

    (g)  Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same instrument, binding on all parties hereto. Any signature page of this Agreement may be detached from any counterpart of this
Agreement and reattached to any other counterpart of this Agreement identical in form hereto by having attached to it one or more additional signature pages. 

    (h)  Execution by All Parties Required to be Binding; Electronically Transmitted Documents.  This
Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all parties hereto. If a copy or counterpart of this Agreement is
originally executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually
signed by the party whose facsimile signature appears. 

    IN
WITNESS WHEREOF, the parties have executed this Agreement. 

	 	 	Company:
	

 	
 	

STAAR Surgical Company

a Delaware corporation
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Andrew F. Pollet, Chairman of the Board
	

 	
 	

Executive:
	

 	
 	

 David Bailey

11

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