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================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               -----------------

                                   FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the fiscal year ended January 3, 2003

                                      or

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

          For the transition period from              to

                        Commission file number: 0-11634

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

                     Delaware                  95-3797439
                  (State or other           (I.R.S. Employer
                  jurisdiction of
                 incorporation or          Identification No.)
                   organization)

                    1911 Walker
                 Avenue Monrovia,
                    California                    91016
               (Address of principal           (Zip Code)
                executive offices)

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

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

                                     None

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

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

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

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

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [_]  No [X]

   The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of June 28, 2002 was approximately
$69,658,578 based upon the closing price per share of the Common Stock of
$4.120 on that date.

   The number of shares outstanding of the registrant's Common Stock as of
March 13, 2003 was 17,244,800.

                      DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the registrant's definitive proxy statement relating to its 2003
annual meeting of stockholders, which will be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days of the close of
the registrant's last fiscal year, are incorporated by reference into Part III
of this report.

================================================================================

<PAGE>

                                    PART I

   This Annual Report on Form 10-K contains statements which constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements include comments regarding the
intent, belief or current expectations of the Company and its management.
Prospective investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
and that actual results may differ materially from those projected in the
forward-looking statements. See "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations--Factors That May Affect
Future Results."

ITEM 1.  BUSINESS

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

   STAAR operates in three business segments all within ophthalmology: cataract
surgery, glaucoma surgery and most important for the Company's future,
refractive surgery. Our overall mission is to develop, manufacture and market
high margin visual implants that improve a patient's quality of vision.

   Refractive Surgery.  In the area of refractive surgery, the Company has used
its uniquely biocompatible Collamer material to develop and manufacture the
Implantable Contact Lens(TM) (ICL)(TM) and the Toric Implantable Contact Lens
(TICL) to treat refractive disorders such as myopia (near-sightedness),
hyperopia (far-sightedness) and astigmatism. These disorders of vision affect a
large proportion of the population. The Company's goal is to establish the
custom made ICL and TICL as the next paradigm shift in refractive surgery,
making the products the dominant revenue generators for the Company over the
next four to five years.

   Cataract Surgery.  Initially, the Company's main product was foldable
implants for use after small incision cataract extraction. Since that time we
have expanded our range of products for use during cataract surgery to include
silicone and Collamer lenses to treat spherical and astigmatic abnormalities,
STAARVISC(TM) II, a viscoelastic material, the SonicWAVE(TM)
Phacoemulsification System having unique low energy and high vacuum
characteristics and UltraVac(TM) V1 tubing for use with certain Venturi-type
Phacoemulsification machines. This gives us a rounded portfolio of products to
meet the needs of the cataract surgeon. Currently, the majority of revenues are
generated from these products.

   Glaucoma Surgery.  For use in glaucoma surgery, the Company developed the
AquaFlow(TM) Collagen Glaucoma Drainage Device (the "Aqua Flow Device"), an
alternative to current methods of treating open angle glaucoma and received FDA
approval of the device in July 2000. The AquaFlow Device is implanted in the
eye using a minimally invasive procedure for the purpose of reducing
intraocular pressure.

   Within each of these segments, the Company also sells other instruments,
devices and equipment that we manufacture or that are manufactured by others in
the ophthalmic industry. In general, such products complement STAAR's
proprietary product range and allow us to compete more effectively.

                                      2

<PAGE>

Strategy

   The Company has spent the past two years strengthening and improving the
organization. This was achieved through the execution of a series of key
strategies that included:

  .   Strengthening management at both the Executive and Board levels

  .   Improving cash flow

  .   Reducing costs

  .   Improving gross margins

  .   Closing unprofitable subsidiaries

  .   Settling multiple lawsuits

   With a strong foundation firmly in place, the Company can focus on the
strategies that are the future of the Company and will provide maximum
stockholder value. Those strategies include:

  .   Obtaining U.S. FDA approval of the ICL

  .   Obtaining approvals for the ICL in key new international markets

  .   Improving lens insertion technology which will allow the Company to
      expand its U.S. customer base for IOLs

  .   Growing the market for the Company's AquaFlow Device

  .   Developing and introducing effective marketing strategies

  .   Strengthening global training programs which form the basis of new
      product introductions and physician acceptance

2002 Financial and Other Information Highlights

  .   In August 2002, STAAR continued to strengthen its senior management with
      the appointment of Nick Curtis, Senior Vice President of Sales and
      Marketing.

  .   The Company continued to strengthen its Board of Directors with the
      appointment of Don Duffy, retired Chief Financial Officer of Johnson &
      Johnson's former ophthalmic affiliate, Iolab, to the Board as Chair of
      the Board's Audit Committee and designated financial expert.

  .   The Company finalized the closure of subsidiaries in Canada and South
      Africa.

  .   Other charges of $1.5 million were recorded related to the recognition of
      deferred losses resulting from the translation of foreign currency
      statements into U.S. dollars for subsidiaries that were closed, and
      employee severance costs.

  .   The Company continued its cost containment efforts during 2002 reducing
      sales and marketing expenses by $3.2 million. $1.7 million of the
      reduction was realized in the U.S. due to overall expense reductions and
      $1.5 million of the reduction was primarily the result of subsidiaries
      that were closed during 2002 and 2001.

  .   The Company recorded a valuation allowance of $9.2 million against its
      deferred tax assets in the fourth quarter of 2002. This non-cash charge
      increased the valuation allowance which now fully reserves the value of
      the deferred tax assets on the Company's balance sheet.

  .   The Company and John R. Wolf, its former Chief Executive Officer, settled
      all legal actions between them as memorialized in a Settlement Agreement
      and Mutual General Release dated November 12, 2002.

                                      3

<PAGE>

  .   The Company acquired the remaining 20% of its German subsidiary in a
      cashless transaction involving the transfer of share ownership in
      exchange for the cancellation of outstanding loans owed to the Company.

  .   Revenues for 2002 were $48.2 million, a decrease of $2.5 million, or 5%,
      from 2001. Net loss for 2002 amounted to $17.2 million, or $1.00 per
      share, compared to a net loss of $14.8 million, or $0.87 per share,
      reported in 2001. Significant operational matters that affected net
      earnings for 2002 included non-recurring charges totaling $1.5 million
      and a $9.2 million valuation allowance recorded against the Company's
      deferred tax assets. Excluding the impact of these charges, the net loss
      for 2002 was $6.5 million or $0.38 per share, compared to the $4.5
      million net loss, or $0.26 per share, reported for 2001.

Financial Information about Industry Segments

   Beginning in 1998, the Company expanded its marketing focus beyond the
cataract surgery segment to include the refractive and glaucoma markets.
However, during 2002 the cataract segment accounted for approximately 95% of
the Company's revenues and thus, the Company operates as one business segment
for financial reporting purposes. See Note 15 to the Consolidated Financial
Statements for the geographic distribution of the Company's products.

Background

   The human eye is a specialized sensory organ capable of receiving visual
images that are transmitted to the visual center in the brain. The main parts
of the eye are the cornea, the iris, the lens, the retina, and the trabecular
meshwork. The cornea is the clear window in the front of the eye through which
light passes. The iris is a muscular curtain located behind the cornea which
opens and closes to regulate the amount of light entering the eye through the
pupil, an opening at the center of the iris. The lens is a clear structure
located behind the iris that changes shape to better focus light to the retina,
located in the back of the eye. The retina is a layer of nerve tissue
consisting of millions of light receptors called rods and cones, which receive
the light image and transmit it to the brain via the optic nerve. The anterior
chamber of the eye, located in front of the iris, is filled with a watery fluid
called the aqueous humour, while the portion of the eye behind the lens is
filled with a jelly-like material called the vitreous humour. The trabecular
meshwork, a drainage channel located between the cornea and the surrounding
white portion of the eye, maintains a normal pressure in the anterior chamber
of the eye by draining excess aqueous humour.

   The eye can be affected by common visual defects, disease and/or trauma. The
most prevalent ocular diseases are cataracts and glaucoma. Cataract formation
is generally an age related situation that involves the hardening and loss of
transparency of the natural crystalline lens, impairing visual acuity.

   Glaucoma is a progressive ocular disease that manifests itself through
increased intraocular pressure. This, in turn, results in a decrease of the
visual field and damage to the optic disc. Untreated, glaucoma can result in
blindness.

   Refractive disorders include myopia, hyperopia, astigmatism and presbyopia.
Myopia and hyperopia are caused by either flat or overly curved corneas which
result in improper focusing of light on the retina. They are also known as
near-sightedness and far-sightedness, respectively. Astigmatism is
characterized by an irregularly shaped cornea resulting in blurred vision.
Presbyopia is an age related condition caused by the loss of elasticity of the
natural crystalline lens, reducing the eye's ability to accommodate or adjust
for varying distances.

                                      4

<PAGE>

Industry

   According to industry analysts, the global market for ophthalmic surgery
products is approximately $3.5 billion worldwide. The major factors influencing
this market are:

  .   the introduction of new methods of correcting vision problems and
      advances in medical technology,

  .   an aging worldwide population,

  .   the importance of reimbursement, both government and private, and

  .   the growing importance of international markets.

Our products serve the following sectors of the ophthalmic market.

   Cataract Treatment.  The occurrence of cataracts is directly associated with
the aging process. Favorable demographics indicate that the number of Americans
older than 65 has increased tenfold since 1900, and according to the U.S.
Census Bureau, currently represent approximately 13% of the total population. A
cataract usually results from the slow opacification of the crystalline lens,
resulting in reduced vision. Once past the age of 65, 50% of the population
develops cataracts. Cataract extractions are accompanied by the insertion of an
IOL. Industry sources estimate that approximately 2.4 million IOLs were
implanted in the United States in 2002, generating approximately $260 million
in sales. We believe that a similar number of IOLs were implanted outside the
United States (excluding China and Russia, for which no reliable data exists),
generating an additional $250 million in sales. We believe that approximately
90% of the domestic market for IOLs in 2002 was held by foldable IOLs, compared
to approximately 15% in 1992, and that approximately 60% of the international
market share is presently held by foldable IOLs. We believe the share of the
worldwide market held by foldable IOLs will continue to increase due to the
benefits of foldable IOLs over non-foldable IOLs.

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

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

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

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

                                      5

<PAGE>

   Refractive Vision Correction.  It is estimated that 52% of the U.S.
population or 162 million people are in need of some form of vision correction.
Of this group, the Company's target market has been defined as those people
between 18 and 55 years of age and within a socioeconomic bracket where
elective surgery is affordable. The target market is estimated at 54.4 million
people. Of the target market, approximately 3 million people (5.4%) have severe
myopia (which is defined as greater than 7.5 diopters) and approximately 4.6
million people (8.4%) have moderate myopia (which is defined from 4.0 to 7.0
diopters). Approximately 1.6 million people have severe hyperopia (which is
defined as greater than 3.0 diopters). In addition, it is estimated that 20% of
the total population has some form of astigmatism, although in the Company's
target population, the percentage of those with astigmatism is believed to be
significantly higher than in the general population. The market outside the
U.S. is larger than the U.S. market. It is estimated that approximately 50% of
the world's population needs some form of vision correction.

   In the U.S., refractive surgery volumes have declined approximately 1% in
2002 (1.316 million procedures) over 2001 (1.324 million procedures). This
downward trend is expected to improve in 2003 as wavefront technology is
introduced thereby re-energizing the laser vision correction market. SG Cowan
estimates a 14% growth rate in domestic refractive procedures as improved
technologies generate renewed interest in quality of vision.

   We believe that this focus on improvement in quality of vision will provide
the perfect atmosphere for the introduction of phakic IOLs as the quality of
vision with these lenses is superior to laser vision correction.

Principal Products

   Our products are designed to:

  .   Improve patient outcomes,

  .   Minimize patient risk and discomfort, and

  .   Simplify ophthalmic procedures and/or post-operative care for the surgeon
      and the patient.

   We sell our products worldwide, principally to ophthalmologists, surgical
centers, hospitals, managed care providers, health maintenance organizations,
group purchasing organizations and government facilities. Demand for our
products is not seasonal.

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

   Our foldable IOLs are manufactured from both our proprietary Collamer
material and silicone. Both materials are offered in two differently configured
styles, the single-piece plate haptic design and the three-piece design where
the optic is combined with polyimide loop haptics. During 2001, the Company
recalled its three-piece Collamer lens. The Company reintroduced the lens in
September 2002. The selection of one style over the other is primarily based on
the preference of the ophthalmologist. Sales of foldable IOLs accounted for
approximately 66% of our total revenues for the 2002 fiscal year, 73% of total
revenues for the 2001 fiscal year and approximately 69% of total revenues for
the 2000 fiscal year.

   We have developed and currently market globally the Toric IOL, a toric
version of our single-piece silicone IOL, which is specifically designed for
patients with pre-existing astigmatism. The Toric IOL is the only IOL that has
FDA approval to include in its labeling that it improves uncorrected visual
acuity. The Toric IOL is the first refractive product we offered in the U.S.,
and is a significant addition to our line of cataract products. In May 2000,
the Health Care Financing Administration, now known as the Centers for Medicare
and Medicaid

                                      6

<PAGE>

(CMS), granted our application to have the Toric IOL designated as a "new
technology". The "new technology" designation allows ambulatory surgical
centers to receive an additional $50 per lens above the standard Medicare
reimbursement rate through May 2005. Furthermore, CMS granted our application
for "pass-through" status for our Toric IOL which, until April 1, 2002, allows
hospitals to pay us our list price for the lenses and pass through the total
amount to CMS for reimbursement. Pass-through status may last for a period of
two to three years, although re-evaluation and adjustment is possible in
January of each year. The adjustment announced for 2002 significantly changes
the impact of pass-through status in that it reimburses only a percentage of
the invoiced amount. We anticipate that this change may have a negative effect
on the pricing of our Toric IOLs to hospitals, although the full impact of the
adjustment will not be known until the final regulations are issued.

   In April 2000, we received approval from the FDA for our single-piece
Collamer IOL for cataract surgery, allowing us to market the lens throughout
the United States. The Collamer IOL was approved for use in Canada and the
European Union during 1999. We believe that the Collamer material, which is a
biomaterial, is superior to other materials used in the manufacture of IOLs in
the marketplace because collagen is incorporated into it.

   Phacoemulsification (phaco) machines are used during cataract surgery to
remove the patient's cataractous lens, usually through a small incision. The
most desired equipment will improve surgical outcomes and make cataract surgery
simpler for the physician and safer for the patient. There are approximately
1,000 to 1,500 phaco machines sold annually at prices ranging from $20,000 to
$85,000. The market for this equipment ranges from $50 million to $100 million
annually and the market for accessories such as hand pieces, surgical packs,
and phaco tips ranges from $50 million to $75 million annually. During 1998 we
introduced the WAVE Phacoemulsification Machine, the precursor to our SonicWAVE
Phacoemulsification System, launched in October 2000, which we believe
represents the next generation of this product. The SonicWAVE
Phacoemulsification System offers physicians the ability to use standard
ultrasound as well as sonic technology, which removes cataract material by
using low frequency sonic pulses. Sonic pulses avoid the generation of heat at
the surgery site, thereby reducing the risk of burns to the cornea. The
SonicWAVE Phacoemulsification System has 510(k) approval. We received CE Mark
in April 2001, allowing us to sell in the European community and began
international shipments of this product on April 16, 2001.

   In August 2001 the Company entered into an agreement with Surgin Surgical
Instruments, Inc. to distribute UltraVac V1 phaco packs for certain
Venturi-type phaco systems. The UltraVac V1 coiled tubing allows surgeons to
operate more efficiently at potentially higher levels of vacuum with the
assurance of greater anterior chamber stability.

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

   AquaFlow Collagen Glaucoma Drainage Device.  Our AquaFlow Device is
surgically implanted in the outer tissues of the eye to maintain a space that
allows increased drainage of intraocular fluid so as to reduce intraocular
pressure. It is made of collagen, a porous material that is compatible with
human tissue and facilitates drainage of excess eye fluid. The AquaFlow Device
is specifically designed for patients with open-angled glaucoma, which is the
most prevalent type of glaucoma. In contrast to conventional and laser glaucoma
surgeries, implantation of the AquaFlow Device does not require penetration of
the anterior chamber of the eye. Instead, a small flap of the outer eye is
folded back and a portion of the sclera and trabecular meshwork is removed. The
AquaFlow Device is placed above the remaining trabecular meshwork and Schlemm's
canal and the outer flap is refolded into place. The device swells, creating a
space as the eye heals. It is absorbed into the surrounding tissue within six
months to nine months after implantation, leaving the open space and possibly
creating new fluid collector channels. The 15 to 45 minute surgical procedure
to implant the AquaFlow Device is performed under local or topical anesthesia,
typically on an outpatient basis.

                                      7

<PAGE>

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

  .   reduced risk of surgical complications compared to trabeculectomy,

  .   a longer-term solution than medications,

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

  .   less need for pressure-reducing medications,

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

  .   cost effectiveness compared to surgical and medication alternatives.

   We believe the AquaFlow Device is an attractive product for:

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

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

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

   While we believe this market is very conservative, there is a continuing
interest in learning the surgical procedure to implant the AquaFlow Device.
Adoption by ophthalmic surgeons, however, will be dependent upon the rate at
which they learn to perform the surgical procedure or the development of
instrumentation to simplify the procedure. Our trained technical sales staff
and several surgical specialists educate surgeons on implanting the AquaFlow
Device. We have also established regional Centers of Excellence, where surgeons
are successfully implanting the AquaFlow Device, to assist in training new
surgeons and in promoting the product.

   We introduced the AquaFlow Device in late 1995 for commercial sale on a
limited basis in South Africa and selected countries in Europe and South
America. In August 1997, we received CE Mark for the AquaFlow Device, allowing
us to sell it in each of the countries comprising the European Union. In
January 2000, the Canadian government, through Health Canada, issued a Medical
Device License, allowing us to sell the AquaFlow Device in Canada. In July
2001, we received pre-market approval for the AquaFlow Device from the FDA.

   Refractive Correction--Implantable Contact Lenses (ICLs).  ICLs are lenses
implanted into the eye in order to correct refractive disorders such as myopia,
hyperopia and astigmatism. The ICL is capable of correcting a wide range of
refractive disorders from low to severe conditions.

   The ICL is folded and implanted into the eye behind the iris and in front of
the natural lens using minimally invasive surgical techniques similar to
implanting an IOL during cataract surgery, except that the human lens is not
removed. The surgical procedure to implant the ICL is typically performed with
topical anesthesia on an outpatient basis. Visual recovery is within one to 24
hours.

   We believe the use of an ICL will afford a number of advantages over
existing refractive surgical procedures, because:

  .   The ICL provides superior quality of vision compared to currently
      available refractive procedures.

  .   The ICL provides superior predictability of surgical outcomes.

                                      8

<PAGE>

  .   The ICL can correct significantly greater levels of myopia, hyperopia and
      astigmatism than other procedures.

  .   The ICL decreases the risk of loss of best corrected vision as a result
      of complications.

  .   The ICL can correct or improve other vision problems, such as amblyopia
      (lazy eye) and keratoconus (a condition causing marked astigmatism) and
      provide an alternative to corneal refractive surgery.

  .   The ICL is implanted through an astigmatically neutral incision.

  .   The ICL enables faster recovery of vision.

  .   The ICL produces superior optical correction, ensuring clear vision.

   We commenced commercial sales of ICLs in late 1996 on a limited basis in
South Africa, China, and selected countries in Europe and South America. In
August 1997, we received CE Mark allowing us to sell the ICL in each of the
countries comprising the European Union. In February 1997, the FDA granted us
an investigational device exemption (IDE) to begin clinical studies consisting
of three distinct phases within the U.S. We have completed enrollment of Phase
III of the IDE clinical trials for the correction of myopia and we are
presently engaged in completing enrollment of Phase III of the IDE for the
correction of hyperopia. We anticipate filing a pre-market approval application
for the ICL correcting myopia in the second quarter of 2003. The ICL received
approval in Canada in July 2001 and in Korea in April 2002. The Company has
submitted for registration in Taiwan and approval is pending for Australia. The
Canon-STAAR Company in Japan will begin clinical trials of the ICL in the
second quarter of 2003.

   In January 2002, the FDA conditionally approved an IDE for the Toric ICL,
allowing us to begin clinical investigation on the lens in the United States
with patients having myopia in the range of -3.0 diopters to -20.0 diopters and
astigmatism in the range of +1.0 diopters to +4.0 diopters. Enrollment began in
August 2002 with six investigational sites. Industry sources estimate 20% of
the population requiring vision correction have astigmatism with the percentage
higher in severe myopia.

Distribution and Customers

   We market our products to a variety of health care providers, including
surgical centers, hospitals, managed care providers, health maintenance
organizations, group purchasing organizations and government facilities. The
primary user of our products is the ophthalmologist. No material part of our
business, taken as a whole, is dependant upon a single or a few customers.

   STAAR maintains direct distribution in the United States and Canada. Sales
efforts are supported through a network of independent manufacturers'
representatives. The representatives are compensated via commissions based on
annual sales volumes and targets. International sales are conducted through a
series of independent distributors.

   STAAR supports the efforts of its agents and distributors through the
marketing efforts of its internal marketing departments. Sales efforts are
supplemented via promotional materials, educational courses, speakers programs
and technical presentations.

Sources and Availability of Raw Materials

   Our IOLs, ICLs, and our AquaFlow glaucoma devices are manufactured in
facilities located in California and Switzerland. Our SonicWAVE
Phacoemulsification System is manufactured by our subsidiary, Circuit Tree
Medical, Inc., also located in California. The components used in the
manufacture of the SonicWAVE System are available from multiple sources.

                                      9

<PAGE>

   Manufacturing is currently outsourced for our viscoelastic, custom procedure
packs and phaco packs. Many of our raw material components are purchased to our
specifications from suppliers. Most of these components are standard parts and
available from multiple sources. Although we presently have one supplier for
silicone, the principal raw material for our silicone IOL is available from
several other sources. We recently validated a new supplier of polypropylene
plastic resin for our lens delivery systems which is readily available in the
marketplace. The proprietary collagen-based raw material used to manufacture
IOLs, ICLs, and the Aqua Flow Device is internally sole-sourced at one of our
facilities in California. If the supply of these collagen-based raw materials
is interrupted we know of no alternate supplier, and therefore, any such supply
interruption could result in our inability to manufacture these products.

Patents, Trademarks and Licenses

   We or our licensors have pending patent applications and issued patents in
various countries relating specifically to our products or various aspects of
them, including our core patent (the "Mazzocco Patent") relating to methods of
folding or deforming an IOL or ICL for use in minimally invasive surgery. The
Mazzocco Patent was granted by the United States Patent Office in March 1986 to
Thomas Mazzocco, M.D., who was a practicing ophthalmologist and a co-founder of
the Company. The Mazzocco Patent will expire in the year 2003. We do not derive
significant revenues from this patent, and we do not believe that its
expiration is of material importance in relation to our overall sales. We have
also acquired or applied for several patents for insertion devices, glaucoma
devices and other products for ophthalmic use.

   In May 1995, Intersectional Research and Technology Complex Eye Microsurgery
("IRTC") granted an exclusive royalty-bearing license to our subsidiary, STAAR
Surgical AG, to manufacture, use and sell IRTC's glaucoma devices in the United
States, Europe, Latin America, Africa, and Asia, and non-exclusive rights with
respect to the countries in the Commonwealth of Independent States (the former
Union of Soviet Socialists Republic) and China. In January 1996, IRTC granted
an exclusive royalty bearing license to STAAR Surgical AG to manufacture, use
and sell implantable contact lenses using IRTC's biocompatible materials in the
United States, Europe, Latin America, Africa, and Asia, and non-exclusive
rights with respect to the Commonwealth of Independent States. The terms of
these licenses extend for the lives of the patents. In connection with these
licenses, IRTC also assigned to us its patent for its biocompatible material,
which we use in manufacturing our ICLs and some of our IOLs. We have since
adopted IRTC's biocompatible material and glaucoma device design for our
AquaFlow Device, and have incorporated IRTC's biocompatible materials for use
with our proprietary ICL design. These patents and the technology rights are of
material importance to our refractive products market segment. Each of these
patents will expire in the year 2009. We are continuing to expand our patent
portfolios of refractive and glaucoma products so that we do not become
dependent on the protection of any single patent.

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

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

   We have granted licenses to certain of our patents, trade secrets and
technology, including our foldable technology, to other companies for use in
connection with their cataract products. The licenses under the patents extend
for the life of the patents. The licensees include Allergan Medical Optics
("AMO"), Alcon Surgical, Inc. ("Alcon"), Bausch & Lomb Surgical ("Bausch &
Lomb"), CIBA Vision, Pharmacia & Upjohn, Inc. ("Pharmacia & Upjohn") and
Canon-STAAR Company, Inc., a joint venture we own with Canon, Inc. and Canon
Sales Co., Inc. We licensed certain of our patented foldable technology on an
exclusive basis to Canon-STAAR Company, Inc. (for Japan only), on a
non-exclusive basis to Alcon, Bausch & Lomb, CIBA Vision and Canon-STAAR
Company, Inc. (with respect to the world other than Japan), and on a
co-exclusive basis to AMO. At the

                                      10

<PAGE>

time these licenses were granted, we received substantial pre-payments of
royalties on all but one of the licenses. We expect to receive continuing
revenues from only one of these licenses through March 2003. Our business
strategy is not dependent upon realizing royalties from these licenses in the
future.

Competitive Conditions

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

   We believe our primary competition in the development and sale of products
used to surgically correct cataracts, namely foldable IOLs and
phacoemulsification machines, includes Bausch & Lomb, AMO, Alcon, Pharmacia &
Upjohn, Inc. and CIBA Vision. Each of these competitors is a licensee of our
foldable technology. Significant competitors in the hard IOL market include
Bausch & Lomb, AMO, Pharmacia & Upjohn, Inc., Alcon and CIBA Vision. These
competitors have been established for longer periods of time than we have and
have significantly greater resources than we have, factors that give them the
advantages of greater name recognition, larger sales operations and greater
ability to finance research and development and proceedings for regulatory
approval.

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

   Our ICL will face significant competition in the marketplace from products
that improve or correct refractive conditions, such as corrective eyeglasses
and external contact lenses, and particularly from providers of conventional
and laser surgical procedures. These are products long established in the
marketplace and familiar to patients in need of refractive correction.
Furthermore, corrective eyeglasses and external contact lenses are more easily
obtained, in that a prescription is usually written following a routine eye
examination in a doctor's office, without admitting the patient to a hospital
or surgery center. We believe that the following providers of laser surgical
procedures comprise our primary competition in the marketplace for patients
requiring refractive corrections: Alcon, Bausch & Lomb, VISX, Nidek and Laser
Sight all market Excimer lasers for corneal refractive surgery. The expected
approval of custom ablation, along with the addition of wavefront technology,
will increase awareness of corneal refractive surgery by patients and
practitioners. Conductive Keratoplasty (CK) by Refractec will compete for the
hyperopic market for +1.0 to +3.0 diopters. In the phakic IOL market, the ICL
faces Ophtec (to be distributed in the United States by Advanced Medical
Optics), Bausch & Lomb and CIBA, all with phakic IOLs under investigation.

Regulatory Requirements

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

                                      11

<PAGE>

   Clinical Regulatory Requirements within the United States.  Under the
Federal Food, Drug & Cosmetic Act as amended by the "Food and Drug
Administration Modernization Act of 1997 ("The Act"), the FDA has the authority
to adopt regulations that:

  .   set standards for medical devices,

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

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

  .   permit detailed inspections of device manufacturing facilities,

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

  .   require reporting of serious product defects to the FDA, and

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

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

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

   A medical device that is substantially equivalent to a directly related
medical device previously in commerce may be eligible for the FDA's abbreviated
pre-market notification "510(k) review" process. FDA 510(k) clearance is a
"grandfather" process. As such, FDA clearance does not imply that the safety,
reliability and effectiveness of the medical device has been approved or
validated by the FDA, but merely means that the medical device is substantially
equivalent to a previously cleared commercially-related medical device. The
review period and FDA determination as to substantial equivalence should be
made within 90 days of submission of a 510(k) application, unless additional
information or clarification or clinical studies are requested or required by
the FDA. As a practical matter, the review process and FDA determination may
take longer than 90 days.

   Our IOLs and ICLs are Class III devices, and our AquaFlow Devices, lens
injectors, phacoemulsification equipment, ultrasonic cutting tips and surgical
packs are Class II devices. We have received FDA pre-market approval for our
IOLs (including the Toric and the Collamer IOLs) and AquaFlow Device and FDA
510(k) clearance for our phacoemulsification equipment, lens injectors,
ultrasonic cutting tips and surgical packs. We have completed the enrollment
for Phase III of the clinical study of the ICL that corrects myopia and we
continue to enroll patients in Phase III of the clinical study of the ICL that
corrects hyperopia. In September 2001, we applied for an investigation device
exemption (IDE) for a toric version of the ICL. In January 2002, the FDA
conditionally approved an IDE for the Toric ICL. We expect to submit an
application to the FDA for pre-market approval of our ICL to correct myopia in
the second quarter of 2003.

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

                                      12

<PAGE>

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

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

   Clinical Regulatory Requirements In Foreign Countries.  There is a wide
variation in the approval or clearance requirements necessary to market
products in foreign countries. The requirements range from minimal requirements
to a level comparable to the FDA. For example, many countries in South America
have minimal regulatory requirements, while many developed countries, such as
Japan, have requirements at least as stringent as those of the FDA. FDA
acceptance is not always a substitute for foreign government approval or
clearance.

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

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

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

Research and Development

   We are focused on furthering technological advancements in the ophthalmic
products industry through continuous innovative development of ophthalmic
products and materials and related surgical techniques. We maintain an active
internal research and development program which activities includes research
and development, clinical, and regulatory affairs and is comprised of 28
employees. Over the past year, we have principally focused our research and
development efforts on:

  .   developing our Toric ICL, and developing new material IOLs (including a
      reintroduction of the three-piece Collamer IOL in the U.S.) and ICLs for
      the correction of presbyopia,

  .   improving insertion and delivery systems for our foldable products,
      including a successful design and launch of the environmentally
      controlled cartridge,

  .   generally improving the manufacturing systems and procedures for all
      products to reduce manufacturing costs resulting in yield increases for
      Collamer products in 2002,

  .   improving the SonicWAVE Phacoemulsification System and obtaining FDA
      510(k) approval for the Cruise Control device, and

  .   developing products and extending foreign registrations for the
      refractive market.

   Research and development expenses were approximately $4,016,000, $3,800,000,
and $4,215,000 for our 2002, 2001 and 2000 fiscal years, respectively.

                                      13

<PAGE>

Environmental Matters

   The Company is subject to federal, state, local and foreign environmental
laws and regulations. We believe that our operations comply in all material
respects with applicable environmental laws and regulations in each country
where we have a business presence. We do not anticipate that compliance with
these laws will have any material impact on our capital expenditures, earnings
or competitive position. We currently have no plans to invest in material
capital expenditures for environmental control facilities for the remainder of
our current fiscal year or for the next fiscal year. We are not aware of any
pending litigation or significant financial obligations arising from current or
past environmental practices that are likely to have a material adverse impact
on our financial position. However, environmental problems relating to our
properties could develop in the future, and such problems could require
significant expenditures. Additionally, we are unable to predict changes in
legislation or regulations that may be adopted or enacted in the future and
that may adversely affect us.

Significant Subsidiaries

   The Company's only significant subsidiary is STAAR Surgical AG, a wholly
owned entity incorporated in Switzerland. This subsidiary develops,
manufactures and distributes products worldwide including Collamer IOLs, ICLs
and the AquaFlow Device. STAAR Surgical AG also controls 100% of Domilens GMBH,
a European sales subsidiary that distributes both STAAR products and products
from various competitors.

Employees

   Together with our subsidiaries, we had a total of 237 employees as of
February 18, 2003, including 36 in administration, 78 in marketing and sales,
28 in research and development and technical services and 95 in manufacturing,
quality control and shipping.

Financial Information about Foreign and Domestic Operations

   Approximately $24,450,000, $27,558,000 and $30,986,000 of our overall
revenues were generated in the United States for the 2002, 2001 and 2000 fiscal
years, respectively, constituting approximately 51%, 54% and 57% of overall
revenues for those years. We believe that international markets represent a
significant opportunity for continued growth. Europe, which is our principal
foreign market, generated approximately $19,409,000, $19,572,000 and
$19,101,000 in revenues for the 2002, 2001 and 2000 fiscal years, respectively,
constituting approximately 40%, 39% and 35% of overall revenues for those
fiscal years. The remaining foreign sales were attributed to the Canadian,
Asian/Pacific, South African, Australian and South American geographic areas.
Most all products sold in 2002 were manufactured in the United States and
Switzerland. See Note 15 to the Consolidated Financial Statements.

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

  .   loss of distribution of third-party lines,

  .   risks associated with fluctuating exchange rates,

  .   the regulation of fund transfers by foreign governments,

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

  .   political instability.

The occurrence of any of the foregoing could materially and adversely affect
our business. We have not previously engaged in activities to mitigate the
effects of foreign currency fluctuations, because historically we have been
generally paid in U.S. dollars with respect to our international operations. As
earnings from

                                      14

<PAGE>

international operations increase, our exposure to fluctuations in foreign
currencies may increase, and we may utilize forward exchange rate contracts or
engage in other efforts to mitigate foreign currency risks.

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

Additional Information

   During the second quarter of 2003, the Company expects to make available
free of charge through its website, www.staar.com, its Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as soon as reasonably practicable after those
reports are filed with the Securities and Exchange Commission.

ITEM 2.  PROPERTIES

   Our operations are conducted in leased facilities throughout the world. Our
executive offices, manufacturing, warehouse and distribution, and primary
research facilities are located in Monrovia, California. STAAR Surgical AG
maintains office, manufacturing, warehouse and distribution, and research
facilities in Nidau, Switzerland. The Company has two additional facilities in
California, one for raw material support and another for research and
manufacturing. Outside the United States, the Company leases facilities in
Germany, Australia, Switzerland, France, and Austria. The Company will exit its
France facility in 2003. We believe our manufacturing facilities in the U.S.
and Switzerland are suitable and adequate for our current and future planned
requirements since manufacturing runs only one shift. However, the Company is
at capacity in the U.S. and Switzerland in the areas of distribution and
administration. The Company would require additional space to support growth in
those areas, although this is not anticipated for 2003.

ITEM 3.  LEGAL PROCEEDINGS

   We are party to various claims and legal proceedings arising out of the
normal course of our business. These claims and legal proceedings relate to
contractual rights and obligations, employment matters, and claims of product
liability. In addition to legal proceedings arising out of the normal course of
our business, on January 3, 2003 we were named as a party in the following
pending actions.

   Mario Pelegrina v. Andrew F. Pollet, John R. Wolf, Peter J. Utrata, Volker
D. Anhaeusser, Joseph Priske, William Huddleston, Carl Manisco, individuals,
Pollet & Richardson, a California corporation, and Iotech, Inc., a California
corporation, Defendants, and STAAR Surgical Company, Nominal Defendant, Court
of Chancery of the State of Delaware, Case No. 18556. In December 2000, Mario
Pelegrina filed this shareholder derivative suit against us and certain named
directors and officers. Mr. Pelegrina alleges that these directors and officers
breached their fiduciary duties by engaging in self-dealing and waste of our
assets. Because this is a shareholder derivative action, we are a putative
plaintiff and stand to receive any damages that may be awarded. Mr Pelegrina
took no steps to prosecute the action until May 2002, when the Court of
Chancery requested a status report on the litigation. On October 9, 2002, we
filed a motion to dismiss the action and began preparing a brief in support of
the motion. The briefing has been stayed since December 2002, with Mr.
Pelegrina's consent, to enable us to discuss a potential voluntary dismissal of
the action.

   Richard Leza v. STAAR Surgical Company, Pollet & Richardson, Los Angeles
Superior Court, Case Number BC257159: This action was filed on August 30, 2001.
Plaintiff Richard Leza was the Company's former Vice President of Finance,
Business Development and Corporate Strategy. He was terminated on November 1,
2000. Mr. Leza alleged that no cause existed for his termination, that he was
entitled to acceleration of an option

                                      15

<PAGE>

to purchase 50,000 shares of the Company's Common Stock, that a loan in the
amount of $120,000 made to him by the Company should have been forgiven, and
that he is entitled to a severance payment of $130,000. Mr. Leza also alleged
that the Company breached the implied covenant of good faith and fair dealing
and terminated him in violation of public policy. On February 27, 2003, the
Company and Mr. Leza settled their disputes. Pursuant to the settlement, the
Company agreed to pay Mr. Leza monthly payments totaling $180,000 over a
15-month period. The Company also agreed to issue Mr. Leza an option to
purchase 75,000 shares of the Company's Common Stock and forgave a note
receivable of $120,000.

   John R. Wolf v. STAAR Surgical Company, Los Angeles Superior Court; Case No.
BC235396. On November 12, 2002, the Company and its former Chief Executive
Officer, John R. Wolf, settled their disputes resulting in the dismissal of all
legal actions between them. The settlement provided for completion of
Mr. Wolf's transfer of 243,000 shares of the Company's Common Stock pursuant to
the Form 4 executed May 9, 2000, in satisfaction of $2.1 million in promissory
notes executed by Mr. Wolf in favor of the Company.

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

   There were no matters submitted to a vote of security holders during the
quarter ended January 3, 2003.

                                      16

<PAGE>

                                    PART II

<TABLE>
<C>     <S>
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS
</TABLE>

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

<TABLE>
<CAPTION>
                             Period                    High    Low
                             ------                   ------- ------
            <S>                                       <C>     <C>
            2003
               First Quarter (through April 1, 2003). $ 6.550 $3.050
            2002
               Fourth Quarter........................ $ 4.580 $2.100
               Third Quarter.........................   4.200  1.710
               Second Quarter........................   6.020  3.750
               First Quarter.........................   5.440  3.500
            2001
               Fourth Quarter........................ $ 4.250 $1.700
               Third Quarter.........................   5.250  1.550
               Second Quarter........................   5.500  2.000
               First Quarter.........................  13.875  3.563
</TABLE>

   On April 1, 2003, the closing price of the Company's Common Stock was $5.95.
Stockholders are urged to obtain current market quotations for the Common Stock.

   As of March 13, 2003, there were approximately 615 record holders of our
Common Stock.

   We have not paid any cash dividends on our Common Stock since our inception.
We currently anticipate that any earnings will be retained to further develop
our business and that no cash dividends on the Common Stock will be declared in
the foreseeable future. Furthermore, pursuant to its domestic credit facility,
the Company cannot declare or pay any dividend to its stockholders. The
declaration and payment of any such dividends in the future would not only be
subject to approval by the Company's lender, but would also depend upon the
Company's earnings, financial condition, capital needs and other factors deemed
relevant by the Board of Directors.

   During the three years ended December 31, 2002, the Company issued an
aggregate of 191,766 shares of Common Stock (the "Shares") without registration
under the Securities Act of 1933, as amended (the "Act"), to 8 directors,
officers, employees and consultants (the "Participants") under its 1996 STAAR
Surgical Company Stock Option Plan and 1998 STAAR Surgical Company Stock Option
Plan (the "Plans") for an aggregate cash consideration of $1,650,955. The
Company sold the Shares directly, without the services of an underwriter, in
reliance upon Rule 506 of Regulation D promulgated under Section 4(2) of the
Act. The Company believes that each Participant who purchased Shares was an
"accredited investor" within the meaning of Regulation D.

   During such three year period, granted but unexercised options (the
"Options") to purchase shares of the Company's Common Stock without
registration under the Act totaled 1,823,298 to 49 Participants under the
Plans. The average exercise price of the Options is $7.15, and the Options
become exercisable in installments. As of April 1, 2003, Options to purchase
1,198,457 shares of Common Stock were exercisable. The Company granted the
Options directly, without the services of an underwriter. No Options have been
exercised, and the Company intends to register under the Act the shares of
Common Stock issuable upon exercise of the Options before the exercise thereof.

                                      17

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

   The following table sets forth selected consolidated financial data with
respect to the five most recent fiscal years ended January 3, 2003, December
28, 2001, December 29, 2000, December 31, 1999, and January 1, 1999. The
selected consolidated statement of income data set forth below for each of the
three most recent fiscal years, and the selected consolidated balance sheet
data set forth below at January 3, 2003 and December 28, 2001, are derived from
the Consolidated Financial Statements which have been audited by BDO Seidman,
LLP, independent certified public accountants, as indicated in their report
which is included elsewhere in this Annual Report. The selected consolidated
statement of income data set forth below for each of the two fiscal years in
the periods ended December 31, 1999 and January 1, 1999, and the consolidated
balance sheet data set forth below at December 29, 2000, December 31, 1999, and
January 1, 1999 are derived from the Company's audited consolidated financial
statements not included in this Annual Report. The selected consolidated
financial data should be read in conjunction with the Consolidated Financial
Statements of the Company, and the Notes thereto, included elsewhere in this
Annual Report, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Item 7.

<TABLE>
<CAPTION>
                                                                                Fiscal Year Ended
                                                                       (in thousands except per share data)
                                                           -----------------------------------------------------------
                                                           January 3, December 28, December 29, December 31, January 1,
                                                              2003        2001         2000         1999        1999
                                                           ---------- ------------ ------------ ------------ ----------
<S>                                                        <C>        <C>          <C>          <C>          <C>
Statement of Operations
Sales.....................................................  $ 47,880    $ 50,237     $ 53,986     $58,955     $54,244
Royalty and other income..................................       368         549          448         253         899
                                                            --------    --------     --------     -------     -------
Total revenues............................................    48,248      50,786       54,434      59,208      55,143
Cost of sales.............................................    24,099      28,203       26,329      22,935      18,533
                                                            --------    --------     --------     -------     -------
Gross profit..............................................    24,149      22,583       28,105      36,273      36,610
                                                            --------    --------     --------     -------     -------

Selling, general and administrative expenses
General and administrative................................     8,959       8,746        8,593       7,939       6,770
Marketing and selling.....................................    16,833      20,043       21,254      19,879      18,709
Research and development..................................     4,016       3,800        4,215       4,338       3,570
Other charges.............................................     1,454       7,780       15,276          --          --
                                                            --------    --------     --------     -------     -------
Total selling, general and administrative expenses........    31,262      40,369       49,338      32,156      29,049
                                                            --------    --------     --------     -------     -------
Operating income (loss)...................................    (7,113)    (17,786)     (21,233)      4,117       7,561
                                                            --------    --------     --------     -------     -------
Total other expense, net..................................    (1,011)       (455)      (4,162)       (682)       (763)
                                                            --------    --------     --------     -------     -------
Income before income taxes, minority interest and
 cumulative effect of change in accounting method.........    (8,124)    (18,241)     (25,395)      3,435       6,798
Income tax provision (benefit)............................     8,959      (3,547)      (6,580)        862       1,999
Minority interest.........................................        75         139           87         419         662
                                                            --------    --------     --------     -------     -------
Net income (loss) before accounting change................   (17,158)    (14,833)     (18,902)      2,154       4,137
Cumulative effect of accounting change....................        --          --           --          --       1,680
                                                            --------    --------     --------     -------     -------
Net income (loss).........................................  $(17,158)   $(14,833)    $(18,902)    $ 2,154     $ 2,457
                                                            ========    ========     ========     =======     =======
Diluted income (loss) per share before effect of change in
 accounting method........................................  $  (1.00)   $  (0.87)    $  (1.23)    $  0.15     $  0.29
Basic net income (loss) per share.........................  $  (1.00)   $  (0.87)    $  (1.23)    $  0.15     $  0.18
Diluted net income (loss) per share.......................  $  (1.00)   $  (0.87)    $  (1.23)    $  0.15     $  0.17
Weighted average number of basic shares...................    17,142      17,003       15,378      14,157      13,542
Weighted average number of diluted shares.................    17,142      17,003       15,378      14,756      14,268

Balance Sheet Data
Working capital...........................................  $  6,792    $ 16,780     $ 23,960     $25,590     $26,925
Total assets..............................................    45,220      64,804       79,250      85,273      73,290
Notes payable and current portion of long-term debt.......     5,845       8,216        7,944       2,691       2,312
Long-term debt............................................        --          --           --      13,673      10,021
Stockholders' equity......................................  $ 30,551    $ 46,296     $ 58,315     $52,684     $47,706
</TABLE>

                                      18

<PAGE>

<TABLE>
    <C>     <S>
    ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS
</TABLE>

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

Results of Operations

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

<TABLE>
<CAPTION>
                                         Percentage of Total Revenues     Percentage Change
                                     ----------------------------------   ---------------
                                     January 3, December 28, December 29, 2002 vs. 2001 vs.
                                        2003        2001         2000       2001     2000
                                     ---------- ------------ ------------ -------- --------
<S>                                  <C>        <C>          <C>          <C>      <C>
Total revenues......................   100.0%      100.0%       100.0%      (5.0)%   (6.7)%
Cost of sales.......................    49.9%       55.5%        48.4%     (14.6)%    7.1%
Gross profit........................    50.1%       44.5%        51.6%       6.9%   (19.6)%
Costs and expenses:
   General and administrative.......    18.6%       17.2%        15.8%       2.4%     1.8%
   Marketing and selling............    34.9%       39.5%        39.0%     (16.0)%   (5.7)%
   Research and development.........     8.3%        7.5%         7.7%       5.7%    (9.8)%
   Other charges....................     3.0%       15.3%        28.1%     (81.3)%  (49.1)%
       Total costs and expenses.....    64.8%       79.5%        90.6%     (22.6)%  (18.2)%
Operating loss......................   (14.7)%     (35.0)%      (39.0)%    (60.0)%  (16.2)%
Other expense, net..................    (2.1)%      (0.9)%       (7.6)%    122.2%   (89.1)%
Loss before income taxes............   (16.8)%     (35.9)%      (46.6)%     55.5%   (28.2)%
Income tax provision (benefit)......    18.6%       (7.0)%      (12.1)%    352.6%   (46.1)%
Minority interest...................     0.2%        0.3%         0.2%     (46.0)%   59.8%
Net loss............................   (35.6)%     (29.2)%      (34.7)%    (15.7)%  (21.5)%
</TABLE>

2002 Fiscal Year Compared to 2001 Fiscal Year

   Revenues.  Revenues for the year ended January 3, 2003 decreased over the
year ended December 28, 2001 by 5.0% or $2,538,000. The decrease in revenues
was due primarily to a 14% decrease in IOL sales primarily in the United
States. Approximately 66% of the decrease in IOL sales was the result of a
decline in unit volume and 34% of the decrease was the result of a decline in
average selling price ("ASP"). The decrease in IOL sales were partially offset
by an 11% increase in sales in international markets of distributed products
and a 33% increase in ICL sales. Unit volume of ICLs increased 34%, partially
offset by a 1% decline in ASP. Sales of STAARVisc increased 205% on increased
volume and Aquaflow sales increased 54% on increased volume and ASP. The
Company expects sales of IOLs in the U.S. to increase in 2003 as a result of
tighter management of the Company's independent sales force and the
introduction of improved lens delivery systems.

   Gross profit.  Gross profit for the year ended January 3, 2003 was 50.1% of
revenues compared to the year ended December 28, 2001 when it was 44.5% of
revenues (including other charges of $5.6 million related to inventory
write-offs primarily as the result of voluntary product recalls). Excluding the
other charges, gross profit for the year ended December 28, 2001 was 57.0%. The
lower gross profit for the current year compared to the previous year
(excluding other charges) is due to the high unit costs of IOL inventory
manufactured last year during a period of low production volumes. Gross profit
for the year was also impacted by a shift in product mix from IOLs with a
higher gross profit margin to equipment and other distributed product with a
lower gross profit

                                      19

<PAGE>

margin. Gross profit margin has improved sequentially each quarter since the
second quarter of 2002. The Company expects gross profit to continue to improve
as the high cost inventory is depleted and the Company's strategy to improve
efficiency yields additional cost savings.

   Marketing and selling expenses.  Marketing and selling expenses for the year
ended January 3, 2003 were 34.9% of revenues compared to 39.5% of revenues for
the year ended December 28, 2001. In terms of dollars, marketing and selling
expenses for 2002 decreased $3.2 million or 16.0% over 2001 due to cost
containment measures which have reduced overall spending in the U.S. and the
approximate $1.6 million in cost savings the Company has realized as a result
of subsidiary closures in the previous year.

   Other charges.  Other charges for the year ended January 3, 2003 were
approximately $1.5 million compared to the year ended December 28, 2001 when
other charges were $7.8 million. The $1.5 million in charges taken during 2002
related to the recognition of deferred losses resulting from the translation of
foreign currency statements into U.S. dollars of subsidiaries that were closed
and employee separation.

   Other expense, net.  Other expense, net for the year ended January 3, 2003
increased $556,000 over the year ended December 28, 2001. This increase was due
to decreased income from the Company's joint venture with Canon-STAAR,
decreased interest income, and increased foreign exchange losses.

   Income taxes.  During the year ended January 3, 2003, the Company recorded a
valuation allowance of $9.2 million against its deferred tax assets. This
non-cash charge reduced the deferred tax assets on the balance sheet to zero.
The assets were created as a result of income tax benefits that were recorded
on U.S. operating losses incurred during the restructuring and reorganization
accomplished in 2000 and 2001. No deferred tax benefits were recorded on
operating losses in 2002. Current accounting standards place significant weight
on a history of recent cumulative losses in determining whether or not a
valuation allowance is necessary. Forecasts of future taxable income are not
considered sufficient positive evidence to outweigh a history of losses.
Accordingly, the assets were reserved in full. The Company's federal net
operating loss carryforwards are not impacted and can continue to be utilized
for up to 20 years.

   Legislation enacted on March 9, 2002 (HR 3090) enabled the Company to
carryback a portion of the federal 2001 net operating loss to 1996, 1997 and
1998. Since this legislation was not enacted as of the end of fiscal year 2001,
the benefit of $959,000 from this carryback was recorded in 2002.

2001 Fiscal Year Compared to 2000 Fiscal Year

   Revenues for the year ended December 28, 2001 were $50.8 million,
representing a 6.7% decrease over the $54.4 million in revenues for the year
ended December 29, 2000. The decrease in revenues resulted primarily due to
decreased sales of the Company's Elastic(TM) and Elastimide(TM) silicone
intraocular lenses due to the impact of a voluntary product recall in the
second quarter of 2001. The decrease in silicone IOL sales was partially offset
by increased sales of the Company's Collamer, Toric, and acrylic IOLs. The
Company experienced a continued shift in product mix in fiscal 2002. Revenues
also decreased in 2001 for sales in 2000 of subsidiaries that were closed in
the same year and sales of the Company's SonicWAVE Phacoemulsification System
also decreased. This decrease was due to the elimination of a dedicated sales
force as a result of cost containment measures taken during fiscal 2001 and a
general decline in the economy resulting in a decline in capital equipment
spending. In addition to increased sales of Collamer, Toric and acrylic IOLs,
sales of the Company's AquaFlow Device, which was approved for sale in the
United States in the third quarter of fiscal 2001 and STAARVISC II also
increased.

   The Company is expanding its market focus beyond the cataract market to also
include the refractive and glaucoma markets. The Company anticipates that its
growth in the refractive and glaucoma product markets will

                                      20

<PAGE>

increase significantly as the Company's refractive lenses (ICL and Toric IOL)
and its AquaFlow Device continue to gain market acceptance and regulatory
approvals. The Company believes its sales of products used for the treatment of
cataracts will grow with the introduction or reintroduction of various products
including the Collamer three-piece IOL, STAARVISC II, UltraVac V1 tubing and
the SonicWAVE Phacoemulsification System.

   Cost of sales.  Cost of sales were $28.2 million or 55.5% of revenue for the
year ended December 28, 2001 compared to $26.3 million or 48.4% of revenue for
the year ended December 29, 2000. The increase in cost of sales resulted from a
23% increase in inventory write-offs over the prior year, primarily relating to
voluntary product recalls. Excluding the impact of inventory write-offs, cost
of sales as a percent of revenues increased from 38.9% in fiscal 2000 to 43.0%
in fiscal 2001. This increase was primarily due to increased unit costs of
silicone IOLs and a change in product mix. Silicone IOL unit costs increased
significantly due to lower production levels necessitated by reduced sales
demand and improved inventory management.

   General and administrative.  General and administrative expense for the year
ended December 28, 2001 was $8.7 million, or 17.2% of revenue, as compared to
$8.6 million, or 15.8% of revenue for the year ended December 29, 2000. The
primary reason for the increase as a percent of revenue was due to decreased
revenues. The slight increase in dollars is primarily attributable to
relocation costs of executive management, increased administrative salaries,
and increased professional fees offset by decreased expenses from a subsidiary
that was closed in the prior year.

   Marketing and selling.  Marketing and selling expense for the year ended
December 28, 2001 was $20.0 million or 39.5% of revenue, as compared to $21.3
million or 39.0% of revenue for the year ended December 29, 2000. The primary
reason for the increase as a percent of revenue was due to decreased revenues.
Actual expense decreased by $1.2 million due to decreased commissions,
decreased costs from a subsidiary that was closed in fiscal 2000 and cost
containment measures taken during fiscal 2001.

   Research and development.  Research and development expense for the year
ended December 28, 2001 was $3.8 million, or 7.5% of revenue as compared to
$4.2 million or 7.7% of revenue for the year ended December 29, 2000. Research
and development expense decreased over the prior year due primarily to
decreased staffing during the first six months of 2001.

   Other charges.  In June 2001 management completed an extensive operational
review of the Company. Based upon that review, in August 2001 the Company
implemented a plan that management believes will allow it to become profitable.
As a result of implementing the plan, the Company significantly changed its
manufacturing processes and locations, including consolidating lathing activity
into the Swiss manufacturing site from the current dual site operations and
reducing molded lens capacity at the California site. The Company also reduced
its workforce and closed certain overseas operations. In conjunction with the
implementation of the plan, the Company recorded pretax charges of
approximately $7.8 million in the third and fourth quarters of the 2001 fiscal
year. Planned charges included approximately $3.7 million in fixed asset
write-offs, $0.3 million in severance and employee relocation costs, and $1.0
million for subsidiary closures. Additionally, the Company reserved $2.1
million of notes receivable from former officers and directors of the Company
and paid $0.7 million for the early termination of a consulting contract with
the president of one of the Company's European subsidiaries.

   The Company also wrote off $6.4 million of inventory related to voluntary
product recalls and excess and obsolete inventory in the second and fourth
quarters of 2001. The amount is included in cost of sales at December 28, 2001.

   Other expense, net.  Other expense, net for the year ended December 28, 2001
was approximately $0.5 million or 0.9% of revenues as compared to approximately
$4.2 million or 7.6% of revenues for the year ended December 29, 2000. This
decrease resulted from decreased interest expense and amounts written off in
fiscal 2000 related to the Company's joint venture with Canon-STAAR Co., Inc.

                                      21

<PAGE>

   Income tax benefit.  The income tax benefit was $3.5 million for the year
ended December 28, 2001 as compared to a benefit of $6.6 million for the year
ended December 29, 2000. The primary reason for this decrease relates to
decreased U.S. losses over the prior fiscal year resulting in a lower overall
tax benefit. The tax benefit for fiscal 2001 was further reduced by
approximately $2.8 million in valuation allowances that were recorded against
the Company's deferred tax assets.

2000 Fiscal Year Compared to 1999 Fiscal Year

   Revenues.  Revenues for the year ended December 29, 2000 were $54.4 million,
representing an 8.1% decrease over the $59.2 million in revenues for the year
ended December 31, 1999. The primary reasons for the decrease in revenues were
the reduced U.S. dollar amounts recorded by international subsidiaries due to
the strength of the U.S. dollar as compared to foreign currencies, most
specifically the German Mark, decreased sales to the Company's joint venture,
Canon-STAAR Company, Inc., the continuing decline in sales of the Company's
silicone IOLs in Europe and lower average selling prices on international sales
of the Company's ICLs due to the change from direct selling to selling through
international distributors. These decreases were offset by increased sales of
the SonicWAVE Phacoemulsification System, which was introduced in the third
quarter, increased revenue from the sales of the Collamer single piece IOL,
approved for sale in April 2000, increased revenues from sales of the Toric IOL
and increased revenues from a full year of sales of custom surgical packs to
our U.S. customers, which began in mid-year 1999. Other revenue in 2000
increased over 1999 by $195,000.

   Cost of sales.  Cost of sales increased to 48.4% of revenue for the year
ended December 29, 2000 from 38.7% of revenue for the year ended December 31,
1999. The primary reasons for this 14.8% increase relates to an inventory
write-off of $5.2 million, recorded during the second quarter of 2000, of
various items that no longer fit the Company's future direction. Additionally,
despite higher average selling prices for IOLs, higher average unit cost caused
the cost of sales as a percentage of revenue exclusive of the above-mentioned
write-off to increase slightly to 38.8%. The increase in average selling price
was due to the change in product mix to the Company's premium priced IOLs
(Toric and Collamer). The higher average cost of IOLs was due principally to
the changes in product mix to the Collamer IOL and, to a lesser extent;
increased unit cost due to lower manufacturing activity levels which resulted
in the units produced carrying a higher per unit cost from absorption of fixed
expenses. Additionally, the full year of sales of custom surgical packs in the
U.S. have a higher cost of sales as a percentage of sales when compared to the
other products the Company offers.

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

   Marketing and selling.  Marketing and selling expense for the year ended
December 29, 2000 was $21.3 million or 39.0% of revenue, as compared to $19.9
million or 33.6% of revenue for the year ended December 31, 1999. The primary
reasons for this increase was the compensation and travel costs of direct sales
management hired in late 1999 and 2000 to sell IOLs and the Company's SonicWAVE
Phacoemulsification Systems, increased commissions generated by the graduated
commission schedule which has higher percentage rates as IOL sales prices
increase, and average selling price increases over 1999 due to the change in
IOL mix to the Company's proprietary IOLs. Additionally, the Company has
continued to increase the expenses for product management to prepare for
broader entry into the refractive and glaucoma markets. These increases were
offset, in part, as a result of the reduced U.S. dollar amounts recorded by
international subsidiaries due to the strength of the U.S. dollar as compared
to foreign currencies, most specifically, the German Mark.

   Research and development.  Research and development expense for the year
ended December 29, 2000 was $4.2 million, or 7.7% of revenue as compared to
$4.3 million or 7.3% of revenue for the year ended

                                      22

<PAGE>

December 31, 1999. Research and development expense decreased slightly over the
prior year due to a reduction in research and development staffing offset by
increased spending related to the monitoring of clinical trials for the ICL for
the correction of myopia, the ICL for the correction of hyperopia, and the
AquaFlow Device. Additionally, expenses relating to the development and
improvement of the Company's SonicWAVE Phacoemulsification System increased.

   Other charges.  On June 22, 2000 the Company announced the details of its
plan of restructuring. In conjunction with the implementation of the plan, the
Company recorded a pre-tax charge to earnings of $13.8 million in the second
quarter of fiscal 2000. The charges include approximately $0.9 million for
restructuring of certain subsidiaries, approximately $4.0 million to write-off
patents that were considered questionable in providing future value to the
Company, approximately $1.9 million of costs incurred by the Company relating
to activities that were abandoned, approximately $4.1 million relating to
severance and other employee separation costs, approximately $1.9 million
relating to the disposition of investment and assets related to the Company's
abandoned entry into the Lasik market, and approximately $1.0 million relating
to the closure of a foreign subsidiary. 19 employees were laid-off, terminated
or resigned as part of the Company's restructuring plan. Also included is a
$1.5 million charge related to a note receivable from a former officer, which
is currently under-collateralized.

   Other expense, net.  Other expense, net for the year ended December 29, 2000
was approximately $4.2 million or 7.6% of revenues as compared to approximately
$0.7 million or 1.2% of revenues for the prior year. The primary reason for
this increase was a $4.7 million charge the Company recorded relating to the
write-off of its Japanese joint venture.

   Income tax provision.  Income tax benefit was $6.6 million for the year
ended December 29, 2000 as compared to a provision of $0.9 million for the year
ended December 31, 1999. The reasons for the change relate to the dramatic
reduction in income before income taxes, which was due primarily to the charges
taken in the second quarter totaling $24 million before income taxes. During
2000, the Company recorded a deferred tax asset that resulted from the losses
recorded for the year. The Company would have been profitable in the 2000
fiscal year with the exclusion of charges relating to the restructuring plan
and the reserve for notes receivable.

Liquidity and Capital Resources

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

   Net cash provided by (used in) operating activities was $0.6 million, ($2.5)
million, and ($5.0) million for fiscal 2002, 2001, and 2000, respectively. For
fiscal 2002, cash provided by operations was the result of the net loss,
adjusted for depreciation, amortization, deferred income taxes, and other
non-cash charges, and decreases in working capital--primarily accounts
receivable, inventory, and accounts payable. For fiscal 2001, cash used in
operations was the net loss, adjusted for depreciation, amortization, deferred
income taxes, and non-cash restructuring and inventory write-downs. For fiscal
2000, cash used in operations was the net loss, adjusted for depreciation,
amortization, the write-down of the Company's investment in its Japanese joint
venture, deferred income taxes, and non-cash restructuring and inventory
write-downs partially offset by changes in working capital--primarily accounts
receivable, inventories and accounts payable.

   Accounts receivable was $6.0 million in 2002, $7.5 million in 2001, and $9.7
million in 2000 due to lower sales but also due to increased collection
efforts. Day's sales outstanding (DSO) improved from 64 days in 2000; to 54
days in 2001; to 45 days in 2002. The Company does not believe that the trend
of lower DSO will continue in 2003 below the 45 days realized in 2002.

   Inventory in 2002, 2001, and 2000 was $11.8 million, $15.2 million, and
$20.8 million, respectively. Day's inventory on hand decreased from 285 days in
2000; to 195 days in 2001; to 176 days in 2002. Decreases in

                                      23

<PAGE>

inventory in 2000 and 2001 totaling $5.2 million and $6.4 million,
respectively, were the result of write-offs of excess and obsolete inventory
and inventory related to voluntary product recalls. The decrease in inventory
in 2001 was partially offset by higher cost inventory that was produced during
the year as a result of decreased production volume. This high cost inventory
was sold during 2002 and replaced with lower cost inventory resulting in an
overall decrease in inventory of $3.4 million over 2001. The Company expects
that for 2003, the value of its inventory will remain approximately $12.0
million and that the trend of decreasing inventory will not continue.

   Accounts payable in 2002, 2001, and 2000 was $4.6 million, $5.6 million, and
$6.2 million, respectively. The decreases in 2000 and 2001 were the result of
companywide cost savings measures implemented during those years. The benefits
of those cost savings measures continued into 2002. However, the decrease at
January 3, 2003 is principally due to plant shutdowns during the Christmas
holidays which resulted in a change in the timing of payments.

   Net cash used in investing activities was approximately $406,000, $705,000,
and $4.1 million for fiscal 2002, 2001, and 2000, respectively. The principal
investments of the Company are in property and equipment. Investments in
property and equipment were $874,000, $1.2 million, and $3.3 million for fiscal
2002, 2001, and 2000, respectively. The investments are generally made to
upgrade and improve existing production equipment and processes. In fiscal
2000, additional expenditures were made to set up or expand production
facilities in the U.S. and in Switzerland for new products. The Company expects
to spend approximately $1.0 million on property and equipment in 2003.

   Net cash (used in) provided by financing activities were approximately
($592,000), ($1.7 million), and $12.2 million for fiscal 2002, 2001, and 2000,
respectively. The Company had a $7.0 million line of credit with a domestic
lender which matured on March 29, 2002, and was amended and restated from time
to time during the year ended January 3, 2003. The line of credit, as modified,
extends the maturity date to March 31, 2003, included the release of restricted
cash in the amount of $2.0 million in order to pay down the note and provides
for monthly decreases in availability through February 2003 totaling $4.0
million. The Company's obligation to the lender is secured by a first priority
lien on substantially all of the Company's assets and bears interest at a rate
equal to the prime rate (4.25% at January 3, 2003) plus an applicable interest
margin from 1% to 5% which is based on the Company's ratio of funded debt to
earnings before interest, taxes, depreciation, and amortization (EBITDA) at
each fiscal quarter on a trailing 12-month basis. In addition, the Company is
required to pay a commitment fee .25% to 1.25% of the unused amount of the line
of credit also based on a ratio of funded debt to EBITDA. Since the Company
reported losses throughout 2002, it was charged the maximum total interest rate
allowed under the agreement of prime plus a 5% margin (9.25%) and the maximum
commitment fee of 1.25% at January 3, 2003.

   The agreement also requires the Company to satisfy certain financial tests,
which include positive and negative covenants such as the maintenance of
certain levels of liquidity, operating cash flows, tangible net worth, and
operating income. As of January 3, 2003, the Company was not in compliance with
the tangible net worth covenants of the agreement due to the valuation
allowance recorded against the Company's deferred tax assets. The Company has
obtained a waiver from the lender who agreed to waive the events of default
resulting from the covenant violations. Borrowings outstanding under the note
as of January 3, 2003 and December 28, 2001, were approximately $2.8 million
and $5.7 million, respectively. As of January 3, 2003 and December 28, 2001,
the note provided for borrowings of up to $3.7 million and $7.0 million,
respectively.

   On March 26, 2003, the Company and its domestic lender executed an agreement
to extend the maturity date of the Company's $3.0 million line-of-credit for
one year to March 31, 2004. The line-of-credit bears interest at a rate equal
to the prime rate (4.25% at January 3, 2003) plus an interest margin of 5%. In
addition, the Company is required to pay a commitment fee of 1.25% per annum of
the unused amount of the line-of-credit. All other terms and conditions are
generally unchanged except that the cash flow and operating income covenants of
the agreement do not commence until the third quarter of 2003 and minimum
tangible net worth covenants were reduced.

                                      24

<PAGE>

   A subsidiary of the Company has a revolving credit facility with a Swiss
bank, which as amended in fiscal 2001, provides for borrowings of up to 4.5
million Swiss Francs "CHF" ($3.2 million based on the exchange rate on January
3, 2003). The credit facility is divided into two parts: Part A provides for
borrowings of up to CHF 3.0 million ($2.1 million based on the exchange rate on
January 3, 2003) and does not have a termination date; Part B provides for
borrowings of up to CHF 1.5 million ($1.1 million based on the exchange rate on
January 3, 2003). The loan amount under Part B of the agreement reduces by CHF
250,000 ($178,000 based on the exchange rate on January 3, 2003) semi-annually
beginning June 30, 2002. The credit facility is secured by a general assignment
of claims.

   The loan agreement provides for borrowings on a current or fixed-term basis.
The interest rate on current advances is 6.5% per annum at January 3, 2003 plus
a commission rate of 0.25%, payable each quarter. The base interest rate for
fixed-term advances follows Euromarket conditions for loans of a corresponding
term and currency plus an individual margin. The fixed-term rate at January 3,
2003 was 4.6%. Borrowings outstanding under the current account as of January
3, 2003 were CHF 90,000 ($64,000 based on the exchange rate on January 3,
2003). Fixed term advances at January 3, 2003 were CHF 4.1 million ($2.9
million based on the exchange rate on January 3, 2003).

   A subsidiary of the Company has a revolving credit facility with a German
bank that provides for borrowings of up to approximately 200,000 EUR ($207,000
at the exchange rate on January 3, 2003) at an interest rate of 8.5%. The loan,
originally due February 28, 2003, was extended on October 8, 2002 to August 31,
2003. Payments in the amount of 50,000 EUR ($52,000 at the exchange rate on
January 3, 2003) were due monthly beginning December 31, 2001. The amended
agreement reduced the monthly payment to 25,000 EUR ($26,000 at the exchange
rate on January 3, 2003). The bank also agreed to waive the September 2002 and
October 2002 payments. There were no other changes to the original terms of the
agreement. The loan is secured by an assignment of the subsidiary's accounts
receivable and inventory and is personally guaranteed by the subsidiary's
president. There are no financial covenants included in the agreement and no
borrowings outstanding as of January 3, 2003.

   The subsidiary of the Company negotiated another credit facility with a
different German bank to replace the one that expires on August 31, 2003. The
new agreement, effective January 13, 2003, provides for borrowings of up to
210,000 EUR ($199,000 at the exchange rate on the date of the agreement) at an
interest rate of 8.5%. The note is due November 30, 2003 and is personally
guaranteed by the subsidiary's president. The agreement includes a covenant
which prevents the subsidiary from paying dividends.

   The following table represents the Company's known contractual obligations
at January 3, 2003.

<TABLE>
<CAPTION>
                                           Payments Due by Period
         -                           ----------------------------------
                                             Less                More
                                             Than   1-3    3-5   Than
           Contractual Obligations   Total  1 Year Years  Years 5 Years
           -----------------------   ------ ------ ------ ----- -------
                                               (In thousands)
         <S>                         <C>    <C>    <C>    <C>   <C>
         Long-term debt Obligations. $   -- $   -- $   -- $ --   $ --
         Capital Lease Obligations..     --     --     --   --     --
         Operating Lease Obligations  1,647    713    879   55     --
         Purchase Obligations.......  2,865  1,065  1,800   --     --
         Other long-term liabilities     89     --     89   --     --
                                     ------ ------ ------ ----   ----
            Total................... $4,601 $1,778 $2,768 $ 55   $ --
                                     ====== ====== ====== ====   ====
</TABLE>

   The Company depends on external sources (banks and capital markets) for the
funding it needs to operate the business. Unexpected conditions have arisen and
can continue to arise that could cause the Company to be in violation of its
lender's financial covenants. The Company believes it has sufficient cash
available through its bank credit facilities and cash from operations to fund
existing operations and that it could obtain alternate

                                      25

<PAGE>

financing, if necessary, although this is not certain. The decision of any one
of the Company's lenders not to renew its line of credit could have a material
adverse affect on the Company and the costs associated with obtaining alternate
financing could be significant.

Critical Accounting Policies

   The Company believes the following represent its critical accounting
policies.

  .   Revenue Recognition.  In general, the Company supplies foldable IOLs on a
      consignment basis to customers, primarily ophthalmologists, surgical
      centers, hospitals and other eye care providers and recognizes sales when
      the IOLs are implanted. Sales of all other products, including sales to
      foreign distributors, are generally recognized upon shipment.

      Revenue from license and technology agreements is recorded as income,
      when earned, according to the terms of the respective agreements.

  .   Impairment of Long-Lived Assets.  Intangible and other long lived-assets
      are reviewed for impairment whenever events such as product
      discontinuance, plant closures, product dispositions or other changes in
      circumstances indicate that the carrying amount may not be recoverable.
      In reviewing for impairment, the Company compares the carrying value of
      such assets to the estimated undiscounted future cash flows expected from
      the use of the assets and their eventual disposition. When the estimated
      undiscounted future cash flows are less than their carrying amount, an
      impairment loss is recognized equal to the difference between the assets'
      fair value and their carrying value.

      Goodwill, which has an indefinite life and was previously amortized on a
      straight-line basis over the periods benefited, is no longer amortized to
      earnings, but instead is subject to periodic testing for impairment.
      Intangible assets determined to have definite lives are amortized over
      their remaining useful lives. Goodwill of a reporting unit is tested for
      impairment on an annual basis or between annual tests if an event occurs
      or circumstances change that would reduce the fair value of a reporting
      unit below its carrying amount. As provided under SFAS 142, the initial
      testing of goodwill for possible impairment was completed within the
      first six months of 2002 and no impairment has been identified. As of
      January 3, 2003, the carrying value of goodwill was $6.4 million.

      The Company also has other intangible assets consisting of patents and
      licenses, with a gross book value of $14.0 million and accumulated
      amortization of $5.0 million as of January 3, 2003. The Company
      capitalizes the costs of acquiring patents and licenses as well as the
      legal costs of successfully defending its rights to these patents.
      Amortization is computed on the straight-line basis over the estimated
      useful lives, which are based on legal and contractual provisions, and
      range from 10 to 20 years.

  .   Deferred Taxes.  The Company recognizes deferred tax assets and
      liabilities for temporary differences between the financial reporting
      basis and the tax basis of the Company's assets and liabilities along
      with net operating loss and credit carryforwards. A valuation allowance
      is recognized if, based on the weight of available evidence, it is more
      likely than not that some portion or all of the deferred tax asset may
      not be realized. The impact on deferred taxes of changes in tax rates and
      laws, if any, are applied to the years during which temporary differences
      are expected to be settled and reflected in the financial statements in
      the period of enactment.

      In 2002, due to the Company's recent history of losses, an increase to
      the valuation allowance was recorded as a non-cash charge to tax expense
      in the amount of $9.2 million. As a result, the valuation allowance fully
      offsets the value of deferred tax assets on the Company's balance sheet
      as of January 3, 2003. If in the future, the Company determines it will
      be able to utilize all or part of the deferred tax assets which have a
      valuation allowance of $18.2 million at January 3, 2003, we would reverse
      the valuation allowance, which would result in an income tax benefit.

                                      26

<PAGE>

Factors That May Affect Future Results of Operations

   Our short and long-term success is subject to many factors that are beyond
our control. Stockholders and prospective stockholders in the Company should
consider carefully the following risk factors, in addition to other information
contained in this report. This Annual Report on Form l0-K contains
forward-looking statements, which are subject to a variety of risks and
uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors
including those set forth below.

  The Company may not be able to fund its future growth or react to competitive
  pressures if it lacks sufficient funds.

   The Company depends on external sources (banks and capital markets) for the
funding it needs to operate the business. Unexpected conditions have arisen and
can continue to arise that could cause the Company to be in violation of its
lender's financial covenants. The Company believes it has sufficient cash
available through its bank credit facilities and cash from operations to fund
existing operations and that it could obtain alternate financing, if necessary,
although this is not certain. The decision of any one of the Company's lenders
not to renew its line of credit could have a material adverse affect on the
Company and the costs associated with obtaining alternate financing could be
significant.

  We have a history of losses.

   We have reported losses in each of the last three fiscal years and have an
accumulated deficit of $41.4 million as of January 3, 2003. If losses from
operations continue, they could adversely affect the market price for our
common stock, and our ability to maintain existing financing and obtain new
financing. Despite our restructuring efforts, there can be no assurance that we
will receive the intended benefits from these changes or that we will be
successful in restoring the profitability of the Company.

  We risk losses through litigation.

   We are party to various claims and legal proceedings arising out of the
normal course of our business. These claims and legal proceedings relate to
contractual rights and obligations, employment matters, stockholder suits, and
claims of product liability. While there can be no assurance that an adverse
determination of any such matters could not have a material adverse impact in
any future period, we do not believe, based upon information known to us, that
the final resolution of any of these matters will have a material adverse
effect upon our consolidated financial position or results of operations and
cash flows.

  We have been in default of the terms of our domestic loans and have been
  required to reduce our principal balances, limiting our access to credit.

   During recent periods, we have failed to comply with some of the covenants
in our principal domestic loan, including covenants that we maintain minimum
levels of operating income, cash flow and tangible net worth. Accordingly, we
have had to seek waivers from our lender or modifications of our lending
agreement. Among other things, we have agreed to monthly reductions of the
balance of our principal domestic loan which reduces it from $7.0 million to
$3.0 million when it is due on March 31, 2003. As of January 3, 2003, the
principal balance of the loan was approximately $2.8 million. If we fail to
meet the covenants in our loans in the future, we may not be able to secure
further waivers or amendments from our lenders, who may instead seek payment on
their loans and, if we fail to pay, to foreclose on the collateral for their
loans. We have pledged substantially all of our assets as security for our
existing loans. Our collateral pledge may make it more difficult for us to
obtain additional financing on advantageous terms, if at all.

                                      27

<PAGE>

  If we fail to keep pace with advances in our industry or fail to persuade
  physicians to adopt the new products we introduce, customers may not buy our
  products and our revenue may decline.

   Constant development of new technologies and techniques, frequent new
product introductions and strong price competition characterize the ophthalmic
industry. The first company to introduce a product to market usually gains a
significant competitive advantage. Our future growth depends, in part, on our
ability to develop products to treat diseases and disorders of the eye that are
more effective, safer, or incorporate emerging technologies better than our
competitors' products. In addition, we must manufacture these products
economically and market them successfully by persuading a sufficient number of
eye care professionals to use them. For example, glaucoma requires ongoing
treatment over a long period of time; thus, many doctors are reluctant to
switch a patient to a new treatment if the patient's current treatment for
glaucoma remains effective. Sales of our existing products may decline rapidly
if one of our competitors introduces a substantially superior product, or if we
announce a new product of our own. Similarly, if we fail to make sufficient
investments in research and development or if we focus on technologies that do
not lead to better products, our current and planned products could be
surpassed by more effective or advanced products.

  Resources devoted to research and development may not yield new products that
  achieve commercial success.

   We devote substantial resources to research and development. The research
and development process is expensive, prolonged and entails considerable
uncertainty. Development of new implantable technology, from discovery through
testing and registration to initial product launch, typically takes between
three and seven years. This period varies considerably from product to product
and country to country. Because of the complexities and uncertainties
associated with ophthalmic research and development, products we are currently
developing may not complete the development process or obtain the regulatory
approvals required for us to market such products successfully. These may take
longer and cost more to develop and may be less successful than we currently
anticipate. It is possible that few or none of the products in our development
pipeline will become commercially successful.

  Failure of users of our products to obtain adequate reimbursement from
  third-party payors could limit market acceptance of our products, which could
  impact our sales and profits.

   Many of our products, in particular IOLs and products related to the
treatment of glaucoma, are used in procedures that are typically covered by
health insurance, HMO plans, Medicare or Medicaid. These third-party payors
have recently been trying to contain costs by restricting the types of
procedures they reimburse to those viewed as most cost-effective and capping or
reducing reimbursement rates. These polices could adversely affect sales and
prices of our products. Physicians, hospitals and other health care providers
may be reluctant to purchase our products if third-party payors do not
adequately reimburse them for the cost of our products and the use of our
surgical equipment. For example:

  .   Major third-party payors for hospital services, including government
      insurance plans, Medicare, Medicaid and private health care insurers,
      have substantially revised their payment methodologies during the last
      few years, resulting in stricter standards for reimbursement of hospital
      and outpatient charges for some medical procedures, including cataract
      procedures and IOLs;

  .   Numerous legislative proposals have been considered that, if enacted,
      would result in major reforms in the United States' health care system,
      which could have an adverse effect on our business;

  .   Our competitors may reduce the prices of their products, which could
      result in third-party payors favoring our competitors;

  .   There are proposed and existing laws and regulations governing product
      prices and the profitability of companies in the health care industry; and

  .   There have been recent initiatives by third-party payors to challenge the
      prices charged for medical products, which could affect our profitability.

                                      28

<PAGE>

Reductions in the prices for our products in response to these trends could
reduce our profits. Moreover, our products may not be covered in the future by
third-party payors. The failure of our products to be so covered could cause
our profits to decline.

  Economic conditions and price competition may cause sales of our products
  used in elective surgical procedures to decline and reduce our profitability.

   Some of our products are used in purely elective procedures. For example,
many patients with refractive errors that could be successfully treated with
ICLs can also obtain satisfactory vision with eyeglasses or conventional
contact lenses. Except in cases where ICLs offer the only acceptable outcome,
it is likely that insurers, HMOs and government payors generally will not pay
for ICL implantation and that the patient will bear the full cost of the
procedure. Individuals may be less willing to incur the costs of these
procedures in weak or uncertain economic conditions, which could lead to a
decline in the number of these procedures.

  Product recalls have been costly and may be so in the future.

   Implantable medical devices must be manufactured to the highest standards
and tolerances, and often incorporate newly developed technology. Despite all
efforts at quality control and advance testing, from time to time defects or
technical flaws in our products may not come to light until after the products
are sold or consigned. In such circumstances, the Company has previously made
voluntary recalls of its products. Such voluntary recalls may take place again
in the future. Mandatory recalls can also take place if regulators or courts
require them, even if the Company believes its products are safe and effective.
Recalls result in lost sales of the recalled products themselves, and can
result in further lost sales while replacement products are manufactured,
especially if the replacements must be redesigned. If recalled products have
already been implanted, we may bear some or all of the cost of corrective
surgery. Recalls also damage our reputation. The inconvenience caused by
recalls and related interruptions in supply, and the damage to our reputation,
could cause some providers to discontinue using our products. The costs of
recalls have severely impacted our revenues in recent periods.

  We are subject to extensive government regulation, which increases our costs
  and could prevent us from selling our products.

   The research, development, testing, manufacturing and marketing of our
products are subject to extensive governmental regulation. Government
regulation includes inspection of and controls over testing, manufacturing,
safety and environmental controls, efficacy, labeling, advertising, promotion,
record keeping, the sale and distribution of pharmaceutical products and
samples and electronic records and electronic signatures. We are also subject
to government regulation with respect to the prices we charge and the rebates
we offer to customers. Government regulation substantially increases the cost
of developing, manufacturing and selling our products.

   In the United States, we must obtain approval from the FDA for each product
that we market. The FDA approval process is typically lengthy and expensive,
and approval is never certain. Products distributed outside of the United
States are also subject to government regulation, which may be equally or more
demanding. Our new products could take a significantly longer time than we
expect to gain regulatory approval and may never gain approval. If a regulatory
authority delays approval of a potentially significant product, our market
value and operating results may decline. Even if the FDA or another regulatory
agency approves a product, the approval may limit the indicated uses for a
product, may otherwise limit our ability to promote, sell and distribute a
product or may require post-marketing studies. If we are unable to obtain
regulatory approval of our products, we will not be able to market these
products, which would result in a decrease in our sales. Currently, we are
actively pursuing approval for a number of our products from regulatory
authorities in a number of countries, including, among others, the United
States, Egypt, Taiwan, China, and the United Arab Emirates. Continued growth in
our sales and profits will depend, in part, on the timely and successful
introduction and marketing of some or all of these products.

                                      29

<PAGE>

   The clinical trials required to obtain regulatory approvals are complex and
expensive and their outcomes are uncertain. We incur substantial expense for,
and devote significant time to, clinical trials, yet cannot be certain that the
trials will ever result in the commercial sale of a product. Positive results
from pre-clinical studies and early clinical trials do not ensure positive
results in later clinical trials that form the basis of an application for
regulatory approval. We may suffer significant setbacks in clinical trials,
even after earlier clinical trials show promising results. Any of our products
may produce undesirable side effects that could cause us or regulatory
authorities to interrupt, delay or halt clinical trials of a pharmaceutical or
medical device candidate. We, the FDA or another regulatory authority may
suspend or terminate clinical trials at any time if they or we believe the
trial participants face unacceptable health risks.

   Noncompliance with applicable United States regulatory requirements can lead
to fines, injunctions, penalties, mandatory recalls or seizures, suspensions of
production, denial or withdrawal of pre-marketing approvals, recommendations by
the FDA against governmental contracts and criminal prosecution. The FDA also
has authority to request repair, replacement or refund of the cost of any
device we manufacture or distribute. Regulatory authorities outside of the
United States may impose similar sanctions for noncompliance with applicable
regulatory requirements.

  We face strong competition.

   Our competitors, including Bausch & Lomb, AMO, Alcon, Pharmacia & Upjohn,
Inc. and CIBA Vision, have much greater financial resources than we do and some
of them have large international markets for a full suite of ophthalmic
products. Their greater resources for research, development and marketing, and
their greater capacity to offer comprehensive products and equipment to
providers, make it difficult for us to compete. In recent periods, the Company
has lost significant market share to some of its competitors.

  The global nature of our business may result in fluctuations and declines in
  our sales and profits.

   Our products are sold in more than 39 countries. Revenues from international
operations make up a significant portion of our total revenue, reaching 49% for
the year ended January 3, 2003. The results of operations and the financial
position of our offshore operations are generally reported in the relevant
local currencies and then translated into United States dollars at the
applicable exchange rates for inclusion in our consolidated financial
statements, exposing us to translation risk. In 2002, our most significant
currency exposures were to the Euro, the Swiss Franc, and the Australian
Dollar. The exchange rates between these and other local currencies and the
United States dollar may fluctuate substantially. In addition, we are exposed
to transaction risk because some of our expenses are incurred in a different
currency from the currency in which our revenues are received. Fluctuations in
the value of the United States dollar against other currencies have had in the
past, and may have in the future, a material adverse effect on our operating
margins and profitability.

   Economic, social and political conditions, laws, practices and local customs
vary widely among the countries in which we sell our products. Our operations
outside of the United States are subject to a number of risks and potential
costs, including lower product margins, less stringent protection of
intellectual property and economic, political and social uncertainty in some
countries, especially in emerging markets. Our continued success as a global
company depends, in part, on our ability to develop and implement policies and
strategies that are effective in anticipating and managing these and other
risks in the countries where we do business. These and other risks may have a
material adverse effect on our operations in any particular country and on our
business as a whole. We price all of our products in U.S. dollars, and as a
result changes in exchange rates can make our products more expensive in some
offshore markets and reduce our revenues. Inflation in emerging markets also
makes our products more expensive there and increases the credit risks to which
we are exposed. We have experienced currency fluctuations, inflation and
volatile economic conditions, which have impacted our profitability in the past
in several markets, including Germany, Austria, South Africa, France, Sweden,
Norway, Canada and Australia, and we may experience such impacts in the future.

                                      30

<PAGE>

  We depend on proprietary technologies, but may not be able to protect our
  intellectual property rights adequately.

   We have numerous patents and pending patent applications. We rely on a
combination of contractual provisions, confidentiality procedures and patent,
trademark, copyright and trade secrecy laws to protect the proprietary aspects
of our technology. These legal measures afford limited protection and may not
prevent our competitors from gaining access to our intellectual property and
proprietary information. Any of our patents may be challenged, invalidated,
circumvented or rendered unenforceable. Furthermore, we cannot assure you that
any pending patent application held by us will result in an issued patent or
that if patents are issued to us, the patents will provide meaningful
protection against competitors or competitive technologies. Litigation may be
necessary to enforce our intellectual property rights, to protect our trade
secrets and to determine the validity and scope of our proprietary rights. Any
litigation could result in substantial expense, may reduce our profits and may
not adequately protect our intellectual property rights. In addition, we may be
exposed to future litigation by third parties based on claims that our products
infringe their intellectual property rights. This risk is exacerbated by the
fact that the validity and breadth of claims covered by patents in our industry
may involve complex legal issues that are not fully resolved.

   Any litigation or claims against us, whether or not successful, could result
in substantial costs and harm our reputation. In addition, intellectual
property litigation or claims could force us to do one or more of the
following: to cease selling or using any of our products that incorporate the
challenged intellectual property, which would adversely affect our revenue; to
obtain a license from the holder of the intellectual property right alleged to
have been infringed, which license may not be available on reasonable terms, if
at all; or to redesign our products to avoid infringing the intellectual
property rights of a third party, which may be costly and time-consuming or
impossible to accomplish.

  We obtain some of the components of our products from a single source, and an
  interruption in the supply of those components could reduce our revenue.

   We obtain some of the components for our products from a single source. The
loss or interruption of any of these suppliers could cause our revenue and
profitability to decline and harm our customer relations.

  Most of our products have single- site manufacturing approvals, exposing us
  to risks of business interruption.

   The validation of a second manufacturing site is expensive both in terms of
time and money and, therefore, has not been done. If there were to be a natural
disaster, fire, or other serious business interruption at one of our
manufacturing facilities, it could take a significant amount of time to
validate a second site and replace lost product. We could lose customers to
competitors, thereby reducing sales and profitability.

  We may not successfully develop and launch replacements for our products that
  lose patent protection.

   Most of our products are covered by patents that give us a degree of market
exclusivity during the term of the patent. We also earn revenue by licensing
some of our patented technology to other ophthalmic companies. The legal life
of a patent is 20 years from application. Patents covering our products will
expire within the next 1 to 15 years. Upon patent expiration, our competitors
may introduce products using the same technology. As a result of this possible
increase in competition, we may need to charge a lower price in order to
maintain sales of our products, which could make these products less
profitable. If we fail to develop and successfully launch new products prior to
the expiration of patents for our existing products, our sales and profits with
respect to those products could decline significantly. We may not be able to
develop and successfully launch more advanced replacement products before these
and other patents expire.

                                      31

<PAGE>

  The Company depends on key employees.

   The Company depends on the continued service of its senior management and
other key employees. The loss of a key employee could hurt the business. The
Company could be particularly hurt if key employees went to work for
competitors. The Company's future success depends on its ability to identify,
attract, train and motivate other highly skilled personnel. Failure to do so
may adversely affect future results.

  The Company's Certificate of Incorporation and Bylaws could delay or prevent
  an acquisition or sale of the Company.

   The Company's Certificate of Incorporation empowers the Board of Directors
to establish and issue a class of preferred stock, and to determine the rights,
preferences and privileges of the preferred stock. This gives the Board of
Directors the ability to deter, discourage or make more difficult a change in
control of the Company, even if such a change in control would be in the
interest of a significant number of our stockholders or if such a change in
control would provide our stockholders with a substantial premium for their
shares over the then-prevailing market price for the common stock.

   The Company's Bylaws contain other provisions that could have an
anti-takeover effect, including the following:

  .   only one of the three classes of directors is elected each year,

  .   Stockholders have limited ability to remove directors;

  .   Stockholders cannot call a special meeting of stockholders; and

  .   Stockholders must give advance notice to nominate directors.

  Anti-takeover provisions of Delaware law could delay or prevent an
  acquisition of the Company.

   The Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which regulates corporate acquisitions. These
provisions could discourage potential acquisition proposals and could delay or
prevent a change in control transaction. They could also have the effect of
discouraging others from making tender offers for the Company's common stock or
preventing changes in its management.

  Our activities involve hazardous materials and emissions and may subject us
  to environmental liability.

   Our manufacturing, research and development practices involve the controlled
use of hazardous materials. We are subject to federal, state and local laws and
regulations in the various jurisdictions in which we have operations governing
the use, manufacturing, storage, handling and disposal of these materials and
certain waste products. Although we believe that our safety and environmental
procedures for handling and disposing of these materials comply with legally
prescribed standards, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. Remedial environmental actions
could require us to incur substantial unexpected costs, which would materially
and adversely affect our results of operations. If we were involved in a major
environmental accident or found to be in substantial non-compliance with
applicable environmental laws, we could be held liable for damages or penalized
with fines.

  The market price of our common stock is likely to be volatile.

   Our stock price could be subject to significant fluctuations in response to
factors such as quarterly variations in operating results, operating results
which vary from the expectations of securities analysts and investors, changes
in financial estimates, changes in market valuations of competitors,
announcements by us or our competitors of a material nature, additions or
departures of key personnel, future sales of common stock and stock volume
fluctuations. Also, general political and economic conditions such as recession
or interest rate fluctuations may adversely affect the market price of our
stock.

                                      32

<PAGE>

Foreign Exchange

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

Inflation

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

New Accounting Pronouncements

   In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations." SFAS No. 143 requires the fair value of a
liability for an asset retirement obligation to be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated retirement costs are capitalized as part of the carrying amount of
the long-lived asset. SFAS No. 143 is effective for fiscal years beginning
after June 15, 2002. The Company's adoption of SFAS No. 143 did not have a
material impact on its operations or financial position.

   In May 2002, the FASB issued SFAS 145, "Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 eliminates Statement 4 (and Statement 64, as it amends Statement
4), which requires gains and losses from extinguishments of debt to be
aggregated and, if material, classified as an extraordinary item, and thus,
also the exception to applying Opinion 30 is eliminated as well. This statement
is effective for years beginning after May 2002 for the provisions related to
the rescission of Statements 4 and 64, and for all transactions entered into
beginning May 2002 for the provision related to the amendment of Statement 13.
The Company's adoption of SFAS No. 145 did not have a material impact on its
operations or financial position.

   In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities", which addresses accounting for restructuring
and similar costs. SFAS No. 146 supersedes previous accounting guidance,
principally Emerging Issues Task Force (EITF) Issue No. 94-3. The Company will
adopt the provisions of SFAS No. 146 for restructuring activities initiated
after December 31, 2002. SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the liability
is incurred. Under EITF No. 94-3, a liability for an exit cost was recognized
at the date of a company's commitment to an exit plan. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at
fair value. Accordingly, SFAS No. 146 may affect the timing of recognizing
future restructuring costs as well as the amount recognized.

   In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others," an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34. This
interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees
issued. The interpretation also clarifies that a guarantor is required to
recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of
the interpretation are applicable to guarantees issued or modified after
December 31, 2002 and are not expected to have a material effect on the
Company's operations or financial position. The disclosure requirements are
effective for financial statements of interim and annual periods ending after
December 31, 2002. Significant guarantees that have been entered into by the
Company as of January 3, 2003 are disclosed in Note 9 to the consolidated
financial statements.

   In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure", which amends SFAS No. 123,
"Accounting for Stock-Based Compensation".

                                      33

<PAGE>

SFAS No. 148 provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require more prominent and more frequent disclosures in
financial statements of the effects of stock-based compensation. The transition
guidance provisions of SFAS No. 148 are effective for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for
financial reports containing condensed financial statements for interim periods
beginning after December 15, 2002. The adoption of SFAS No. 148 did not have a
material impact on the Company's financial position or results of operations.
The Company will provide the interim disclosures required by SFAS No. 148
beginning in the first quarter of 2003.

   In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities," an interpretation of Accounting Research
Bulletins ("ARB") No. 51, Consolidated Financial Statements ("FIN 46"). FIN 46
clarifies the application of ARB No. 51 to certain entities in which equity
investors do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other
parties. The Company does not believe the adoption of FIN 46 will have a
material impact its financial position or results of operations.

<TABLE>
<C>      <S>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
</TABLE>

   In the normal course of business, our operations are exposed to risks
associated with fluctuations in interest rates and foreign currency exchange
rates. The Company manages its risks based on management's judgment of the
appropriate trade-off between risk, opportunity and costs. Management does not
believe that market risks are material to the results of operations or cash
flows of the Company, and, accordingly, does not generally enter into interest
rate or foreign exchange rate hedge instruments.

   Interest rate risk.  Our $5.8 million of debt is split between domestic
borrowings of $2.8 million and borrowings of our international subsidiaries of
$3.0 million. Our domestic borrowings are linked to the prime interest rate
and, thus, our interest rate expense will fluctuate with rate changes in the
U.S. The majority of our international borrowings bear an interest rate that is
linked to Euro market conditions and, thus, our interest rate expense will
fluctuate with changes in those conditions. If interest rates were to increase
or decrease by 1% for the year, our annual interest rate expense would increase
or decrease by approximately $60,000.

   Foreign currency risk.  Our international subsidiaries operate in and are
net recipients of currencies other than the U.S. dollar and, as such, we
benefit from a weaker dollar and are adversely affected by a stronger dollar
relative to major currencies worldwide (Euro and Australian dollar).
Accordingly, changes in exchange rates, and particularly the strengthening of
the US dollar, may negatively affect our consolidated sales and gross profit as
expressed in U.S. dollars. Additionally, approximately 51% of our debt is
denominated in Swiss Francs and as such, we are subject to fluctuations of the
Swiss Franc as compared to the U.S. dollar in converting the value of the debt
in U.S. dollars. The U.S. dollar value of the debt is increased by a weaker
dollar and decreased by a stronger dollar relative to the Swiss Franc.

<TABLE>
<C>     <S>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
</TABLE>

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

<TABLE>
<C>     <S>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.
</TABLE>

   Not applicable.

                                      34

<PAGE>

                                   PART III

<TABLE>
<C>      <S>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
</TABLE>

   The information in Item 10 is incorporated herein by reference to portions
of the Proxy Statement for the Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission within 120 days of the close of the
fiscal year ended January 3, 2003.

<TABLE>
<C>      <S>
ITEM 11. EXECUTIVE COMPENSATION
</TABLE>

   The information in Item 11 is incorporated herein by reference to portions
of the Proxy Statement for the Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission within 120 days of the close of the
fiscal year ended January 3, 2003.

<TABLE>
<C>      <S>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
</TABLE>

   The information in Item 12 is incorporated herein by reference to portions
of the Proxy Statement for the Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission within 120 days of the close of the
fiscal year ended January 3, 2003.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The information in Item 13 is incorporated herein by reference to portions
of the Proxy Statement for the Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission within 120 days of the close of the
fiscal year ended January 3, 2003.

ITEM 14.  CONTROLS AND PROCEDURES.

   (a) Evaluation of disclosure controls and procedures.

   Within the 90 days prior to the filing date of this report, the Chief
Executive Officer and the Chief Financial Officer of the Company, with the
participation of the Company's management, carried out an evaluation of the
effectiveness of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive
Officer and the Chief Financial Officer believe that, as of the date of the
evaluation, the Company's disclosure controls and procedures are effective in
making known to them material information relating to the Company (including
its consolidated subsidiaries) required to be included in this report.

   Disclosure controls and procedures, no matter how well designed and
implemented, can provide only reasonable assurance of achieving an entity's
disclosure objectives. The likelihood of achieving such objectives is affected
by limitations inherent in disclosure controls and procedures. These include
the fact that human judgment in decision-making can be faulty and that
breakdowns in internal control can occur because of human failures such as
simple errors or mistakes or intentional circumvention of the established
process.

   (b) Changes in internal controls.

   There were no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls, known to the
Chief Executive Officer or the Chief Financial Officer, subsequent to the date
of the evaluation.

                                      35

<PAGE>

                                    PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             -----
<C>    <S>                                                                                                   <C>

(a)(1)   Financial statements required by Item 14 of this form are filed as a separate part of this report
         following Part IV

         Report of Independent Certified Public Accountants.................................................   F-2

         Consolidated Balance Sheets at January 3, 2003 and December 28, 2001...............................   F-3

         Consolidated Statements of Operations for the years ended January 3, 2003, December 28, 2001,
         and December 29, 2000..............................................................................   F-4

         Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Loss for the
         years ended January 3, 2003, December 28, 2001, and December 29, 2000..............................   F-5

         Consolidated Statements of Cash Flows for the years ended January 3, 2003, December 28,
         2001, and December 29, 2000........................................................................   F-6

         Notes to Consolidated Financial Statements.........................................................  F-13
</TABLE>

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

          I. Independent Certified Public Accountants' Report on Schedule

          II. Independent Certified Public Accountants' Consent

          III. Valuation and Qualifying Accounts and Reserves

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

(3) Reports on Form 8-K

   On December 6, 2002 the Company filed a Current Report on Form 8-K
disclosing the Settlement Agreement and Mutual General Release entered into
between the Company and John R. Wolf the former Chief Executive Officer of the
Company.

   On March 31, 2003 the Company filed a Current Report on Form 8-K reporting
that the Company and Wells Fargo Bank executed an agreement on March 26, 2003,
extending the maturity date of the Company's $3.0 million line-of-credit for
one year to March 31, 2004.

(4) Exhibits

<TABLE>
<C>   <S>
  3.1 Certificate of Incorporation, as amended(8)

  3.2 By-laws, as amended(9)

+ 4.1 1990 Stock Option Plan(1)

+ 4.2 1991 Stock Option Plan(2)

+ 4.3 1995 STAAR Surgical Company Consultant Stock Plan(3)

+ 4.4 1996 STAAR Surgical Company Non-Qualified Stock Plan(4)

  4.5 Stockholders' Rights Plan, dated effective April 20, 1995(9)

+ 4.6 1998 STAAR Surgical Company Stock Plan, adopted April 17, 1998(5)

 10.1 Joint Venture Agreement, dated May 23, 1988, between the Company, Canon Sales Co, Inc. and
        Canon, Inc.(7)

+10.2 Promissory Note dated February 28, 1991, from John R. Wolf to the Company(4)
</TABLE>

                                      36

<PAGE>

<TABLE>
<C>    <S>
+ 10.3 Stock Pledge/Security Agreement, dated February 28, 1991, between John R. Wolf, the Company and
         Pollet & Associates(4)

+ 10.4 Promissory Note dated February 28, 1991, from William C. Huddleston to the Company(4)

+ 10.5 Modification dated August 21, 2000 to Promissory Note dated February 28, 1991, from William C.
         Huddleston to the Company(9)

+ 10.6 Stock Pledge/Security Agreement, dated February 28, 1991, between William C. Huddleston, the
         Company and Pollet & Associates(4)

+ 10.7 Promissory Note, dated May 26, 1992, from the Andrew F. Pollet and Sally M. Pollet Revocable Trust
         dated March 6, 1990(6)

+ 10.8 Deed of Trust, dated September 21, 1992, by the Andrew F. Pollet and Sally M. Pollet Revocable
         Trust dated March 6, 1990(6)

+ 10.9 Promissory Note dated July 3, 1992, from William C. Huddleston to the Company(6)

+10.10 Modification dated August 21, 2000, to Promissory Note dated July 3, 1992, from William C.
         Huddleston to the Company(9)

+10.11 Stock Pledge/Security Agreement dated July 3, 1992, between William C. Huddleston the Company
         and Pollet & Associates(6)

 10.12 Lease, dated November 9, 1992, by and between Linda Lee Brown and Phyllis Ann Bailey and the
         Company regarding real property located at 1911 Walker Avenue, Monrovia, California(6)

 10.13 Indenture of Lease dated September 1, 1993, between the Company and FKT Associates(9)

 10.14 Second Amendment to Indenture of Lease dated September 21, 1998, between the Company and FKT
         Associates(9)

 10.15 Indenture of Lease dated October 20, 1983, between Dale E. Turner and Francis R. Turner(6)

+10.16 Promissory Note dated March 18, 1993, from William C. Huddleston to the Company(9)

+10.17 Modification dated August 21, 2000 to Promissory Note dated March 18, 1993, from William C.
         Huddleston to the Company(9)

 10.18 Patent License Agreement, dated May 24, 1995, with Eye Microsurgery Intersectoral Research and
         Technology Complex(9)

 10.19 Patent License Agreement, dated January 1, 1996, with Eye Microsurgery Intersectoral Research and
         Technology Complex(9)

 10.20 Agreement dated December 31, 1997, between the Company and Mentor Corporation(7)

+10.21 Promissory Note dated September 4, 1998, from John R. Wolf to the Company(7)

+10.22 Stock Pledge Agreement, dated September 4, 1998, between the Company and John R. Wolf(7)

+10.23 Stock Pledge Agreement dated September 4, 1998, between the Company and William C.
         Huddleston(7)

+10.24 Promissory Note dated September 4, 1998, from Andrew F. Pollet to the Company(7)

+10.25 Stock Pledge Agreement dated September 4, 1998, between the Company and Andrew F. Pollet(7)

 10.26 License and Supply Agreement dated May 6, 1999, between LensTec Incorporated, Lenstec Barbados
         Inc., STAAR Surgical AG and the Company(8)

 10.27 Equipment Purchase and Sale Agreement dated May 6, 1999, between Lenstec, Incorporated and the
         Company(8)

+10.28 Employment Agreement dated April 28, 1999, between the Company and John Santos(9)

+10.29 Modification to Employment Agreement dated May 31, 2000, between the Company and John
         Santos(9)
</TABLE>

                                      37

<PAGE>

<TABLE>
<C>    <S>
+10.30 Second Modification to Employment Agreement dated September 5, 2000, between the Company and
         John Santos(9)

+10.31 Promissory Note dated June 16, 1999, from Peter J. Utrata, M.D. to the Company(8)

+10.32 Stock Pledge Agreement dated June 16, 1999, by Peter J. Utrata, M.D. in favor of the Company(8)

+10.33 Promissory Note dated November 11, 1999, from Peter J. Utrata, M.D. to the Company(8)

+10.34 Promissory Note dated November 12, 1999, from John R. Wolf to the Company(8)

+10.35 Promissory Note dated November 17, 1999, from William C. Huddleston to the Company(8)

 10.36 Standard Industrial/Commercial Multi-Tenant Lease-Gross dated April 5, 2000, entered into between
         the Company and Kilroy Realty, L.P.(9)

+10.37 Promissory Note dated April 7, 2000, from William C. Huddleston to the Company(9)

+10.38 Modification dated August 21, 2000, to Promissory Note dated April 7, 2000, from William C.
         Huddleston to the Company(9)

+10.39 Description of oral agreement between John R. Wolf and the Company dated April 18, 2000(9)

+10.40 Promissory Note dated June 2, 2000, from Peter J. Utrata, M.D. to the Company(9)

+10.41 Stock Pledge Agreement dated June 2, 2000, between the Company and Peter J. Utrata, M.D.(9)

+10.44 Promissory Note dated September 5, 2000, from Andrew F. Pollet to the Company(9)

 10.45 Deed of Trust dated September 5, 2000, against real property commonly known as 10934 Alto Court,
         Oak View, California executed in favor of the Company by Andrew F. Pollet and Sally M. Pollet, as
         individuals and as trustees of the Andrew F. and Sally M. Pollet Revocable Trust dated March 6,
         1990(9)

 10.47 Form of Purchase Agreement entered into between the Company and Fortis Advantage Portfolios,
         Inc.--Capital Appreciation Portfolio(9)

 10.48 Form of Purchase Agreement entered into between the Company and Fortis Series Fund,
         Inc.--Aggressive Growth Series(9)

 10.49 Form of Purchase Agreement entered into between the Company and Phoenix Edge Series Fund
         Engemann Small & Mid Cap Growth Series(9)

 10.50 Form of Purchase Agreement entered into between the Company and Phoenix-Engemann Small Cap
         Fund(9)

 10.51 Form of Purchase Agreement entered into between the Company and Phoenix-Engemann Small &
         Mid-Cap Growth Fund(9)

 10.52 Form of Purchase Agreement entered into between the Company and Pequot Scout Fund, L.P.(9)

 10.53 Form of Purchase Agreement entered into between the Company and Pequot Navigator Offshore
         Fund, Inc.(9)

 10.54 Form of Purchase Agreement entered into between the Company and Baystar International, Ltd.(9)

 10.55 Form of Purchase Agreement entered into between the Company and Baystar Capital, L.P.(9)

 10.56 Form of Purchase Agreement entered into between the Company and Invesco Global Health Sciences
         Fund(9)

+10.57 Promissory Note dated October 23, 2000, from Andrew F. Pollet to the Company(9)

 10.59 Letter Agreement between the Company and Wells Fargo Bank, National Association and Revolving
         Line of Credit Note(9)

+10.60 Promissory Note dated November 1, 2000, from Andrew F. Pollet to the Company(9)

 10.61 Settlement Agreement and Mutual Release dated December 19, 2000, between the Company and
         William C. Huddleston(9)
</TABLE>

                                      38

<PAGE>

<TABLE>
<C>       <S>
+   10.62 Employment Agreement dated December 20, 2000, between the Company and David Bailey(9)

+   10.63 Stock Option Agreement dated December 20, 2000, between the Company and David Bailey(9)

    10.64 Letter Amendment dated December 22, 2000, between the Company and Wells Fargo Bank, N.
            A.(10)

+   10.65 Consulting Agreement dated March 1, 2001, between the Company and DRM Strategic Services,
            Ltd.(10)

    10.66 Letter Agreement dated April 1, 2001, between the Company and Wells Fargo Bank, N.A.(10)

    10.67 Letter Amendment dated July 1, 2001, between the Company and Wells Fargo Bank, N.A.(10)

    10.68 Letter Agreement dated July 1, 2001, between the Company and Wells Fargo Bank, N.A.(10)

+   10.69 Severance and Release Agreement dated August 21, 2001, between the Company and Thomas J.
            Chambers (including Consulting Agreement dated August 9, 2001)(10)

    10.70 Settlement Agreement between the Company, Canon, Inc., Canon Sales Co., Inc., and Canon-
            STAAR Co. Inc. dated September 28, 2001(10)

    10.71 Fifth Amendment to Credit Agreement dated October 1, 2001, between the Company and Wells
            Fargo Bank, N.A.(10)

    10.72 Settlement and Release Agreement dated October 5, 2001, between the Company and Gunther
            Roepstorff(10)

    10.73 Stock Option Agreement dated November 13, 2001, between the Company and David Bailey(10)

    10.74 Stock Option Agreement dated November 13, 2001, between the Company and David R.
            Morrison(10)

    10.75 Stock Option Certificate dated November 13, 2001, between the Company and Richard D.
            Simmons(10)

    10.76 Sixth Amendment to Credit Agreement dated December 20, 2001, between the Company and
            Wells Fargo Bank, N.A.(10)

    10.77 Letter Agreement dated January 25, 2002, between the Company and Wells Fargo Bank, N.A.(10)

    10.78 Second Amendment to the Amended and Restated Credit Agreement dated October 25, 2002,
            between the Company and Wells Fargo Bank, N.A.(12)

+   10.79 Settlement Agreement and Mutual General Release between John R. Wolf and the Company dated
            November 12, 2002(13)

+   10.80 Employment Agreement dated January 3, 2002, between the Company and John Bily(11)

+   10.81 Employment Agreement dated January 22, 2002, between the Company and Helene Lamielle(11)

   *10.82 Master Credit Agreement dated December 15, 2000, between STAAR Surgical AG and UBS AG

  *#10.83 Amended and Restated Credit Agreement dated March 29, 2002, between the Company and Wells
            Fargo Bank

  *+10.84 Settlement Agreement and General Release dated March 29, 2002, among the Company, Sally M.
            Pollet, Pollet and Richardson, and the Estate of Andrew F. Pollet

  *+10.85 Settlement Note dated March 29, 2002, from Sally M. Pollet to the Company

 *+#10.86 Stock Pledge Agreement dated March 29, 2002, between the Company and Sally M. Pollet

  *+10.87 Promissory Note dated March 29, 2002 from, Pollet & Richardson to the Company

 *+#10.88 Security Agreement dated March 29, 2002, between the Company and Pollet & Richardson

  *#10.89 First Amendment to the Amended and Restated Credit Agreement dated July 31, 2002, between
            the Company and Wells Fargo Bank.

   *10.90 Third Amendment to the Amended and Restated Credit Agreement dated November 25, 2002,
            between the Company and Wells Fargo Bank, N.A.
</TABLE>

                                      39

<PAGE>

<TABLE>
<C>     <S>
*#10.91 Assignment Agreement of the Share Capital of Domilens Vertrieb fuer medizinische Produkte
          GmbH dated January 3, 2003, between Staar Surgical AG and Guenther Roepstorff

 *10.92 Credit Agreement effective January 13, 2003, between Domilens Gmbh and Postbank.

 *10.93 Settlement Agreement and Mutual General Release dated February 27, 2003, by and between the
          Company and Richard Leza

 *10.94 Waiver of Certain Covenant Violations dated February 27, 2003, between the Company and Wells
          Fargo Bank

 #10.95 Second Amended and Restated Credit Agreement dated March 26, 2003, between the Company and
          Wells Fargo Bank(14)

   *21. List of Significant Subsidiaries

  *99.1 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002
</TABLE>
--------
* Filed herewith
+ Management contract or compensatory plan or arrangement
# All schedules and or exhibits have been omitted. Any omitted schedule or
  exhibit will be furnished supplementally to the Securities and Exchange
  Commission upon request

 (1) Incorporated by reference from the Company's Registration Statement on
     Form S-8, File No. 033-37248, as filed on October 11, 1990.
 (2) Incorporated by reference from the Company's Registration Statement on
     Form S-8, File No. 033-76404, as filed on March 11, 1994.
 (3) Incorporated by reference from the Company's Registration Statement on
     Form S-8, File No. 033-60241, as filed on June 15, 1995.
 (4) Incorporated by reference from the Company's Annual Report on Form 10-K,
     File No. 0-11634, for the year ended January 3, 1997, as filed on April 2,
     1997.
 (5) Incorporated by reference from the Company's Proxy Statement, File No.
     0-11634, for its Annual Meeting of Stockholders held on May 29, 1998, as
     filed on May 4, 1999.
 (6) Incorporated by reference from the Company's Annual Report on Form 10-K,
     File No. 0-11634, for the year ended January 1, 1998, as filed on April 1,
     1998.
 (7) Incorporated by reference from the Company's Annual Report on Form 10-K,
     File No. 0-11634, for the year ended January 1, 1999, as filed on April 1,
     1999.
 (8) Incorporated by reference from the Company's Annual Report on Form 10-K,
     File No. 0-11634, for the year ended December 31, 1999, as filed on March
     30, 2000.
 (9) Incorporated by reference from the Company's Annual Report on Form 10-K,
     File No. 0-11634, for the year ended December 29, 2000, as filed on March
     29, 2001.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K,
     File No. 0-11634, for the year ended December 28, 2001, as filed on March
     28, 2002.
(11) Incorporated by reference to the Company's Quarterly Report, File No.
     0-11634, for the period ended June 28, 2002, as filed on August 12, 2002.
(12) Incorporated by reference to the Company's Quarterly Report, File No.
     0-11634, for the period ended September 27, 2002, as filed on November 12,
     2002.
(13) Incorporated by reference to the Company's Current Report on Form 8-K,
     File No. 0-11634, filed on December 6, 2002.
(14) Incorporated by reference to the Company's Current Report on Form 8-K,
     File No. 0-11634, filed on March 31, 2003.

                                      40

<PAGE>

                                  SIGNATURES

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

                                            STAAR SURGICAL COMPANY

                                            By:          /s/  DAVID BAILEY
                                                  -----------------------------
                                                          David Bailey
                                                  President and Chief Executive
                                                             Officer
                                                  (principal executive officer)

                                            Date:         April 2, 2003
                                                  -----------------------------

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

<TABLE>
<CAPTION>
            Name                                 Title                  Date
            ----                                 -----                  ----
<S>                                  <C>                            <C>

   /s/  DAVID BAILEY                 President, Chief Executive     April 2, 2003
-----------------------------          Officer, Chairman and
       David Bailey                    Director (principal
                                       executive officer)

   /s/  JOHN BILY                    Chief Financial Officer        April 2, 2003
-----------------------------          (principal accounting and
       John Bily                       financial officer)

   /s/  JOHN R. GILBERT              Director                       April 2, 2003
-----------------------------
       John R. Gilbert

   /s/  DONALD DUFFY                 Director                       April 2, 2003
-----------------------------
       Donald Duffy

   /s/  DAVID MORRISON               Director                       April 2, 2003
-----------------------------
       David Morrison

   /s/  VOLKER ANHAEUSSER            Director                       April 2, 2003
-----------------------------
       Volker Anhaeusser
</TABLE>


                                      41

<PAGE>

                                Certifications

   I, David Bailey, certify that:

      1.  I have reviewed this annual report on Form 10-K of STAAR Surgical
   Company;

      2.  Based on my knowledge, this annual report does not contain any untrue
   statement of a material fact or omit to state a material fact necessary to
   make the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period covered by
   this annual report;

      3.  Based on my knowledge, the financial statements, and other financial
   information included in this annual report, fairly present in all material
   respects the financial condition, results of operations and cash flows of
   the registrant as of, and for, the periods presented in this annual report;

      4.  The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

          a) designed such disclosure controls and procedures to ensure that
       material information relating to the registrant, including its
       consolidated subsidiaries, is made known to us by others within those
       entities, particularly during the period in which this annual report is
       being prepared;

          b) evaluated the effectiveness of the registrant's disclosure
       controls and procedures as of a date within 90 days prior to the filing
       date of this annual report (the "Evaluation Date"); and

          c) presented in this annual report our conclusions about the
       effectiveness of the disclosure controls and procedures based on our
       evaluation as of the Evaluation Date;

      5.  The registrant's other certifying officers and I have disclosed,
   based on our most recent evaluation, to the registrant's auditors and the
   audit committee of registrant's board of directors (or persons performing
   the equivalent functions):

          a) all significant deficiencies in the design or operation of
       internal controls which could adversely affect the registrant's ability
       to record, process, summarize and report financial data and have
       identified for the registrant's auditors any material weaknesses in
       internal controls; and

          b) any fraud, whether or not material, that involves management or
       other employees who have a significant role in the registrant's internal
       controls; and

      6.  The registrant's other certifying officers and I have indicated in
   this annual report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.

<TABLE>
<C>                                                                          <C> <S>
Date:  April 2, 2003                                                         By:         /s/  DAVID BAILEY
                                                                                 ----------------------------------
                                                                                            David Bailey
                                                                                     President, Chief Executive
                                                                                       Officer, Chairman and
                                                                                   Director (principal executive
                                                                                              officer)
</TABLE>

                                      42

<PAGE>

                                Certifications

   I, John Bily, certify that:

      1.  I have reviewed this annual report on Form 10-K of STAAR Surgical
   Company;

      2.  Based on my knowledge, this annual report does not contain any untrue
   statement of a material fact or omit to state a material fact necessary to
   make the statements made, in light of the circumstances under which such
   statements were made, not misleading with respect to the period covered by
   this annual report;

      3.  Based on my knowledge, the financial statements, and other financial
   information included in this annual report, fairly present in all material
   respects the financial condition, results of operations and cash flows of
   the registrant as of, and for, the periods presented in this annual report;

      4.  The registrant's other certifying officers and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

          a.  designed such disclosure controls and procedures to ensure that
       material information relating to the registrant, including its
       consolidated subsidiaries, is made known to us by others within those
       entities, particularly during the period in which this annual report is
       being prepared;

          b.  evaluated the effectiveness of the registrant's disclosure
       controls and procedures as of a date within 90 days prior to the filing
       date of this annual report (the "Evaluation Date"); and

          c.  presented in this annual report our conclusions about the
       effectiveness of the disclosure controls and procedures based on our
       evaluation as of the Evaluation Date;

      5.  The registrant's other certifying officers and I have disclosed,
   based on our most recent evaluation, to the registrant's auditors and the
   audit committee of registrant's board of directors (or persons performing
   the equivalent functions):

          a.  all significant deficiencies in the design or operation of
       internal controls which could adversely affect the registrant's ability
       to record, process, summarize and report financial data and have
       identified for the registrant's auditors any material weaknesses in
       internal controls; and

          b.  any fraud, whether or not material, that involves management or
       other employees who have a significant role in the registrant's internal
       controls; and

      6.  The registrant's other certifying officers and I have indicated in
   this annual report whether or not there were significant changes in internal
   controls or in other factors that could significantly affect internal
   controls subsequent to the date of our most recent evaluation, including any
   corrective actions with regard to significant deficiencies and material
   weaknesses.

<TABLE>
<C>                                                                          <C> <S>
Date:  April 2, 2003                                                         By:           /s/  JOHN BILY
                                                                                 ----------------------------------
                                                                                             John Bily
                                                                                      Chief Financial Officer
                                                                                     (principal accounting and
                                                                                         financial officer)
</TABLE>

                                      43

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                         YEARS ENDED JANUARY 3, 2003,
                    DECEMBER 28, 2001 AND DECEMBER 29, 2000

<PAGE>

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
STAAR Surgical Company

   We have audited the accompanying consolidated balance sheets of STAAR
Surgical Company and subsidiaries as of January 3, 2003 and December 28, 2001,
and the related consolidated statements of operations, stockholders' equity and
comprehensive loss, and cash flows for each of the three years in the period
ended January 3, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of STAAR
Surgical Company and subsidiaries as of January 3, 2003 and December 28, 2001,
and the results of their operations and their cash flows for each of the three
years in the period ended January 3, 2003, in conformity with accounting
principles generally accepted in the United States of America.

   As discussed in the Summary of Accounting Policies to the consolidated
financial statements, effective December 29, 2001, STAAR Surgical Company and
subsidiaries adopted the provisions of SFAS No. 142, "Goodwill and Other
Intangible Assets".

                                          /s/  BDO SEIDMAN, LLP

Los Angeles, California
February 21, 2003
(except for Note 18 which is dated March 26, 2003)

                                      F-2

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                     January 3, 2003 and December 28, 2001

<TABLE>
<CAPTION>
                                                                                     2002       2001
                                                                                   --------   --------
                                                                                   (In thousands, except
                                                                                   par value amounts)
                                     ASSETS
                                     ------
<S>                                                                                <C>        <C>
Current assets:
   Cash and cash equivalents...................................................... $  1,009   $    853
   Restricted cash................................................................       --      2,000
   Accounts receivable, less allowance for doubtful accounts......................    5,992      7,542
   Inventories....................................................................   11,761     15,231
   Prepaids, deposits and other current assets....................................    2,510      3,660
   Deferred income tax, current...................................................       --      5,304
                                                                                   --------   --------
       Total current assets.......................................................   21,272     34,590
                                                                                   --------   --------
Investment in joint venture.......................................................      462        466
Property, plant and equipment, net................................................    7,438      8,742
Patents and licenses, net of accumulated amortization of $4,967 and $4,034........    9,038      9,896
Goodwill..........................................................................    6,427      5,985
Deferred income tax, non-current..................................................       --      3,982
Other assets......................................................................      583      1,143
                                                                                   --------   --------
       Total assets............................................................... $ 45,220   $ 64,804
                                                                                   ========   ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
Current liabilities:
   Notes payable.................................................................. $  5,845   $  8,216
   Accounts payable...............................................................    4,556      5,594
   Other current liabilities......................................................    4,079      4,000
                                                                                   --------   --------
       Total current liabilities..................................................   14,480     17,810
Other long-term liabilities.......................................................       89        316
                                                                                   --------   --------
       Total liabilities..........................................................   14,569     18,126
                                                                                   --------   --------
Minority interest.................................................................      100        382
                                                                                   --------   --------
Commitments and contingencies

Stockholders' equity:
   Preferred stock, $.01 par value, 10,000 shares authorized, none issued.........       --         --
   Common stock, $.01 par value; 30,000 shares authorized; issued and outstanding
     17,205 and 17,158 shares.....................................................      172        172
   Additional paid-in capital.....................................................   75,947     75,573
   Accumulated other comprehensive loss...........................................     (111)    (1,728)
   Accumulated deficit............................................................  (41,421)   (24,263)
                                                                                   --------   --------
                                                                                     34,587     49,754
   Treasury stock, at cost (243 and 0 shares).....................................     (972)        --
                                                                                   --------   --------
                                                                                     33,615     49,754
Notes receivable from officers and directors......................................   (3,064)    (3,458)
                                                                                   --------   --------
       Total stockholders' equity.................................................   30,551     46,296
                                                                                   --------   --------
       Total liabilities and stockholders' equity................................. $ 45,220   $ 64,804
                                                                                   ========   ========
</TABLE>

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

                                      F-3

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000

<TABLE>
<CAPTION>
                                                                 2002      2001      2000
                                                               --------  --------  --------
                                                                      (In thousands,
                                                                 except per share amounts)
<S>                                                            <C>       <C>       <C>
Sales......................................................... $ 47,880  $ 50,237  $ 53,986
Royalty and other income......................................      368       549       448
                                                               --------  --------  --------
       Total revenues.........................................   48,248    50,786    54,434
Cost of sales.................................................   24,099    28,203    26,329
                                                               --------  --------  --------
       Gross profit...........................................   24,149    22,583    28,105
                                                               --------  --------  --------
Selling, general and administrative expenses:
   General and administrative.................................    8,959     8,746     8,593
   Marketing and selling......................................   16,833    20,043    21,254
   Research and development...................................    4,016     3,800     4,215
   Other charges..............................................    1,454     7,780    15,276
                                                               --------  --------  --------
       Total selling, general and administrative expenses.....   31,262    40,369    49,338
                                                               --------  --------  --------
       Operating loss.........................................   (7,113)  (17,786)  (21,233)
                                                               --------  --------  --------
Other income (expense):
   Equity in operations of joint venture......................       36       389    (4,698)
   Interest income............................................      135       270     1,294
   Interest expense...........................................     (579)     (640)   (1,496)
   Other income (expense).....................................     (603)     (474)      738
                                                               --------  --------  --------
       Total other expense, net...............................   (1,011)     (455)   (4,162)
                                                               --------  --------  --------
Loss before income taxes and minority interest................   (8,124)  (18,241)  (25,395)
Provision (benefit) for income taxes..........................    8,959    (3,547)   (6,580)
Minority interest.............................................       75       139        87
                                                               --------  --------  --------
Net loss...................................................... $(17,158) $(14,833) $(18,902)
                                                               ========  ========  ========
Loss per share:
   Basic and diluted.......................................... $  (1.00) $  (0.87) $  (1.23)
                                                               ========  ========  ========
</TABLE>

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

                                      F-4

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE
                                     LOSS

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000

<TABLE>
<CAPTION>
                                                              Accumulated
                                                  Additional     Other     Retained
                                           Common  Paid-In   Comprehensive Earnings  Treasury   Notes
                                           Stock   Capital       Loss      (Deficit)  Stock   Receivable   Total
                                           ------ ---------- ------------- --------- -------- ---------- --------
                                                                       (In thousands)
<S>                                        <C>    <C>        <C>           <C>       <C>      <C>        <C>
Balance, at December 31, 1999.............  $147   $51,205      $(1,281)   $  9,472   $  --    $(7,009)  $ 52,534
Common stock issued upon exercise of
 options..................................     5     3,519           --          --      --     (1,167)     2,357
Common stock issued upon exercise of
 warrants.................................     1       171           --          --      --         --        172
Common stock issued as payment for
 services.................................     1     1,486           --          --      --         --      1,487
Common stock issued in private
 placement................................    15    18,666           --          --      --         --     18,681
Proceeds from notes receivable............    --        --           --          --      --        788        788
Notes receivable reserve..................    --        --           --          --      --      1,500      1,500
Foreign currency translation adjustment...    --        --         (301)         --      --         --       (301)
Net loss..................................    --        --           --     (18,902)     --         --    (18,902)
                                            ----   -------      -------    --------   -----    -------   --------
Balance, at December 29, 2000.............   169    75,047       (1,582)     (9,430)     --     (5,888)    58,316
Common stock issued upon exercise of
 options..................................     1        62           --          --      --         --         63
Common stock issued as payment for
 services.................................     2       411           --          --      --         --        413
Stock-based compensation expense..........    --        53           --          --      --         --         53
Proceeds from notes receivable............    --        --           --          --      --        321        321
Notes receivable reserve..................    --        --           --          --      --      2,109      2,109
Foreign currency translation adjustment...    --        --         (146)         --      --         --       (146)
Net loss..................................    --        --           --     (14,833)     --         --    (14,833)
                                            ----   -------      -------    --------   -----    -------   --------
Balance, at December 28, 2001.............   172    75,573       (1,728)    (24,263)     --     (3,458)    46,296
Common stock issued upon exercise of
 warrants.................................    --         6           --          --      --         --          6
Common stock issued as payment for
 services.................................    --       120           --          --      --         --        120
Common stock issued pursuant to
 employment contract......................    --        12           --          --      --         --         12
Stock-based compensation expense..........    --       236           --          --      --         --        236
Treasury stock acquired in satisfaction of
 note receivable..........................    --        --           --          --    (972)     2,128      1,156
Proceeds from notes receivable............    --        --           --          --      --         80         80
Notes receivable reserve..................    --        --           --          --      --     (1,814)    (1,814)
Foreign currency translation adjustment...    --        --        1,617          --      --         --      1,617
Net loss..................................    --        --           --     (17,158)     --         --    (17,158)
                                            ----   -------      -------    --------   -----    -------   --------
Balance, at January 3, 2003...............  $172   $75,947      $  (111)   $(41,421)  $(972)   $(3,064)  $ 30,551
                                            ====   =======      =======    ========   =====    =======   ========
</TABLE>

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


                                      F-5

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000

<TABLE>
<CAPTION>
                                                                          2002      2001      2000
                                                                        --------  --------  --------
                                                                               (In thousands)
<S>                                                                     <C>       <C>       <C>
Cash flows from operating activities:
   Net loss............................................................ $(17,158) $(14,833) $(18,902)
   Adjustments to reconcile net loss to net cash provided by (used in)
     operating activities:
       Depreciation of property and equipment..........................    2,171     2,364     2,140
       Amortization of intangibles.....................................      933     1,259     1,590
       Write-off of accounts receivable................................       --        --       449
       Deferred revenue................................................       --        --      (448)
       Equity in operations of joint venture...........................      (36)     (746)    3,577
       Deferred income taxes...........................................    9,286    (4,435)   (6,632)
       Stock-based compensation expense................................      236        53        --
       Common stock issued for services................................      132       413     1,224
       Non-cash restructuring and inventory write-down.................    1,225    13,230    18,029
       Minority interest...............................................      144       178      (332)
   Changes in working capital:
       Accounts receivable.............................................    1,462     1,697      (759)
       Inventories.....................................................    3,108    (1,316)   (4,020)
       Prepaids, deposits and other current assets.....................     (232)    2,619      (301)
       Accounts payable................................................     (966)     (573)   (1,249)
       Other current liabilities.......................................      264    (2,450)      605
                                                                        --------  --------  --------
          Net cash provided by (used in) operating activities..........      569    (2,540)   (5,029)
                                                                        --------  --------  --------
Cash flows from investing activities:
   Acquisition of property and equipment...............................     (874)   (1,180)   (3,339)
   Acquisition of patents and licenses.................................      (75)     (245)     (775)
   Proceeds from notes receivable and other............................       10       321       789
   Change in other assets..............................................      493       119      (817)
   Dividends received from joint venture...............................       40       280        --
                                                                        --------  --------  --------
          Net cash used in investing activities........................     (406)     (705)   (4,142)
                                                                        --------  --------  --------
Cash flows from financing activities:
   Net borrowings (payments) under notes payable and long-term debt....   (2,598)      276       414
   Payments on notes payable and long-term debt........................       --        --    (9,400)
   Restricted cash.....................................................    2,000    (2,000)       --
   Proceeds from the exercise of stock options and warrants............        6        63     2,520
   Proceeds from private placement.....................................       --        --    18,681
                                                                        --------  --------  --------
          Net cash provided by (used in) financing activities..........     (592)   (1,661)   12,215
                                                                        --------  --------  --------
Effect of exchange rate changes on cash and cash equivalents...........      585      (328)     (301)
                                                                        --------  --------  --------
Increase (decrease) in cash and cash equivalents.......................      156    (5,234)    2,743
Cash and cash equivalents, at beginning of year........................      853     6,087     3,344
                                                                        --------  --------  --------
Cash and cash equivalents, at end of year.............................. $  1,009  $    853  $  6,087
                                                                        ========  ========  ========
</TABLE>

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

                                      F-6

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                        SUMMARY OF ACCOUNTING POLICIES

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000

Organization and Description of Business

   STAAR Surgical Company (the "Company"), a Delaware corporation, was
incorporated in 1982 for the purpose of developing, producing, and marketing
Intraocular Lenses ("IOLs") and other products for minimally invasive
ophthalmic surgery. The Company has evolved to become a developer, manufacturer
and global distributor of products used by ophthalmologists and other eye care
professionals to improve or correct vision in patients with refractive
conditions, cataracts and glaucoma. Products manufactured by the Company for
use in correcting refractive conditions such as myopia (near-sightedness),
hyperopia (far-sightedness) and astigmatism include the Implantable Contact
Lens ("ICL(TM)"), the Toric ICL ("TICL(TM)") and the Toric IOL. Products
manufactured by the Company for use in restoring vision adversely affected by
cataracts include its line of IOLs, the SonicWAVE(TM) Phacoemulsification
System, STAARVISC(TM) II, a viscoelastic material and the UltraVac(TM) V1
tubing, used with certain Venturi-type Phacoemulsification machines. The
Company's AquaFlow(TM) Collagen Glaucoma Drainage Device is surgically
implanted in the outer tissues of the eye to maintain a space that allows
increased drainage of intraocular fluid thereby reducing intraocular pressure,
which may lead to deterioration of vision in patients with glaucoma. The
Company also sells other instruments, devices and equipment that are
manufactured either by the Company or by others in the ophthalmic products
industry.

   The Company's most significant subsidiary is STAAR Surgical AG, a wholly
owned subsidiary formed in Switzerland to develop, manufacture and distribute
certain of the Company's products worldwide, including the ICL and its AquaFlow
Device. STAAR Surgical AG also controls a major European sales subsidiary that
distributes both the Company's products and products from various other
manufacturers. Investment in the subsidiary was increased from 80% to 100%
during the fourth quarter of 2002, when Staar Surgical AG purchased the
remaining shares of the subsidiary (see Note 17).

Basis of Presentation

   The accompanying consolidated financial statements include the accounts of
the Company, its wholly and its majority owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
Assets and liabilities of foreign subsidiaries are translated at rates of
exchange in effect at the close of the year. Revenues and expenses are
translated at the weighted average of exchange rates in effect during the year.
The resulting translation gains and losses are deferred and are shown as a
separate component of stockholders' equity as accumulated other comprehensive
loss. During 2002, 2001 and 2000, the net foreign translation gain (loss) was
$585,000, $(328,000) and $(301,000), respectively and net foreign currency
transaction loss was $458,000, $204,000 and $182,000, respectively.

   Investment in the Japanese joint venture is accounted for using the equity
method of accounting except for the nine-months ended September 29, 2001 and
the year ended December 28, 2000 when the investment was written off and
earnings were recognized on a cash basis (see Note 4).

   The Company's fiscal year ends on the Friday nearest December 31 and each of
the Company's quarterly reporting periods generally consist of 13 weeks.

Summary of Significant Accounting Policies

Revenue Recognition

   In general, the Company supplies foldable IOLs on a consignment basis to
customers, primarily ophthalmologists, surgical centers, hospitals and other
eye care providers and recognizes sales when the IOLs are

                                      F-7

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                        SUMMARY OF ACCOUNTING POLICIES

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000

implanted. Sales of all other products, including sales to foreign
distributors, are generally recognized upon shipment.

   Revenue from license and technology agreements is recorded as income, when
earned, according to the terms of the respective agreements.

Income Taxes

   The Company recognizes deferred tax assets and liabilities for temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities along with net operating loss and credit
carryforwards. A valuation allowance is recognized if, based on the weight of
available evidence, it is more likely than not that some portion or all of the
deferred tax asset may not be realized. The impact on deferred taxes of changes
in tax rates and laws, if any, are applied to the years during which temporary
differences are expected to be settled and reflected in the financial
statements in the period of enactment.

Cash, Cash Equivalents, and Restricted Cash

   The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. Restricted cash is
invested in money market accounts, which mature within one year (see Note 5.)

Inventories

   Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market. Inventory costs are comprised of material, direct
labor, and overhead. The Company records inventory provisions, based on a
review of forecasted demand and inventory levels.

Property, Plant and Equipment

   Property, plant and equipment are recorded at cost. Depreciation on
property, plant, and equipment is computed using the straight-line method over
the estimated useful lives of the assets, generally ranging from 5 to 10 years.
Major improvements are capitalized and minor replacements, maintenance and
repairs are charged to expense as incurred.

Goodwill and Other Intangible Assets

   Goodwill represents the excess of the purchase price over the fair value of
identifiable net assets acquired in business combinations accounted for as
purchases. The Company adopted Statement of Financial Accounting Standards,
("SFAS") No. 141, "Business Combinations," and No. 142, "Goodwill and Other
Intangible Assets," on December 29, 2001.

   Goodwill, which has an indefinite life and was previously amortized on a
straight-line basis over the periods benefited, is no longer amortized to
earnings but instead is subject to periodic testing for impairment. Intangible
assets determined to have definite lives are amortized over their remaining
useful lives. Goodwill of a reporting unit is tested for impairment on an
annual basis or between annual tests if an event occurs or circumstances change
that would reduce the fair value of a reporting unit below its carrying amount.
As provided under

                                      F-8

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                        SUMMARY OF ACCOUNTING POLICIES

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000

SFAS 142, the initial testing of goodwill for possible impairment was completed
within the first six months of 2002 and no impairment has been identified. As
of January 3, 2003, the carrying value of goodwill was $6.4 million.

   In accordance with SFAS 142, prior period amounts were not restated. The net
loss for the years ended December 28, 2001 and December 29, 2000, adjusted for
the exclusion of amortization of goodwill, would have been $375,000 and
$254,000 less than reported and the loss per share would have decreased by
$0.02 and $0.02, respectively.

   The Company also has other intangible assets consisting of patents and
licenses, with a gross book value of $14.0 million and accumulated amortization
of $5.0 million as of January 3, 2003. The Company capitalizes the costs of
acquiring patents and licenses as well as the legal costs of successfully
defending its rights to these patents. Amortization is computed on the
straight-line basis over the estimated useful lives, which are based on legal
and contractual provisions, and range from 10 to 20 years. Aggregate
amortization expense for amortized other intangible assets was $933,000,
$884,000 and $1.3 million for the years ended January 3, 2003, December 28,
2001 and December 29, 2000, respectively.

   The weighted average amortization period for other intangible assets is
approximately 15 years. The following table shows the estimated amortization
expense for these assets for each of the five succeeding years (in thousands):

<TABLE>
                            <S>               <C>
                            Fiscal Year
                               2003.......... $  676
                               2004..........    676
                               2005..........    676
                               2006..........    676
                               2007..........    676
                                              ------
                                   Total..... $3,380
                                              ======
</TABLE>

Impairment of Long-Lived Assets

   Intangible and other long lived-assets are reviewed for impairment whenever
events such as product discontinuance, plant closures, product dispositions or
other changes in circumstances indicate that the carrying amount may not be
recoverable. In reviewing for impairment, the Company compares the carrying
value of such assets to the estimated undiscounted future cash flows expected
from the use of the assets and their eventual disposition. When the estimated
undiscounted future cash flows are less than their carrying amount, an
impairment loss is recognized equal to the difference between the assets' fair
value and their carrying value. No impairment was recognized for the year ended
January 3, 2003.

   The Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets" ("SFAS 144"), which supersedes SFAS 121, "Accounting for
Long-Lived Assets and for Long-lived Assets to be Disposed of," during the
first quarter of 2002. SFAS 144 addresses financial accounting and reporting
requirements for the impairment or disposal of long lived-assets. This
statement also expands the scope of a discontinued operation to include a
component of an entity, and eliminates the current exemption to consolidation
when control over a subsidiary is likely to be temporary. The Company's
adoption of SFAS 144 did not have a material impact on its financial position
or results of operations.

                                      F-9

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                        SUMMARY OF ACCOUNTING POLICIES

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000


Accounting Estimates

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported
in the financial statements and footnotes thereto. Actual results may
materially differ from those estimates.

Fair Value of Financial Instruments

   The carrying values reflected in the consolidated balance sheets for cash
and cash equivalents, accounts receivable, accounts payable, and notes payable
approximate their fair values because of the short maturity of these
instruments.

Loss Per Share

   The Company presents loss per share data in accordance with the provision of
SFAS No. 128, "Earnings per Share" ("SFAS 128"), which provides for the
calculation of Basic and Diluted earnings per share. Loss per share of common
stock is computed by using the weighted average number of common shares
outstanding during the period. Common stock equivalents are not included in the
determination of the weighted average number of shares outstanding, as they
would be antidilutive. For the years ended January 3, 2003, December 28, 2001,
and December 29, 2000, 0, 5,000, and 5,000 warrants and 3.1 million, 2.9
million, and 1.9 million options to purchase shares of the Company's common
stock, respectively, were outstanding.

Stock Based Compensation

   The Company accounts for stock-based compensation in accordance with APB
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and has
adopted the disclosure provisions of SFAS No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123"). SFAS 123 defines a fair value based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic value
based method of accounting prescribed by APB 25. If the APB 25 intrinsic value
method of accounting is used, SFAS 123 requires pro forma disclosures of net
income and earnings per share as if the fair value based method of accounting
for stock based compensation had been applied. The Company records expense in
an amount equal to the excess of the quoted market price on the grant date over
the option price. Such expense is recognized at the grant date for options
fully vested. For options with a vesting period, the expense is recognized over
the vesting period.

Comprehensive Loss

   The Company presents comprehensive losses in its Consolidated Statement of
Changes in Stockholders' Equity in accordance with SFAS No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). Total comprehensive loss includes, in
addition to net loss, changes in equity that are excluded from the consolidated
statements of operations and are recorded directly into a separate section of
stockholders' equity on the consolidated balance sheets.

                                     F-10

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                        SUMMARY OF ACCOUNTING POLICIES

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000


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

<TABLE>
<CAPTION>
                                               2002      2001      2000
                                             --------  --------  --------
     <S>                                     <C>       <C>       <C>
     Net loss............................... $(17,158) $(14,833) $(18,902)
     Foreign currency translation adjustment      585      (328)     (301)
                                             --------  --------  --------
     Comprehensive loss..................... $(16,573) $(15,161) $(19,203)
                                             ========  ========  ========
</TABLE>

Segments of an Enterprise

   The Company reports segment information in accordance with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," ("SFAS
131"). Under SFAS 131 all publicly traded companies are required to report
certain information about the operating segments, products, services and
geographical areas in which they operate and their major customers. While the
Company has expanded its marketing focus beyond the cataract market to include
the refractive and glaucoma markets, the cataract market remained its primary
source of revenues and accordingly operates as one business segment. See Note
15, Geographic and Product Data for geographic information.

Reclassifications

   Certain reclassifications have been made to the prior year consolidated
financial statements to conform to the 2002 presentation.

New Accounting Pronouncements

   In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations." SFAS No. 143 requires the fair value of a
liability for an asset retirement obligation to be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated retirement costs are capitalized as part of the carrying amount of
the long-lived asset. SFAS No. 143 is effective for fiscal years beginning
after June 15, 2002. The Company's adoption of SFAS No. 143 did not have a
material impact on its operations or financial position.

   In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 eliminates Statement 4 (and Statement 64, as it
amends Statement 4), which requires gains and losses from extinguishments of
debt to be aggregated and, if material, classified as an extraordinary item,
and thus, also the exception to applying Opinion 30 is eliminated as well. This
statement is effective for years beginning after May 2002 for the provisions
related to the rescission of Statements 4 and 64, and for all transactions
entered into beginning May 2002 for the provision related to the amendment of
Statement 13. The Company's adoption of SFAS No. 145 did not have a material
impact on its operations or financial position.

   In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which addresses accounting for restructuring
and similar costs. SFAS No. 146 supersedes previous accounting guidance,
principally Emerging Issues Task Force (EITF) Issue No. 94-3. The Company will
adopt the provisions of SFAS No. 146 for restructuring activities initiated
after December 31, 2002. SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the liability
is incurred. Under EITF No. 94-3, a liability for an exit cost was recognized
at the date of a

                                     F-11

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                        SUMMARY OF ACCOUNTING POLICIES

     Years Ended January 3, 2003, December 28, 2001 and December 29, 2000

company's commitment to an exit plan. SFAS No. 146 also establishes that the
liability should initially be measured and recorded at fair value. Accordingly,
SFAS No. 146 may affect the timing of recognizing future restructuring costs as
well as the amount recognized.

   In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34," ("FIN 45"). This
interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees
issued. The interpretation also clarifies that a guarantor is required to
recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of
the interpretation are applicable to guarantees issued or modified after
December 31, 2002 and are not expected to have a material effect on the
Company's operations or financial results. The disclosure requirements are
effective for financial statements of interim and annual periods ending after
December 31, 2002. Significant guarantees that have been entered into by the
Company as of January 3, 2003 are disclosed in Note 9 to the consolidated
financial statements.

   In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure", which amends SFAS No. 123,
"Accounting for Stock-Based Compensation". SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require more prominent
and more frequent disclosures in financial statements of the effects of
stock-based compensation. The transition guidance provisions of SFAS No. 148
are effective for fiscal years ending after December 15, 2002. The interim
disclosure provisions are effective for financial reports containing condensed
financial statements for interim periods beginning after December 15, 2002. The
adoption of SFAS No. 148 is not expected to have a material impact on the
Company's consolidated balance sheet or results of operations. The Company will
provide the interim disclosures required by SFAS No. 148 beginning in the first
quarter of 2003.

   In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities, an interpretation of Accounting Research
Bulletins ("ARB") No. 51, Consolidated Financial Statements," ("FIN 46"). FIN
46 clarifies the application of ARB No. 51 to certain entities in which equity
investors do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other
parties. The Company does not believe the adoption of FIN 46 will have a
material impact on its financial position or results of operations.

                                     F-12

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                Years Ended January 3, 2003, December 28, 2001

NOTE 1--ACCOUNTS RECEIVABLE

   Accounts receivable consisted of the following at January 3, 2003 and
December 28, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                     2002   2001
                                                    ------ ------
               <S>                                  <C>    <C>
               Domestic............................ $3,435 $4,791
               Foreign.............................  3,362  3,519
                                                    ------ ------
                                                     6,797  8,310
               Less allowance for doubtful accounts    805    768
                                                    ------ ------
                                                    $5,992 $7,542
                                                    ====== ======
</TABLE>

NOTE 2--INVENTORIES

   Inventories consisted of the following at January 3, 2003 and December 28,
2001 (in thousands):

<TABLE>
<CAPTION>
                                                  2002    2001
                                                 ------- -------
               <S>                               <C>     <C>
               Raw materials and purchased parts $   710 $ 1,610
               Work in process..................     798   3,252
               Finished goods...................  10,253  10,369
                                                 ------- -------
                                                 $11,761 $15,231
                                                 ======= =======
</TABLE>

NOTE 3--PROPERTY, PLANT AND EQUIPMENT

   Property, plant and equipment consisted of the following at January 3, 2003
and December 28, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                         2002    2001
                                                        ------- -------
         <S>                                            <C>     <C>
         Machinery and equipment....................... $14,147 $11,116
         Furniture and fixtures........................   5,378   7,639
         Leasehold improvements........................   4,577   4,480
                                                        ------- -------
                                                         24,102  23,235
         Less accumulated depreciation and amortization  16,664  14,493
                                                        ------- -------
                                                        $ 7,438 $ 8,742
                                                        ======= =======
</TABLE>

Depreciation expense for the years ended January 3, 2003, December 28, 2001 and
December 29, 2000 was $2.2 million, $2.4 million and $2.1 million, respectively.

NOTE 4--INVESTMENT IN JOINT VENTURE

   The Company owns a 50% equity interest in a joint venture, the CANON-STAAR
Company, Inc. ("CSC"), with Canon Inc. and Canon Sales Co, Inc., together the
"Canon Companies." The Company sold CSC an exclusive license to manufacture,
market and sell the Company's IOL products in Japan. The investment in the
Japanese joint venture is accounted for using the equity method of accounting
except for the nine-months ended September 29, 2001 and the year ended December
28, 2000 when the Company's investment of $3.6 million was

                                     F-13

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

written off, due to disputes between the Company and the Canon Companies.
During the fourth quarter of fiscal year 2001, the Company executed an
agreement with the Canon Companies resolving all claims between the parties and
reaffirming the partnering arrangement to manufacture and distribute ophthalmic
products based on the Company's technology.

   The financial statements of CSC include assets of approximately $9.1 and
$8.7 million, and liabilities of approximately $1.7 million and $1.8 million,
as of January 3, 2003 and December 28, 2001, respectively.

   The Company's equity in operations of the joint venture is calculated as
follows (in thousands):

<TABLE>
<CAPTION>
                                                    2002 Q4 2001   2000
                                                    ---- ------- -------
       <S>                                          <C>  <C>     <C>
       Joint venture net income (loss)............. $(8)   134   $    --
       Equity interest.............................  50%    50%       50%
                                                    ---   ----   -------
       Total joint venture net income (loss).......  (4)    67        --
       Charge related to write-off of joint venture  --     --    (4,698)
                                                    ---   ----   -------
       Equity in operations of joint venture....... $(4)  $ 67   $(4,698)
                                                    ===   ====   =======
</TABLE>

   The Company received dividend income of $40,000 during 2002 and $322,000 in
2001 when it also reversed $170,000 of excess accrued legal fees upon
settlement of the Company's disputes with Canon.

   The Company recorded sales of certain IOL products to CSC of approximately
$142,000, $118,000 and $344,000 in 2002, 2001 and 2000, respectively.

NOTE 5--NOTES PAYABLE

   The Company had a $7.0 million line of credit with a domestic lender which
matured on March 29, 2002, and was amended and restated from time to time
during the year ended January 3, 2003. The line of credit, as modified, extends
the maturity date to March 31, 2003, included the release of restricted cash in
the amount of $2.0 million in order to pay down the note and provides for
monthly decreases in availability through February 2003 totaling $4.0 million.
The Company's obligation to the lender is secured by a first priority lien on
substantially all of the Company's assets and bears interest at a rate equal to
the prime rate (4.25% at January 3, 2003) plus an applicable interest margin
from 1% to 5% which is based on the Company's ratio of funded debt to earnings
before interest, taxes, depreciation, and amortization (EBITDA) at each fiscal
quarter on a trailing 12-month basis. In addition, the Company is required to
pay a commitment fee of .25% to 1.25% of the unused amount of the line of
credit also based on a ratio of funded debt to EBITDA. Since the Company
reported losses throughout 2002, it was charged the maximum total interest rate
allowed under the agreement of prime plus a 5% margin (9.25%) and the maximum
commitment fee of 1.25% at January 3, 2003.

   The agreement also requires the Company to satisfy certain financial tests,
which include positive and negative covenants such as the maintenance of
certain levels of liquidity, operating cash flows, tangible net worth, and
operating income. As of January 3, 2003, the Company was not in compliance with
the tangible net worth covenants of the agreement. The Company has obtained a
waiver from the lender who agreed to waive the events of default resulting from
the covenant violations. Borrowings outstanding under the note as of January 3,
2003 and December 28, 2001, were approximately $2.8 million and $5.7 million,
respectively. As of January 3, 2003 and December 28, 2001, the note provided
for borrowings of up to $3.7 million and $7.0 million, respectively.

   On March 26, 2003, the Company and its domestic lender executed an agreement
to extend the maturity date of the Company's $3.0 million line-of-credit for
one year to March 31, 2004. The line-of-credit bears interest at a rate equal
to the prime rate (4.25% at January 3, 2003) plus an interest margin of 5%. In
addition, the Company is required to pay a commitment fee of 1.25% per annum of
the unused amount of the line-of-credit. All other terms and conditions are
generally unchanged except that the cash flow and operating income covenants of
the agreement do not commence until the third quarter of 2003 and minimum
tangible net worth covenants were reduced.

                                     F-14

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A subsidiary of the Company has a revolving credit facility with a Swiss
bank, which as amended in fiscal 2001, provides for borrowings of up to 4.5
million Swiss Francs "CHF" ($3.2 million based on the exchange rate on January
3, 2003). The credit facility is divided into two parts: Part A provides for
borrowings of up to CHF 3.0 million ($2.1 million based on the exchange rate on
January 3, 2003) and does not have a termination date; Part B provides for
borrowings of up to CHF 1.5 million ($1.1 million based on the exchange rate on
January 3, 2003). The loan amount under Part B of the agreement reduces by CHF
250,000 ($178,000 based on the exchange rate on January 3, 2003) semi-annually
beginning June 30, 2002. The credit facility is secured by a general assignment
of claims.

   The loan agreement provides for borrowings on a current or fixed-term basis.
The interest rate on current advances is 6.5% per annum at January 3, 2003 plus
a commission rate of 0.25%, payable each quarter. The base interest rate for
fixed-term advances follows Euromarket conditions for loans of a corresponding
term and currency plus an individual margin. The fixed-term rate at January 3,
2003 was 4.6%. Borrowings outstanding under the current account as of January
3, 2003 were CHF 90,000 ($64,000 based on the exchange rate on January 3,
2003). Fixed term advances at January 3, 2003 were CHF 4.1 million ($2.9
million based on the exchange rate on January 3, 2003).

   A subsidiary of the Company has a revolving credit facility with a German
bank that provides for borrowings of up to approximately 200,000 EUR ($207,000
at the exchange rate on January 3, 2003) at an interest rate of 8.5%. The loan,
originally due February 28, 2003, was extended on October 8, 2002 to August 31,
2003. Payments in the amount of 50,000 EUR ($52,000 at the exchange rate on
January 3, 2003) were due monthly beginning December 31, 2001. The amended
agreement reduced the monthly payment to 25,000 EUR ($26,000 at the exchange
rate on January 3, 2003). The bank also agreed to waive the September 2002 and
October 2002 payments. There were no other changes to the original terms of the
agreement. The loan is secured by an assignment of accounts receivable and
inventory. There were no borrowings outstanding as of January 3, 2003.

   The subsidiary negotiated another credit facility with a different German
bank to replace the one that expires on August 31, 2003. The new agreement,
effective January 13, 2003, provides for borrowings of up to 210,000 EUR
($199,000 at the exchange rate on the date of the agreement) at an interest
rate of 8.5%. The note is due November 30, 2003 and is personally guaranteed by
the subsidiary's president. The agreement includes a covenant which prevents
the subsidiary from paying dividends.

NOTE 6--INCOME TAXES

   Income tax provision (benefit) (in thousands)

<TABLE>
<CAPTION>
                                            2002     2001     2000
                                           ------  -------  -------
            <S>                            <C>     <C>      <C>
            Current
               U.S. federal............... $ (995) $   484  $  (393)
               State......................    (74)     146       18
               Foreign....................    742      258      317
                                           ------  -------  -------
                                             (327)     888      (58)
                                           ------  -------  -------
            Deferred......................
               U.S. federal and state.....  9,175   (4,435)  (6,522)
               Foreign....................    111       --       --
                                           ------  -------  -------
                                            9,286   (4,435)  (6,522)
                                           ------  -------  -------
            Income tax provision (benefit) $8,959  $(3,547) $(6,580)
                                           ======  =======  =======
</TABLE>

                                     F-15

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Included in the fiscal year 2000 current United States federal net tax
benefit is the carryback of a portion of 2000 net taxable loss to 1998. This
carryback resulted in a refund of $839,000 of taxes previously paid.
Legislation enacted on March 9, 2002 (HR 3090) enabled the Company to carryback
a portion of the federal 2001 net operating loss to 1996, 1997 and 1998. Since
this legislation was not enacted as of the end of fiscal year 2001, the benefit
of $959,000 from this carryback was recorded in 2002. Total federal net
operating loss carryforward as of January 3, 2003 is $37.3 million expiring
between 2020 and 2022.

   The Company has net income taxes payable at January 3, 2003 and December 28,
2001 of $171,000 and $239,000, respectively, $440,000 and $0 is classified as
prepaids, deposits and other current assets and $611,000 and $239,000,
primarily related to foreign income taxes, is classified as other current
liabilities.

   The provision (benefit) for income taxes is different from that which would
be obtained by applying the statutory Federal income tax rate to loss before
income taxes. The items causing this difference are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              2002             2001            2000
                                                        ---------------   --------------  -------------
<S>                                                     <C>      <C>      <C>      <C>    <C>      <C>
Computed tax provision (benefit) on losses at statutory
  rate................................................. $(2,762)   34.0 % $(6,211)  34.0% $(8,664) 34.0%
Increase (decrease) in taxes resulting from:
   Permanent differences...............................      38    (0.4)       39   (0.3)      73  (0.3)
   State taxes, net of federal income tax benefit......   1,296   (16.0)     (743)   4.1     (572)  2.3
   Tax effect attributed to foreign operations.........  (1,245)   15.3      (345)   1.9      505  (2.0)
   Loss related to previously excluded foreign
     earnings..........................................      --      --        --     --      706  (2.8)
   Valuation allowance.................................  11,632  (143.2)    3,713  (20.3)   1,372  (5.4)
                                                        -------  ------   -------  -----  -------  ----
Effective tax provision (benefit) and rate............. $ 8,959  (110.3)% $(3,547)  19.4% $(6,580) 25.8%
                                                        =======           =======         =======
</TABLE>

   Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $9.7 million at January 3, 2003. Undistributed earnings are
considered to be indefinitely reinvested and, accordingly, no provision for
United States federal and state income taxes has been provided thereon.

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

                                     F-16

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets (liabilities) as of January 3, 2003 and
December 28, 2001 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  2002      2001
                                                                --------  -------
<S>                                                             <C>       <C>
Current deferred tax assets (liabilities):
   Allowance for doubtful accounts............................. $    131  $   174
   Inventory reserves and uniform capitalization...............      576    2,478
   Accrued vacation............................................      153      177
   State taxes.................................................        3       14
   Deferred revenue............................................       33       87
   Reserve for restructuring costs.............................       --    2,387
   Other accruals..............................................       --      (13)
   Valuation allowance.........................................     (896)      --
                                                                --------  -------
       Total current deferred tax assets (liabilities)......... $     --  $ 5,304
                                                                ========  =======
Non-current deferred tax assets (liabilities):
   Net operating loss and capital loss carryforwards........... $ 15,044  $ 6,025
   Business, foreign and AMT credit carryforwards..............    1,132      885
   Depreciation and amortization...............................     (781)    (447)
   Reserve for notes receivable................................      744    1,405
   Reserve for restructuring costs.............................    1,573      402
   Subpart F income............................................      103       --
   Capitalized R&D.............................................      136       --
   Valuation allowance.........................................  (17,951)  (4,288)
                                                                --------  -------
       Total non-current deferred tax assets (liabilities)..... $     --  $ 3,982
                                                                ========  =======
</TABLE>

   SFAS No. 109, "Accounting for Income Taxes," ("SFAS 109") requires that a
valuation allowance be established when it is more likely than not that all or
a portion of a deferred tax asset may not be realized. Cumulative losses weigh
heavily in the assessment of the need for a valuation allowance. In 2002, due
to the Company's recent history of losses, an increase to the valuation
allowance was recorded as a non-cash charge to tax expense in the amount of
$9.2 million. As a result, the valuation allowance fully offsets the value of
deferred tax assets on the Company's balance sheet as of January 3, 2003.

NOTE 7--BUSINESS ACQUISITIONS

   During the year ended January 3, 2003, the Company acquired the remaining
20% interest in its German subsidiary at its book value of $426,000, from the
subsidiary's president in exchange for cancellation of amounts due from the
subsidiary's president of $955,000 less bonuses due to the subsidiary's
president of $87,000, resulting in goodwill of $442,000. The terms of the
agreement also provided for the cancellation of 75,000 unexercised stock
options previously issued to the subsidiary's president and an agreement not to
compete with the Company for a period of ten years. For the year ended January
3, 2003, the Company reflected the activity as a wholly owned subsidiary,
whereas for the years ended December 28, 2001 and December 29, 2000, the 20%
interest that was not owned was reflected as a minority interest on the
consolidated statement of operations.

                                     F-17

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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

NOTE 8--STOCKHOLDERS' EQUITY

Common Stock

   In fiscal year 2000, the Company issued 143,000 shares to consultants for
services rendered to the Company. Also, during 2000, the Company completed a
private placement with institutional investors of 1.5 million shares of the
Company's common stock, for net proceeds of $18.7 million.

   In fiscal year 2001, the Company issued 192,000 shares to consultants for
services rendered to the Company.

   During fiscal year 2002, the Company issued 39,000 shares to consultants for
services rendered to the Company and 3,000 shares to an employee relating to an
employment contract. Also during 2002, the Company acquired 243,000 shares of
treasury stock from a former officer in settlement of notes receivable (See
Note 17).

Receivables from Officers and Directors

   As of January 3, 2003 and December 28, 2001, notes receivable from former
officers and directors totaling $4.9 million and $7.1 million, respectively,
were outstanding. The notes were issued in connection with purchases of the
Company's common stock and bear interest at rates ranging between 3.69% and
9.75% per annum, or at the lowest federal applicable rate allowed by the
Internal Revenue Service. The notes are secured by stock pledge agreements and
mature on various dates through June 1, 2006.

   As of January 3, 2003 and December 28, 2001 reserves against notes
receivable from officers and directors were $1.8 million and $3.6 million,
respectively.

   During fiscal year 2002, the Company and its former Chief Executive Officer,
John R. Wolf, dismissed all legal actions between them pursuant to a settlement
agreement dated November 12, 2002. The agreement provided for completion of Mr.
Wolf's transfer of 243,000 shares of Company stock pursuant to the Form 4
executed May 9, 2000, in satisfaction of $2.1 million in promissory notes
executed by Mr. Wolf in favor of the Company.

   Also during the year ended January 3, 2003, the Company entered into a
promissory note in the amount of $560,000 pursuant to the terms of a settlement
agreement with a law firm, of which a principal was a former officer, director
and stockholder of the Company. Terms of the note, secured by trade accounts
receivable of the law firm, include interest at the rate of 5% with monthly
payment of principal and interest due beginning July 1, 2002 through June 1,
2006. During the year ended January 3, 2003 payments against the note were
received in the amount of $80,000.

   The Company entered into a second promissory note in the amount of $2.2
million, pursuant to the terms of the same settlement agreement, with the
former officer's widow. Terms of the note, secured by a stock pledge agreement,
includes interest at the rate of 5% with principal and interest due on or
before March 29, 2006. The note also provides for escalation in the interest
rate to 9.75% if the bid price of the Company's common stock trades at $8.00 or
greater on any public stock exchange for a period of 20 consecutive trading
days, or if the stock permanently ceases to trade on any public stock exchange.
Additionally, the note provides an acceleration of payment in the event the
closing bid price of the common stock of the Company trades at $10.00 or
greater on any public stock exchange for a period of 20 consecutive trading
days.

                                     F-18

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Options

   The table below summarizes the transactions in the Company's stock option
plans (in thousands except per share data):

<TABLE>
<CAPTION>
                                                                 Weighted
                                                                 Average
                                                       Number of Exercise
                                                        Shares    Price
                                                       --------- --------
       <S>                                             <C>       <C>
       Balance at December 31, 1999...................   1,460    $ 7.75
       Options granted................................   1,604    $10.35
       Options exercised..............................    (498)   $ 7.03
       Options forfeited / cancelled..................    (674)   $ 8.05
                                                         -----    ------
       Balance at December 29, 2000...................   1,892    $ 9.95
       Options granted................................   1,114    $ 6.98
       Options exercised..............................     (18)   $ 3.57
       Options forfeited / cancelled..................     (77)   $ 9.77
                                                         -----    ------
       Balance at December 28, 2001...................   2,911    $ 8.85
       Options granted................................     972    $ 3.73
       Options exercised..............................      --    $   --
       Options forfeited / cancelled..................    (745)   $10.55
                                                         -----    ------
       Balance at January 3, 2003.....................   3,138    $ 6.86
                                                         =====    ======
       Options exercisable (vested) at January 3, 2003   2,405    $ 7.43
                                                         =====    ======
</TABLE>

   Under provisions of the Company's 1991 Stock Option Plan, 2.0 million shares
were reserved for issuance. Generally, options under this plan are granted at
fair market value at the date of the grant, become exercisable over a 3-year
period, or as determined by the Board of Directors, and expire over periods not
exceeding 10 years from the date of grant. At January 3, 2003, December 28,
2001, and December 29, 2000 options for 379,000, 384,000 and 434,000 shares
were outstanding, with exercise prices ranging between $2.50 to $14.50 per
share.

   In fiscal year 1995, the Company adopted the 1995 Consultant Stock Plan,
authorizing the granting of options to purchase or awards of the Company's
common stock. Generally, options under the plan are granted at fair market
value at the date of the grant, become exercisable on the date of grant and
expire 10 years from the date of grant. Pursuant to this plan, options for
545,000, 472,000 and 279,000 were outstanding at January 3, 2003, December 28,
2001, and December 29, 2000, respectively.

   In fiscal year 1996, the Board of Directors approved the 1996 Non-Qualified
Stock Plan, authorizing the granting of options to purchase or awards of the
Company's common stock. Under provisions of the Non-Qualified Stock Plan,
600,000 shares were reserved for issuance. Generally, options under the plan
are granted at fair market value at the date of the grant, become exercisable
over a 3-year period, or as determined by the Board of Directors, and expire
over periods not exceeding 10 years from the date of grant. Pursuant to this
plan, options for 170,000, 170,000 and 175,000 shares were outstanding at
January 3, 2003, December 28, 2001 and December 29, 2000, respectively. The
options were originally issued with an exercise price of $12.50 per share.
During fiscal year 1998 the exercise price was reduced to $6.25 per share by
action of the Board of Directors.

   In fiscal year 1998, the Board of Directors approved the 1998 Stock Option
Plan, authorizing the granting of incentive options and/or non-qualified
options to purchase or awards of the Company's common stock. Under the

                                     F-19

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

provisions of the plan, 1.0 million shares were reserved for issuance; however,
the maximum number of shares authorized may be increased provided such action
is in compliance with Article IV of the Plan. During fiscal year 2001, pursuant
to Article IV of the Plan, the stockholders of the Company authorized an
additional 1.5 million shares. Generally, options under the plan are granted at
fair market value at the date of the grant, become exercisable over a 3-year
period, or as determined by the Board of Directors, and expire over periods not
exceeding 10 years from the date of grant. Pursuant to the plan, options for
1.5 million, 1.4 million and 810,000 shares were outstanding at January 3,
2003, December 28, 2001 and December 29, 2000, respectively, with exercise
prices ranging between $2.00 and $15.75 per share.

   In fiscal year 2001, the Board of Directors approved the Stock Option Plan
and Agreement for the Company's Chief Executive Officer authorizing the
granting of options to purchase or awards of the Company's common stock.
Generally, options under the plan are granted at fair market value at the date
of grant, become exercisable over a 3-year period, or as determined by the
Board of Directors, and expire 10 years from the date of grant. Pursuant to
this plan, options for 500,000 were outstanding at January 3, 2003, December
28, 2001, and December 29, 2000, respectively, with an exercise price of
$11.125.

   In fiscal year 2000, officers, employees and others exercised 498,000
options from the 1990, 1991, 1996, 1998 and non-qualified stock option plans at
prices ranging from $2.50 to $13.63 resulting in cash and note proceeds
totaling $3.5 million.

   In fiscal year 2001, officers, employees and others exercised 18,000 options
from the 1991 and 1996 stock option plans at prices ranging from $2.50 to $6.25
resulting in cash proceeds totaling $62,000.

   In fiscal year 2002, no options from any of the Company's stock option plans
were exercised.

   SFAS No. 123, "Accounting for Stock-Based Compensation" requires the Company
to provide pro forma information regarding net income and earnings per share as
if compensation expense for the Company's stock option plans had been
determined in accordance with the fair value based method. The fair value of
each stock option grant is estimated on the grant date using the Black-Scholes
option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                2002   2001   2000
                                               ------ ------ ------
            <S>                                <C>    <C>    <C>
            Dividend yield....................     0%     0%     0%
            Expected volatility...............    66%    64%    42%
            Risk-free interest rate...........  4.50%  4.50%  4.50%
            Expected holding period (in years) 1 to 3 1 to 3 1 to 5
</TABLE>

   The weighted average fair value of options granted during the year ended
January 3, 2003, December 28, 2001 and December 29, 2000, were $1.27 to $2.44,
$0.55 to $3.72 and $1.32 to $4.55, respectively.

                                     F-20

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Pro forma net loss and loss per share for fiscal year 2002, 2001 and 2000
had the Company accounted for stock options issued to employees and others in
accordance with the fair value method of SFAS 123 are as follows (in thousands,
except per share data):

<TABLE>
<CAPTION>
                                                                   2002      2001      2000
                                                                 --------  --------  --------
<C>     <S>                                                      <C>       <C>       <C>
Net loss
   As reported...............................................    $(17,158) $(14,833) $(18,902)
Add:    Stock-based employee compensation expense included in
        reported net loss, net of related tax effects...........       --        --        --
Deduct: Total stock-based employee compensation expense
        determined under fair value based method for all awards,
        net of related tax effects..............................   (1,326)   (1,488)   (1,597)
                                                                 --------  --------  --------
   Pro forma.................................................    $(18,484) $(16,321) $(20,499)
                                                                 ========  ========  ========
Basic and diluted loss per share
   As reported...............................................    $  (1.00) $  (0.87) $  (1.23)
   Pro forma.................................................    $  (1.08) $  (0.96) $  (1.33)
</TABLE>

   Due to the fact that the Company's stock option programs vest over many
years and additional awards are made each year, the above pro forma numbers are
not indicative of the financial impact had the disclosure provisions of SFAS
123 been applicable to all years of previous option grants. The above numbers
do not include the effect of options granted prior to 1995 that vested in 1996
through 2002.

   The following table summarizes information about stock options outstanding
and exercisable at January 3, 2003 (in thousands, except per share data):

<TABLE>
<CAPTION>
                                    Options
                                  Outstanding
                     Number     Weighted-Average                      Number
   Range of       Outstanding      Remaining     Weighted-Average  Exercisable   Weighted-Average
Exercise Prices    at 1/03/03   Contractual Life  Exercise Price   at 01/03/03    Exercise Price
---------------  -------------- ---------------- ---------------- -------------- ----------------
                 (in thousands)                                   (in thousands)
<S>              <C>            <C>              <C>              <C>            <C>

 $1.70 to $2.50        259         4.3 years          $ 1.97            213           $ 1.94
 $2.82 to $4.12        956         4.8 years          $ 3.44            544           $ 3.39
 $4.45 to $6.60        643         3.1 years          $ 5.67            497           $ 5.93
 $7.50 to $11.25     1,110         6.0 years          $10.61          1,009           $10.64
$11.38 to $15.75       170         7.3 years          $13.63            142           $13.63
----------------     -----         ---------          ------          -----           ------
 $1.70 to $15.75     3,138         5.0 years          $ 6.86          2,405           $ 7.43
================     =====         =========          =====           =====           =====
</TABLE>

Warrants

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

<TABLE>
<CAPTION>
                                                     Number   Weighted Average
                                                    of Shares  Exercise Price
                                                    --------- ----------------
 <S>                                                <C>       <C>
 Balance at December 28, 2001 and December 29, 2000   5,000        $1.20
 Warrants exercised................................  (5,000)       $1.20
                                                     ------        -----
 Balance at January 3, 2003........................       0        $   0
                                                     ======        =====
</TABLE>


                                     F-21

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE 9--COMMITMENTS AND CONTINGENCIES

Lease Obligations

   The Company leases certain property, plant and equipment under capital and
operating lease agreements.

   Annual future minimum lease payments under non-cancelable operating lease
commitments as of January 3, 2003 are as follows (in thousands):

<TABLE>
<CAPTION>
                              Fiscal Year
                              -----------
                              <S>           <C>
                               2003........ $  713
                               2004........    348
                               2005........    299
                               2006........    232
                               2007........    55
                                            ------
                                   Total... $1,647
                                            ======
</TABLE>

   Rent expense was approximately $1.1 million for each of the years ended
January 3, 2003, December 28, 2001 and December 29, 2000, respectively.

Supply Agreement

   In May 1999, the Company entered into a license and supply agreement with
another manufacturer to license and re-sell one of the manufacturer's products.
Under the terms of the agreement, the Company was committed to purchase the
specified product for a total sum of $3.2 million over 18 months. In September
2001, the supply agreement was amended reducing the minimum contractual amount
that the Company is obligated to purchase from the manufacturer to $2.5 million
over a 24 month period commencing September 1, 2001. The agreement, as amended,
can be cancelled at the end of the 24 month period by either party upon four
months written notice. Purchases under the agreement for fiscal 2002 and 2001
were approximately $1.3 million and $735,000, respectively.

   In December 2000, the Company entered into a minimum purchase agreement with
another manufacturer for the purchase of viscoelastic solution. In addition to
the minimum purchase requirement, the Company is also obligated to pay an
annual regulatory maintenance fee. The agreement contains provisions to
increase the minimum annual purchases in the event that the Seller gains
regulatory approval of the product in other markets, as requested by the
Company. Purchases under the agreement for fiscal 2002 and 2001 were
approximately $383,000 and $184,000, respectively.

   As of January 3, 2003 estimated annual purchase commitments under these
contracts are as follows (in thousands):

<TABLE>
<CAPTION>
                              Fiscal Year
                              -----------
                              <S>           <C>
                               2003........ $1,065
                               2004........    600
                               2005........    600
                               2006........    600
                                            ------
                                   Total... $2,865
                                            ======
</TABLE>

                                     F-22

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Litigation and Claims

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

NOTE 10--OTHER LIABILITIES

Other Current Liabilities

   Included in other current liabilities at January 3, 2003 and December 28,
2001 are approximately $1.3 million and $1.4 million of commissions due to
outside sales representatives and accrued salaries and wages of $805,000 and
$940,000, respectively.

NOTE 11--RELATED PARTY TRANSACTIONS

   The Company has had significant related party transactions as discussed in
Notes 4, 7 and 8.

   The Company issues options to purchase 60,000 shares of its common stock at
fair market value on the date of grant to members of its Board of Directors
upon election or reelection for services provided as Board members.

   In addition to notes secured by stock pledge agreements (see Note 8), the
Company holds other various promissory notes from current and former officers
and directors of the Company. The notes, which provide for interest at the
lowest applicable rate allowed by the Internal Revenue Code, are due on demand.
Amounts due from officers and directors and included in prepaids, deposits, and
other current assets at January 3, 2003 and December 28, 2001 were $158,000 and
$460,000, respectively.

   In March 2001, the Company entered into a consulting agreement with one of
the members of its Board of Directors. In exchange for services, the Company
issued an option to purchase 20,000 shares of the Company's common stock at
fair market value on the date of grant, in addition to a monthly retainer of
$6,000, and a per-diem rate after six days worked of $1,000. Amounts paid under
the agreement during the year ended January 3, 2003 and December 28, 2001 were
$73,000 and $93,000, respectively.

   The Company had a consulting contract with a corporation owned by an
employee of one of its foreign subsidiaries. The consulting contract, which
began October 1, 1999 and ending October 1, 2005, provided for monthly payments
of $20,000 in exchange for specified services. During fiscal year 2001, the
parties agreed to terminate the contract at a discount in exchange for cash and
forgiveness of a note receivable due the subsidiary from the employee. Debt
forgiveness totaled $658,000 (1.4 million DM at the exchange rate in effect on
the settlement date). During fiscal year 2002, 2001, and 2000, amounts paid or
accrued under the contract totaled $0, $180,000, and $240,000, respectively.
During the year ended January 3, 2003, a pension obligation in the amount of
$257,000, which was included in other long-term liabilities at December 28,
2001, was paid to the employee. Amounts due from the employee and included in
prepaids, deposits, and other current assets at December 28, 2001 were $523,000
(1.2 million DM at the exchange rate on December 28, 2001). Additional amounts
due were cancelled during the year ended January 3, 2003 in exchange for the
purchase of the remaining 20% interest of the subsidiary (see Note 7).

                                     F-23

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   During fiscal year 2001 and 2000, a law firm, of which a principal was an
officer, director and stockholder of the Company, received approximately $1.5
million and $2.0 million, respectively, for fees in connection with legal
services performed on behalf of the Company.

NOTE 12--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

   Interest paid was $580,000, $640,000 and $1.5 million for the years ended
January 3, 2003, December 28, 2001 and December 29, 2000, respectively. Income
taxes paid amounted to approximately $719,000, $479,000 and $648,000 for the
years ended January 3, 2003, December 28, 2001 and December 29, 2000,
respectively.

<TABLE>
<CAPTION>
                                                             2002   2001  2000
                                                           -------  ---- ------
 <S>                                                       <C>      <C>  <C>
 Non cash financing activities:
    Notes receivable from officers and directors (Note 8). $(2,128) $ -- $1,167
    Notes receivable reserve..............................   1,814    --     --
    Prepaids, deposits and other current assets...........    (658)   --     --
    Treasury stock acquired...............................     972    --     --

 Acquisition of business:
    Minority interest acquired............................ $   426  $ -- $   --
    Goodwill..............................................     442    --     --
    Cancellation of amounts receivable....................    (868)   --     --
</TABLE>

NOTE 13--OTHER CHARGES

   On June 22, 2000, the Company announced the details of its plan of
restructuring. In conjunction with the implementation of the plan, the Company
recorded a pretax charge to earnings of approximately $13.8 million in the
second quarter of fiscal year 2000. The charges include approximately $900,000
for restructuring of certain subsidiaries, approximately $4.0 million to
write-off patents that were determined to have no future value to the Company,
approximately $l.9 million of costs incurred by the Company relating to
activities that were abandoned, approximately $4.1 million relating to
severance and other employee separation costs, approximately $1.9 million
relating to the disposition of investment and assets related to the Company's
abandoned entry into the Lasik market, and approximately $1.0 million relating
to the closure of a foreign subsidiary. As part of the restructuring plan, a
total of 19 employees were laid-off, terminated or resigned.

   In addition, the Company wrote-off approximately $5.2 million in inventory
that no longer fit the Company's future direction and recorded an approximate
$4.7 million charge related to the write-off of its Japanese joint venture. At
December 28, 2001, the Company had approximately $100,000 of accrued
restructuring charges consisting of future payments to former employees and
lease obligations.

   In June 2001 management completed an extensive operational review of the
Company. Based upon that review, in August 2001 the Company implemented a plan
that management believes will allow the Company to become profitable. As a
result of implementing the plan, the Company significantly changed its
manufacturing processes and location including consolidating lathing activity
into the Swiss manufacturing site from the current dual site operations and
reducing molded lens capacity at the California site. The Company also reduced
its workforce and closed certain overseas operations. In conjunction with the
implementation of the plan, the Company recorded pretax charges of
approximately $7.8 million in the third and fourth quarters of fiscal year
2001. Planned charges include approximately $3.7 million in fixed asset
write-offs, $300,000 in severance and employee relocation costs, and $1.0
million for subsidiary closures. Additionally, the Company reserved
$2.1 million of notes receivable from former officers and directors of the
Company and paid $700,000 in consideration for the early termination of a
consulting contract with the president of the Company's German subsidiary.

                                     F-24

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The Company also wrote off $6.4 million of inventory related to voluntary
product recalls and excess and obsolete inventory in the second and fourth
quarters of 2001. The amount is included in cost of sales at December 28, 2001.

   In connection with its business strategy to reduce operating expenses,
announced during the third quarter of 2001, the Company completed the sale of
its South African subsidiary and closure of its Swedish and Canadian
subsidiaries during the year ended January 3, 2003. As a result of these
transactions the Company recorded $1.2 million of subsidiary closure charges.
The charges were primarily related to the recognition of deferred losses
resulting from the translation of foreign currency statements into U.S. dollars
(previously included in equity in the balance sheet in accordance with SFAS No.
52). Since the charges had been included in equity their subsequent
recognition, while impacting retained earnings, had no impact on total
stockholders' equity. The Company will continue its presence in the South
African and Swedish markets by selling through distributors and in the Canadian
market by selling through independent sales representatives.

   Also included in other charges at January 3, 2003 is $230,000 in employee
separation costs.

NOTE 14--NET LOSS PER SHARE

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

<TABLE>
<CAPTION>
                                                     2002   2001   2000
                                                    ------ ------ ------
       <S>                                          <C>    <C>    <C>
       Basic weighted average shares outstanding... 17,142 17,003 15,378
       Diluted effect of stock options and warrants     --     --     --
                                                    ------ ------ ------
       Diluted weighted average shares outstanding. 17,142 17,003 15,378
                                                    ====== ====== ======
</TABLE>

NOTE 15--GEOGRAPHIC AND PRODUCT DATA

   The Company develops, manufactures and distributes medical devices used in
minimally invasive ophthalmic surgery. Substantially all of the Company's
revenues result from the sale of the Company's medical devices. The Company
distributes its medical devices in the cataract, refractive and glaucoma
segments within ophthalmology. During the years presented, revenues from the
refractive and glaucoma segments were 5% or less of total revenue. Accordingly,
the difference is not significant enough for the Company to account for these
products separately or to justify segmented reporting by product type.

   The Company markets and sells its products in over 39 countries and has
manufacturing sites in the United States and Switzerland. Other than the United
States and Germany, the Company does not conduct business in any country in
which its sales in that country exceed 5% of consolidated sales. Sales are
attributed to countries based on location of customers. The composition of the
Company's sales to unaffiliated customers between those in the United States,
Germany, and those in other locations for each year, is set forth below (in
thousands).

<TABLE>
<CAPTION>
                                             2002    2001    2000
                                            ------- ------- -------
            <S>                             <C>     <C>     <C>
            Sales to unaffiliated customers
               U.S......................... $24,082 $27,465 $29,501
               Germany.....................  16,081  14,907  14,182
               Other.......................   7,717   7,865  10,303
                                            ------- ------- -------
                   Total................... $47,880 $50,237 $53,986
                                            ======= ======= =======
</TABLE>

                                     F-25

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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

<TABLE>
<CAPTION>
                                                 2002   2001
                                                ------ ------
                  <S>                           <C>    <C>
                  Property, Plant and Equipment
                     U.S....................... $5,221 $6,316
                     Switzerland...............  1,844  2,123
                     Other.....................    373    303
                                                ------ ------
                         Total................. $7,438 $8,742
                                                ====== ======
</TABLE>

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

NOTE 16--QUARTERLY FINANCIAL DATA (UNAUDITED)

   Summary unaudited quarterly financial data from continuing operations for
fiscal 2002 and 2001 is as follows (in thousands except per share data):

<TABLE>
<CAPTION>
     January 3, 2003                  1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
     ---------------                  -------- -------- -------- --------
     <S>                              <C>      <C>      <C>      <C>
     Revenues........................ $11,731  $12,088  $11,201  $ 13,228
     Gross profit....................   5,712    6,024    5,620     6,793
     Net loss........................    (997)  (3,909)  (2,144)  (10,108)
     Basic and diluted loss per share    (.06)    (.23)    (.12)     (.59)

     December 28, 2001                1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
     -----------------                -------- -------- -------- --------
     Revenues........................ $13,001  $12,890  $12,154  $ 12,741
     Gross profit....................   7,822    1,865    6,688     6,208
     Net loss........................    (230)  (4,177)  (1,991)   (8,435)
     Basic and diluted loss per share    (.01)    (.25)    (.12)     (.49)
</TABLE>

Quarterly and year-to-date computations of loss per share amounts are made
independently. Therefore, the sum of the per share amounts for the quarters may
not agree with the per share amounts for the year.

NOTE 17--FOURTH QUARTER SIGNIFICANT ITEMS

   On November 12, 2002, the Company and its former Chief Executive Officer,
John R. Wolf, settled all legal actions between them (see Note 8).

   During the quarter ended January 3, 2003, the Company acquired the remaining
20% interest of its German subsidiary from the subsidiary's president (see Note
7).

   During the quarter ended January 3, 2003, the Company recorded a $9.2
million increase in its deferred tax asset valuation allowance (see Note 6).

                                     F-26

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


NOTE 18--SUBSEQUENT EVENTS

   The Company negotiated a credit facility with a German bank to replace the
credit facility that expires on August 31, 2003. The new credit facility,
effective January 13th, 2003, provides for borrowings of up to $210,000 EUR
($199,000 at the exchange rate on the date of the agreement) at an interest
rate of 8.5%. The note is due on November 30, 2003 and is personally guaranteed
by the subsidiary's president. The agreement includes a covenant which prevents
the subsidiary from paying dividends.

   On February 27, 2003, the Company and Richard Leza, former Vice President of
Finance, Business Development and Corporate Strategy, settled their disputes.
Pursuant to the settlement, the Company agreed to pay Mr. Leza monthly payments
totaling $180,000 over a 15-month period. The Company also agreed to issue Mr.
Leza an option to purchase 75,000 shares of the Company's common stock and
forgave a note receivable of $120,000.

   On March 26, 2003, the Company and its domestic lender executed an agreement
to extend the maturity date of the Company's $3.0 million line-of-credit from
one year to March 31, 2004. The line-of-credit bears interest at a rate equal
to the prime rate (4.25% at January 3, 2003) plus an interest margin of 5%. In
addition, the Company is required to pay a commitment fee of 1.25% per annum of
the unused amount of the line-of-credit. All other terms and conditions are
generally unchanged except that the cash flow and operating income covenants of
the agreement do not commence until the third quarter of 2003 and minimum
tangible net worth covenants were reduced.

                                     F-27

<PAGE>

                   INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'

                              REPORT ON SCHEDULE

To the Board of Directors
STAAR Surgical Company

   The audits referred to in our report dated February 21, 2003 (except for
Note 18 which is dated March 26, 2003), relating to the consolidated financial
statements of STAAR Surgical Company and Subsidiaries, which is contained in
Item 8 of this 10-K included the audit of Schedule II, Valuation and Qualifying
Accounts and Reserves as of January 3, 2003, and for each of the three years in
the period ended January 3, 2003. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audit.

   In our opinion, such financial statement schedule presents fairly, in all
material respects, the information set forth therein.

                                          BDO SEIDMAN, LLP

Los Angeles, California
February 21, 2003
  (except for Note 18 which is dated March 26, 2003)

                                     F-28

<PAGE>

               INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT

To the Board of Directors
STAAR Surgical Company

   We consent to incorporation by reference in the Registration Statement
(No. 333-45810), (No. 333-51064), (No. 333-52096), (No. 333-60241), and
(No. 333-90018) on Form S-8 and (No. 333-47820) on Form S-3 of STAAR Surgical
Company of our report dated February 21, 2003 (except for Note 18 which is
dated March 26, 2003) relating to the consolidated balance sheets of STAAR
Surgical Company and Subsidiaries as of January 3, 2003 and December 28, 2001
and the related consolidated statements of operations, stockholders' equity and
comprehensive income, and cash flows and related schedule for each of the three
years in the period ended January 3, 2003, which report appears in the January
3, 2003 annual report on Form 10-K of STAAR Surgical Company and subsidiaries.

                                          BDO SEIDMAN, LLP

Los Angeles, California
April 2, 2003

                                     F-29

<PAGE>

                    STAAR SURGICAL COMPANY AND SUBSIDIARIES

          SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
                        Column A                            Column B  Column C   Column D   Column E
                        --------                           ---------- --------- ---------- ----------
                                                           Balance at                      Balance at
                                                           Beginning                         End of
                       Description                          of Year   Additions Deductions    Year
                       -----------                         ---------- --------- ---------- ----------
                                                                         (In thousands)
<S>                                                        <C>        <C>       <C>        <C>
2002
   Allowance for doubtful accounts deducted from accounts
     receivable in balance sheet..........................   $  768    $ 1,186    $1,149    $   805
   Accrued restructuring costs............................      100         --       100         --
   Deferred tax asset valuation allowance.................    4,288     14,559        --     18,847
   Notes receivable reserve...............................    3,609         --     1,814      1,795
                                                             ------    -------    ------    -------
                                                             $8,765    $15,745    $3,063    $21,447
                                                             ======    =======    ======    =======
2001
   Allowance for doubtful accounts deducted from accounts
     receivable in balance sheet..........................   $  781    $    --    $   13    $   768
   Accrued restructuring costs............................    2,236        100     2,236        100
   Deferred tax asset valuation allowance.................    1,511      2,777        --      4,288
   Notes receivable reserve...............................    1,500      2,109        --      3,609
                                                             ------    -------    ------    -------
                                                             $6,028    $ 4,986    $2,249    $ 8,765
                                                             ======    =======    ======    =======
2000
   Allowance for doubtful accounts deducted from accounts
     receivable in balance sheet..........................   $  373    $   408    $   --    $   781
   Accrued restructuring costs............................       --      4,236     2,000      2,236
   Deferred tax asset valuation allowance.................       --      1,511        --      1,511
   Notes receivable reserve...............................       --      1,500        --      1,500
                                                             ------    -------    ------    -------
                                                             $  373    $ 7,655    $2,000    $ 6,028
                                                             ======    =======    ======    =======
</TABLE>

                                     F-30

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.82
<SEQUENCE>3
<FILENAME>dex1082.txt
<DESCRIPTION>MASTER CREDIT AGREEMENT DATED 12/15/00
<TEXT>
<PAGE>


[LOGO OF UBS]                                              Master No. 272-351697

                                                                   EXHIBIT 10.82

MASTER CREDIT AGREEMENT

1        LENDER

         UBS AG
         Barenplatz 8
         3001 Berne

         (referred to below as 'UBS')

2        BORROWER

         Staar Surgical AG
         Hauptstrasse 104
         3560 Nidau

         (referred to below as 'the Borrower')

3        CREDIT FACILITY

         UBS grants to the Borrower a credit facility in a maximum amount of CHF
         5'000'000.-- (Swiss francs five million).

4        FINANCING PURPOSE

         General corporate financing purposes

5        ADDITIONAL BORROWER

         None

6        AVAILABILITY

         Subject to the terms and conditions of this Credit Agreement (Clauses
         3, 10 and 11) this credit facility is available for:

         Tranche A: Up to a maximum amount of CHF 3'000'000.--

         (1)      UBS current account in CHF and/or any other freely available
                  and convertible currency, in accordance with the 'Credit
                  Terms'.

         (2)      UBS fixed term advances for periods of 1 - 12 months in an
                  amount of at least CHF 500'000.-- and/or the equivalent in
                  any other freely available and convertible currency, in
                  accordance with the 'Credit Terms'.

         Tranche B: Up to a maximum amount of CHF 2'000'000.--

         (3)      UBS term loans with periods of 1 up to 5 years during the
                  total life of the loan in an amount of at least CHF 500'000.--
                  and/or any other freely available and convertible currency, in
                  accordance with the 'Credit Terms'.

7        CONDITIONS/MARGIN

         Interest shall be calculated on a base interest rate plus an individual
         margin. An explanation of the base interest rate, margin and
         calculation methods is given in the 'Credit Terms'.

                                    Page 1/5

<PAGE>


[LOGO OF UBS]

7.1      UBS CURRENT ACCOUNTS

         At the present time, the following interest rate for Swiss francs
         applies:

         Interest rate            5,50 % per annum

         Credit commission        0,25 % per quarter, calculated on the
                                   average debit balance

7.2      UBS FIXED TERM ADVANCES

         The interest rate will be fixed in accordance with the 'Credit Terms'.

7.3      UBS TERM LOANS

         The interest rate will be fixed in accordance with the 'Credit Terms'.

8        COMMITMENT FEE

         None

9        FEES / COMMISSIONS

         None

10       CANCELLATION/AMORTISATION

         Amortisation on Tranche A:

         None

         Amortisation on Tranche B:

         CHF 500'000.-- per annum, payable half-yearly with CHF 250'000.-- each
         time on June 30 and on December 31; for the first time on June 30,
         2002.

11       TERM OF THE FACILITY / TERMINATION

         Until further notice.

         Termination shall be effected in accordance with the 'Credit Terms',
         whereby UBS may undertake exceptional termination as provided under
         Article 2.2.2. if the ownership of/control over the Borrower, who is a
         group company is subject to change to a degree deemed, in the opinion
         of UBS, to be substantial.

12       SECURITY

         The items listed below shall secure all claims of UBS including all
         interest and commissions, due and to become due under this Credit
         Agreement, etc.

         (1)      General Purposes Assignment of Claims, in accordance with
                  separate form 'Global Assignment'.

13       REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants that

         (1)      the Borrower has not created any security interest in respect
                  of its own obligations and/or the obligations of third parties
                  other than security given under this Credit Agreement or in
                  the context of other credit agreements with UBS and/or
                  security given in favour of other creditors, and which have
                  been notified to UBS;

         (2)      no event has occurred which would entitle UBS to effect
                  extraordinary termination in accordance with the 'Credit
                  Terms' and no litigation is pending which could have a
                  materially adverse effect on it or its assets;

<PAGE>


[LOGO OF UBS]

         (3)      at the time of entering into this Credit Agreement there is no
                  official order within the context of applicable rules and
                  regulations regarding the protection of the environment,
                  namely the Environmental Protection Law and the Clean Water
                  Act, affecting it or any company controlled by it, which could
                  have a materially adverse effect on its ability to perform its
                  financial obligations.

14       POSITIVE COVENANTS

         (1)      The Borrower undertakes throughout the entire term of this
                  Credit Agreement to keep his equity in a minimum amount of CHF
                  15'800'000.--

                  Equity: Capital, statutory and free reserves, profit carried
                  forward.

15       NEGATIVE COVENANTS

         (1)      The Borrower will not enter into any obligation, which is
                  secured by any mortgage, charge, assignment, pledge or other
                  encumbrance on the whole or on any part of its revenues,
                  assets or other property (present or future) and shall not
                  secure any of its existing debt in the above manner, unless
                  the benefit of any security is simultaneously extended equally
                  and rateably to the obligations under this credit facility in
                  such manner that UBS deems necessary in order that the
                  obligations under this credit facility will rank pari passu
                  with all other obligations. This provision shall not apply to
                  existing security which secures any renewal or extension of
                  the originally secured obligations.

         (2)      Furthermore, the Borrower shall not give any guarantee,
                  indemnity or any other security for any obligation of any of
                  its directly or indirectly controlled subsidiaries or any
                  third party. The Borrower shall moreover procure, that each of
                  its directly or indirectly controlled subsidiaries will not
                  give any guarantee, indemnity or any other security for any
                  obligation of any of his directly or indirectly controlled
                  subsidiaries or any third party. This provision shall not
                  apply to any guarantee, indemnity or any other security which
                  is given for the obligations under this credit facility.

         (3)      The Borrower undertakes throughout the entire term of this
                  Credit Agreement not to make any repayment under the
                  shareholder's loan in the amount of CHF 11'834'044.-- (as per
                  balance sheet of December 31, 1999) without prior consent of
                  UBS.

16       FINANCIAL RATIOS

         The Borrower undertakes during the entire term of the Credit Agreement
         at any time to comply with the following key ratio:

         Interest coverage factor in the financial statement of the Borrower of
         at least 10 x.

         The interest coverage factor is calculated as follows: EBITDA in ratio
         to interest expenditure.

         For the computation of this key financial figure and ratio, the term
         listed below shall have the following meaning:

         EBITDA:  operating profit before interest, taxes, depreciation on
                  property, plant, equipment, financial investments as well as
                  amortisation of intangibles (such as goodwill, licences, etc.)
                  and provisions.

17.      INFORMATION

         In accordance with the 'Credit Terms'.

         In addition, the Borrower undertakes to furnish UBS with the following
         information during the entire term of the Credit Agreement:

         (1)      one copy of the balance sheet and profit and loss account
                  statement including any appendixes together with the auditors'
                  report, by no later than four months after the close of the
                  fiscal year (separately and Staar Company consolidated);

         (2)      one copy of the budget, including the investment budget, by no
                  later than 30 calendar days before the start of the relevant
                  fiscal year (separately and Staar Company consolidated);

         Where agreed under Clause 16, UBS shall receive a compliance
         certificate, duly signed by the auditor, with the above key figure by
         no later than four months after the close of each fiscal year.

<PAGE>


[LOGO OF UBS]

18       CONDITIONS PRECEDENT

         The credit facility granted under this Credit Agreement may only be
         utilised subject to UBS having received all the documents and/or
         security listed hereafter in the required form. Should the documents
         and/or security required not be submitted in proper form within one
         month from the date of this Credit Agreement, UBS may cancel this
         Credit Agreement without need of any further legal formality.

         The following documents must be submitted to UBS both in due time and
         duly executed;

         (1)      a copy of this Credit Agreement

         (2)      a copy of the 'Credit Terms'

         (3)      'Global Assignment' in accordance with Clause 12.2 of the
                  Credit Agreement

         (4)      'Repledging of Your Collateral'

19       FURTHER PROVISIONS

         (1)      The 'General Conditions' as well as the 'Credit Terms' of UBS
                  shall form an integral part of this Credit Agreement.

20       TRANSFER

         UBS is free to offer for transfer or transfer its rights and
         obligations under the credit relationship including any collateral
         therefor such as certificates of indebtedness or other collateral, in
         part or in full, to third parties living in Switzerland and abroad. It
         shall be permitted to disclose any information and data collected in
         connection with the present Agreement to third parties involved in such
         transfer, including rating agencies. Where such third parties are not
         subject to Swiss banking secrecy laws, information and data will only
         be passed on where they undertake to maintain secrecy and require such
         secrecy from possible further contracting partners.

         UBS is free, without being required to obtain the client's consent, to
         transfer limit obligations as well as other obligations from a credit
         relationship to their acquirer together with the claim. The acquirer of
         such obligations must either be an associated company of UBS or a Swiss
         or foreign financial institution (bank, insurance company or other). To
         the extent that UBS transfers an obligation, it shall be freed
         therefrom.

21       WAIVER OF SET-OFF

         The Borrower waives his right to fulfil his obligations by setting
         them off with any claims he may have towards UBS.

22       APPLICABLE LAW AND JURISDICTION

         Both this Credit Agreement and the 'Credit Terms' shall be exclusively
         governed by and construed in accordance with Swiss law. The place of
         performance, the place of debt collection (only for persons domiciled
         outside of Switzerland) as well as the exclusive place of jurisdiction
         for any disputes arising out of and in connection with this agreements
         shall be Berne.

         UBS reserves the right, however, to take legal action at the domicile
         of the Borrower or any other competent authority, in which event
         exclusively Swiss law shall remain applicable.

<PAGE>


[LOGO OF UBS]

This contract is executed in 3 original copies and replaces the contract dated
December 29, 1997/August 21, 1998.

Berne, November 27,2000           UBS AG
FOIK/FAC2-YVQ

                                  /s/  Norbert Schacht   /s/  Marco Speichinger
                                       ---------------        -----------------
                                       Norbert Schacht        Marco Speichinger

In agreement:                     Staar Surgical AG

Nidau, 15/12/00                   /s/ Deborah J. Andrews
                                      ------------------
Place, date                           Deborah J. Andrews

In agreement
With Clause 11+15.3.:             Staar Surgical Co., Monrovia / USA

Monrovia CA 12/29/00              /s/ John Santos
---------------                       ---------------
Place, date                           John Santos

We hereby confirm the authenticity of the signatures of Staar Surgical Company,
Monrovia. The above signatures are legally binding Staar Surgical Company,
Monrovia.

                                  Staar Surgical AG

/s/  Nidau, 15/12/00              /s/ Deborah J. Andrews
     -----------                      -------------------
Place, date                           Deborah J. Andrews

<PAGE>


[LOGO OF UBS]                                              Master No. 272-351697

CREDIT TERMS

These 'Credit Terms' together with the 'General Conditions' of UBS AG
(hereinafter UBS) are valid for all Credit Agreements in which they are started
to be applicable. A Clause is a reference to a Clause in the relevant Credit
Agreement.

These 'Credit Terms' shall cease to apply once all obligations under the
relevant Credit Agreement have been repaid or are otherwise definitively
extinguished and the credit lines concerned have been cancelled.

DEFINITION GROUP COMPANIES

Group Company shall mean any company in accordance with artice 563 lit. (e)
paragraph 1 of the Swiss Code of Obligations.

1.       CONDITIONS/MARGIN (CLAUSE 7 OF THE CREDIT AGREEMENT)

1.1      CONDITIONS

1.1.1    INTEREST CALCULATIONS

Interest will be calculated based on a 365/360 year, i.e. actual number of days
per month on the basis of a 360-day year. Calculation methods used for selected
foreign currencies, UBS portfolio mortgage and UBS variable mortgage are
available upon request.

1.1.2    UBS CURRENT ACCOUNT

Accrued Interest and commission will be charged quarterly at the end of each
calendar quarter. Prior written notice of any interest rate changes will be
provided.

1.1.3    UBS FIXED TERM ADVANCE/UBS ROLL-OVER LOAN AND UBS ROLL-OVER MORTGAGE

For any advance, loan and/or mortgage with a term of up to and 6 months,
principal and interest will be calculated upon expiration of the term. For any
advance, loan and/or mortgage with a term of more than 6 months, principal and
interest will be calculated quarterly at the end of each calendar quarter as
well as upon expiration of the term.

The base interest rate used follows Euromarket conditions for loans of the
corresponding term and currency. Where no extension of the term is agreed, both
interest and principal will be charged to the relevant current account in each
case.

The interest rate will be fixed two bank working days prior to drawdown or
renewal for the corresponding term and currency. The instructions for drawdown
or renewal must be received by UBS at least two bank working days before such
drawdown or renewal. Where such instructions are unavailable, advances falling
due will not be renewed and both principal and interest will be debited to the
relevant current account.

1.1.4    UBS TERM LOAN

Interest will be calculated and debited quarterly at the end of each calendar
quarter as well as upon expiration of the term of the loan.

The base interest rate used follows Euromarket conditions for loans of the
corresponding term and currency. Interest will be charged to the relevant
current account. The interest rate will be set two bank working days before
drawdown, and will be fixed for the entire term agreed. The instructions for
receipt of funds must be received by UBS at least two bank working days before
drawdown.

1.1.5    UBS FIXED MORTGAGE

Interest will be calculated and debited quarterly at the end of each calendar
quarter as well as upon final expiration of the term of the mortgage.

The base interest rate used follows Euromarket conditions. Interest will be
charged to the relevant current account. The interest rate will be fixed two
bank working days prior to drawdown, and will be fixed for the entire term
agreed. The instructions for drawdown must be received by UBS at least two bank
working days before drawdown.

1.1.6    UBS PORTFOLIO MORTGAGE

Interest will be calculated and debited quarterly at the end of each calendar
quarter. Interest will be charged to the current account.

The base interest rate is the average of the fixed interest rates of all the
portfolio's capital tranches. At the end of each calendar quarter, a capital
tranche of the portfolio becomes due and will immediately be replaced with a new
tranche at current market conditions (Interbank rate SWIBOR = Swap Interbank
Offered Rate, for the agreed interest period, plus 0,15% p.a. capital costs).
Hence, the portfolio's base interest rate changes quarterly. The base interest
rate applying from time to time will be published in the media. The publication
in 'Investdata' shall prevail.

1.1.7    UBS LIBOR MORTGAGE

Interest will be calculated and debited semi-annually, on the last day in the
months of June and December on which banks are open for business in London. The
6-month CHF LIBOR will be used as the base interest rate. For each 6 month
interest period the interest rate will be fixed 2 bank working days before the
day of disbursement or the interest due date as the case may be and communicated
in writing.

<PAGE>


[LOGO OF UBS]

If disbursement of the mortgage does not take place on the first day of the
first 6 month interest period, UBS will fix the basic interest rate for the
period from the first day of such interest period to the date disbursement
actually takes place based on the Euromarket interest rate applicable for that
period (plus margin) and will communicate the rate in writing.

1.1.8    UBS VARIABLE MORTGAGE

Interest will be calculated and debited quarterly at the end of each calendar
quarter. Interest will be debited to the relevant current account. Prior written
notice of any interest, rate changes will be provided.

1.2      MARGIN

An individual margin will be added to the base interest rates applicable for the
relevant form of utilization.

2        TERMINATION (CLAUSE 11 OF THE CREDIT AGREEMENT)

2.1      ORDINARY TERMINATION

2.1.1    ORDINARY TERMINATION BY THE BORROWER

The Borrower may at any time terminate the Credit Agreement with immediate
effect. Where the Borrower gives notice of termination, such notice shall also
be binding for every Additional Borrower. The unused portion of any committed
credit lines may be cancelled in whole or in part with effect from the end of a
quarter by giving not less than 30 calendar days prior notice. The credit
facility will immediately be reduced by the amount of such cancellation. Where
credit lines have been used, the outstanding amounts will become due for
repayment in accordance with Clause 2.1.2.

2.1.2    ORDINARY TERMINATION BY UBS

UBS may terminate the Credit Agreement with immediate effect and refuse any
drawdown in respect of uncommitted credit lines in its absolute discretion and
without giving reasons therefor. The unused portion of any uncommitted credit
line will be cancelled with immediate effect upon termination. Where credit
lines have been used, the outstanding amounts will become due for repayment as
follows:

-        UBS current account
         immediately

-        UBS fixed term advance
         upon expiration of the fixed term

-        UBS term loan/UBS fixed mortgage/UBS roll-over loan/UBS roll-over
         mortgage
         upon expiration of the term agreed in clause 11 of the applicable
         Credit Agreement.

-        UBS variable mortgage/UBS portfolio mortgage
         upon the expiration of the advance notice period of 90 calendar days

Letters of credit and guarantees issued by UBS shall remain fully valid, and the
Borrower shall remain liable in relation thereto, in accordance with the
relevant terms and provision.

2.2      EXTRAORDINARY TERMINATION

2.2.1    EXTRAORDINARY TERMINATION BY THE BORROWER

The Borrower may at any time upon giving 30 calendar days prior notice terminate
the Credit Agreement in whole or in part and repay any outstanding amounts or
have repayment effectuated by the Additional Borrowers. If prepayment is made
during an interest period or on a date other than the agreed repayment date, an
indemnity pursuant to paragraph 4.3 'Indemnity' shall be payable on the actual
day prepayment is made.

2.2.2    EXTRAORDINARY TERMINATION BY UBS

UBS has the right to terminate the Credit Agreement with immediate effect at any
time, and to declare all outstanding amounts including accrued interest,
commissions, fees etc., immediately due and payable - irrespective of the term
of any credit facility granted - in the event that:

(1)      the Borrower or a Group Company is in breach of a representation or
         warranty (Clause 13 of the Credit Agreement) or defaults in the
         performance of a covenant (Clause 14 to 17 of the Credit Agreement);

(2)      The Borrower or a Group Company fails to pay UBS or a third party
         (including any acquirers of credit claims) principal, interest and/or
         commissions on the due date therefor and such failure continues for a
         period of 30 calendar days, or fails to reduce overdrafts by repayment
         or to furnish sufficient additional security within any period set by
         UBS;

(3)      the Borrower or one of its Group Companies changes its legal or
         commercial structure, e.g. through liquidation, sale of a substantial
         part of its assets, change to its objects and business activities,
         merger or restructuring, provided that the relevant event has a
         material effect on its ability to perform its financial obligations;

                                                                        Page 2/4

<PAGE>


[LOGO OF UBS]

(4)      the Borrower or a Group Company becomes subject to a duty to effect
         restorative works due to an official order under applicable regulations
         designed to protect the environment, namely the Environmental
         Protection Law and Clean Water Act such duty having a material adverse
         effect on its ability to perform its financial obligations;

(5)      a material reduction of the value of the security is threatened or has
         occurred;

(6)      debt collection proceedings are initiated against the Borrower or a
         Group Company, assets are seized within the context of such debt
         collection proceedings or there is a material adverse change in the
         financial condition of the Borrower or a Group Company;

(7)      there is a change of ownership of the whole or any part of any
         mortgaged property.

If at the time of the extraordinary termination letters of credit or guarantees
issued by UBS are outstanding, the Borrower and/or the relevant Additional
Borrower undertake to release UBS from these contingent commitments immediately
or will secure such commitments by granting to UBS a pledge of assets deemed
acceptable by UBS up to the full amount of those commitments plus the usual bank
margin.

3        INFORMATION (CLAUSE 17 OF THE CREDIT AGREEMENT)

The Borrower and each of the Additional Borrowers hereby undertake to inform UBS
immediately during the term of the Credit Agreement of any material changes; and
in particular, if any circumstances become apparent or occur which may be or
become an event giving UBS the right of extraordinary termination.

The Borrower further undertakes to provide UBS on request, and in addition to
the information obligations entered into under the Credit Agreement with further
information regarding individual positions figuring in the financial statements
and the budget.

Where security exists in the form of a third party guarantee/indemnity/letter of
comfort, the Borrower undertakes to ensure that the information obligations
applicable to it will also be complied with by the relevant third party.

Where real estate financed by UBS is leased or rented in whole or in part to
third parties, UBS shall, without having to request such, on an annual basis, be
provided with a list of current tenants, simultaneously with the closing balance
documents. Such list shall include real estate accounts showing gross and net
rents, any rent reductions and empty properties, and in the case of commercial
real estate these accounts must also show the term of the lease and any index
clauses.

4        FURTHER PROVISIONS (CLAUSE 19 OF THE CREDIT AGREEMENT)

4.1      PAYMENTS

All payments must be made in freely transferable currency by crediting an
account in the country of the currency. UBS shall designate the relevant
account. If repayment in any such currency becomes unlawful or illegal due to
changes in the applicable law, repayment of the amount concerned shall take
place in Swiss francs at a rate fixed by UBS.

In the event that a payment falls due on a day that is not a bank working day,
the next bank working day shall be deemed to be the due date therefor.

4.2      INCREASED COST

In the event that increased costs are incurred by UBS due to official
regulations, for example the introduction of minimum reserves, credit taxation
or alterations in equity capital underpinning rates, these additional expenses
must be borne by the Borrower or the relevant Additional Borrower as
appropriate. In such cases, UBS will be entitled to increase correspondingly the
relevant interest/fees/commissions from the next following payment dates
onwards, subject however to advance notice of at least 30 calendar days.

If UBS is forced to increase the interest/fees/commissions in accordance with
this clause, the Borrower or the relevant Additional Borrower, as appropriate,
shall be entitled repay the credit/drawn funds affected by such increase
together with interest fees on the next following payment date, subject however
to an advance notice period of at least 30 calendar days. The costs of such
early repayment, such as those described under clause 4.3 'Indemnity' below must
be borne by the Borrower or the relevant Additional Borrower.

4.3      INDEMNITY

If

(1)      amounts outstanding are declared by UBS to be due for early repayment,
         or

(2)      amounts outstanding are prepaid by the Borrower or the relevant
         Additional Borrower, or

(3)      after the receipt of a drawdown notice therefor for any reason not
         attributable to UBS the corresponding payment is not made,

the Borrower or the relevant Additional Borrower shall indemnify UBS for any
disadvantage and/or costs that may have arisen thereby, for example in relation
to the potential difference between its base interest rate at the time and the
reinvestment rate which UBS could obtain on the Euromarket for the corresponding
currency and remaining term.

This shall not affect the right of UBS to receive additional indemnities under a
separate Credit Agreement.

This shall not affect the validity of the special provisions in respect of the
UBS portfolio mortgage.

                                                                        Page 3/4

<PAGE>


[LOGO OF UBS]

4.4      PRIORITY

Where several assets are pledged to satisfy the obligations to UBS, UBS shall
decide in its absolute discretion the extent and order of realization, and the
allocation of the proceeds of sale of such assets.

4.5      CONSIDERATION OF DRAWN FUNDS

Drawn funds will be counted towards the credit line in the currency of the
credit line (with foreign currencies being converted at the respective daily
rate).

4.6      EXCESS DRAWINGS

All excess drawings (Including excess of tranches or of maximum amounts agreed
under the Credit Agreement together with excesses arising due to changes in
currency exchange rates) shall be repaid within a time set by UBS or secured by
pledging of assets deemed acceptable by UBS to the value of such excess plus the
usual bank margin. Foreign currencies will be converted into the currency of the
facility in accordance with Clause 3 of the Credit Agreement at the spot rate
notified by UBS.

4.7      CONFLICTING PROVISIONS

In the event of conflict between interest, payment and/or termination provisions
stated in any mortgage deed and between the 'General Conditions' as well as the
'Credit Terms' and the corresponding Credit Agreement, the Credit Agreement
shall prevail.

This document has been executed in 3 original copies.

Berne, November 27, 2000          UBS AG
FOIK/FAC2-YVQ

                                  /s/ Norbert Schacht    /s/  Marco Speichinger
                                      ---------------         -----------------
                                     Norbert Schacht        Marco Speichinger

In agreement:                     Staar Surgical AG

Nidau, 15/12/00                   /s/ Deborah Andrews
---------------                       ---------------
Place, date                           Deborah J. Andrews

In agreement:                     Staar Surgical Co., Monrovia/USA

Monrovia CA USA 12/29/00          /s/ John Santos
-----------------------               ------------
Place, date                           John Santos

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.83
<SEQUENCE>4
<FILENAME>dex1083.txt
<DESCRIPTION>AMENDED & RESTATED CREDIT AGREEMENT DATED 3/29/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.83

                      AMENDED AND RESTATED CREDIT AGREEMENT

     THIS AGREEMENT is entered into as of March 29, 2002 by and between STAAR
SURGICAL COMPANY, a Delaware corporation ("Borrower"), and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association ("Bank").

                                    Recitals

     A. Borrower is currently indebted to Bank pursuant to the terms and
conditions of a letter agreement dated as of October 31, 2000, as amended by a
letter amendment dated December 22, 2000, a letter amendment dated April 1,
2001, two letter amendments dated July 1, 2001, a Fifth Amendment to Credit
Agreement dated October 1, 2001, a Sixth Amendment to Credit Agreement dated
December 20, 2001 and a Seventh Amendment to Credit Agreement dated February 1,
2002 (said letter agreement, as so amended, herein called the "Prior Credit
Agreement").

     B. Pursuant to the Prior Credit Agreement, Borrower remains indebted to
Bank under a line of credit in the maximum principal amount of $7,000,000 (the
"Prior Line of Credit"), which is evidenced by a Revolving Line of Credit Note
dated October 31, 2000, as amended by the letter amendment dated April 1, 2001
referred to above, one of the letter amendments dated July 1, 2001 referred to
above, the Fifth Amendment to Credit Agreement referred to above, the Sixth
Amendment to Credit Agreement referred to above and the Seventh Amendment to
Credit Agreement referred to above (said Note, as so amended, herein called the
"Prior Line of Credit Note"). The Prior Line of Credit Note matures on March 29,
2001, and the outstanding balance under the Prior Line of Credit as of March 29,
2002 is $4,789,151.75 in principal, plus accrued but unpaid interest.

     C. Borrower has requested that Bank extend the maturity date of and
restructure the Prior Line of Credit, and Bank has agreed to do so subject to
the terms and conditions contained herein.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Bank hereby agree that all of the
terms and conditions of the Prior Credit Agreement and the Prior Line of Credit
Note shall be and hereby are amended, restated and superseded by the terms and
conditions of this Agreement; provided, however, that (1) nothing herein shall
terminate any security interest in favor of Bank, and all such security
interests shall remain in full force and effect, and (2) upon the Effective Date
(as defined below), all references in the Loan Documents (as defined below) to
the Prior Credit Agreement shall be deemed to be references to this Agreement.
Borrower and Bank further agree as set forth below.

                                       -1-

<PAGE>

                                    ARTICLE I
                                  CREDIT TERMS

     SECTION 1.1. LINE OF CREDIT.

          (a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including March 31, 2003, not to exceed at any time the aggregate
principal amount of $7,000,000 (the "Line of Credit"), the proceeds of which
shall be used for Borrower's general corporate purposes, including, without
limitation, for lending to direct or indirect subsidiaries (each a "Subsidiary")
of Borrower for their general corporate purposes. Borrower's obligation to repay
advances under the Line of Credit shall be evidenced by a promissory note
substantially in the form of Exhibit A attached hereto (the "Line of Credit
Note"), all terms of which are incorporated herein by this reference. Advances
outstanding under the Prior Line of Credit as of the Effective Date (as defined
in Section 3.1 below) of this Agreement shall be deemed to be advances
outstanding under the Line of Credit.

          (b) Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided, however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.

     SECTION 1.2. INTEREST/FEES.

          (a) Interest. The outstanding principal balance of each advance
hereunder shall bear interest at a rate per annum equal at all times to the sum
of the Prime Rate in effect from time to time plus the Applicable Interest
Margin, as such terms are defined below.

          (b) Prime Rate. The term "Prime Rate" shall mean at any time the rate
of interest most recently announced within Bank at its principal office as its
"prime rate," with the understanding that such "prime rate" is one of Bank's
base rates, serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto and is evidenced by the
recording thereof in such internal publication or publications as Bank may
designate. Each change in the rate of interest shall become effective on the
date each Prime Rate change is announced within Bank.

          (c) Applicable Interest Margin. The term "Applicable Interest Margin"
shall mean, as of any date, the applicable margin set forth below based on the
ratio of Funded Debt to 12-month EBITDA determined by means of the Pricing
Certificate to be delivered by Borrower to Bank pursuant to Section 4.3(d)
hereof from time to time.

--------------------------------------------------------------------------------
Level            Funded Debt to EBITDA Ratio         Applicable Interest Margin
-----            ---------------------------         --------------------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
1                *2.00:1.00                          1.00% per annum
--------------------------------------------------------------------------------
2           # or =2.00:1.00 but *4.00:1.00           2.00% per annum
--------------------------------------------------------------------------------
3           # or =4.00:1.00 but *6.00:1.00           3.00% per annum
--------------------------------------------------------------------------------
4           # or =6.00:1.00                          4.00% per annum
--------------------------------------------------------------------------------

* Less than
# Greater than

                                       -2-

<PAGE>

The Applicable Interest Margin shall adjust, if applicable, each time Bank
receives a Pricing Certificate pursuant to Section 4.3(d), on the third business
day after such receipt, and the adjusted Applicable Interest Margin shall apply
to each advance then outstanding or thereafter made by Bank under the Line of
Credit until the Applicable Interest Margin is readjusted thereafter; provided,
however, that (i) from and including the date hereof to but excluding the third
business day after the day on which Bank receives a Pricing Certificate for the
period ending on September 27, 2002 (EBITDA for which period shall be calculated
by annualizing EBITDA for the nine fiscal months ending on that date), the
Applicable Interest Margin shall be 4.00% per annum and (ii) if at any time
Borrower fails to deliver a Pricing Certificate as required by Section 4.3(d),
the Applicable Interest Margin shall be 4.00% per annum until Borrower delivers
a Pricing Certificate as so required.

          (d) Computation and Payment. Interest shall be computed on the basis
of a 360-day year and actual days elapsed. Interest shall be payable at the
times and place set forth in each promissory note or other instrument required
hereby.

          (e) Unused-Commitment Fee. Borrower shall pay Bank a fee at the
Applicable Fee Rate (as defined below, computed on the basis of a 360-day year
and actual days elapsed) on the average daily unused amount of the Line of
Credit, from the date hereof until the maturity date of the Line of Credit,
payable monthly in arrears on the first business day of each calendar month,
commencing on May 1, 2002, and on the maturity date of the Line of Credit.

          (f) Applicable Fee Rate. The term "Applicable Fee Rate" shall mean, as
of any date, the applicable rate set forth below based on the ratio of Funded
Debt to 12-month EBITDA determined by means of the Pricing Certificate to be
delivered by Borrower to Bank pursuant to Section 4.3(d) hereof from time to
time.

--------------------------------------------------------------------------------
Level               Funded Debt to EBITDA Ratio            Applicable Fee Rate
-----               ---------------------------            -------------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
1                   *2.00:1.00                             0.25% per annum
--------------------------------------------------------------------------------
2                   # or =2.00:1.00 but *4.00:1.00         0.50% per annum
--------------------------------------------------------------------------------
3                   # or =4.00:1.00 but *6.00:1.00         0.75% per annum
--------------------------------------------------------------------------------
4                   # or =6.00:1.00                        1.00% per annum
--------------------------------------------------------------------------------

The Applicable Fee Rate shall adjust, if applicable, each time Bank receives a
Pricing Certificate pursuant to Section 4.3(d), on the third business day after
such receipt, and the adjusted Applicable Fee Rate shall apply until the
Applicable Fee Rate is readjusted thereafter; provided, however, that (i) from
and including the date hereof to but excluding the third business day after the
day on which Bank receives a Pricing Certificate for the period ending on
September 27, 2002 (EBITDA for which period shall be calculated by annualizing
EBITDA for the nine fiscal months ending on that date), the Applicable Fee Rate
shall be 1.00% per annum and (ii) if at any time Borrower fails to deliver a
Pricing Certificate as required by Section 4.3(d), the Applicable Fee Rate shall
be 1.00% per annum until Borrower delivers a Pricing Certificate as so required.

     SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due hereunder by charging Borrower's deposit
account number 4159-251172 with Bank, or any other deposit account maintained by
Borrower with Bank, for the full amount thereof. Should there be insufficient
funds in any such deposit account to pay all

* Less than

# Greater than

                                       -3-

<PAGE>

such sums when due, the full amount of such deficiency shall be immediately due
and payable by Borrower.

     SECTION 1.4. MANDATORY PREPAYMENT.

          (a) Application of Proceeds. Borrower will, on each date of receipt by
Borrower, or by any Subsidiary of Borrower, of (i) Net Cash Proceeds (as defined
below) from the sale, lease, transfer or other disposition of any asset of
Borrower or any Subsidiary thereof that is prohibited by Section 5.5(d), (ii)
Net Cash Proceeds from the sale or issuance of any equity interests in Borrower
or any Subsidiary thereof, or any warrants, options or other rights to acquire
any such equity interests, (iii) Net Cash Proceeds from the incurrence by
Borrower or any Subsidiary thereof of any indebtedness not permitted by Section
5.4 or (iv) insurance or condemnation proceeds from any casualty or condemnation
in respect of any asset of Borrower or any Subsidiary thereof (except to the
extent that any such proceeds in respect of a single casualty or condemnation do
not exceed $10,000 (or the equivalent in one or more currencies) in the
aggregate), prepay an aggregate principal amount of the advances outstanding
hereunder equal to the amount of such Net Cash Proceeds or insurance or
condemnation proceeds. All prepayments pursuant to this Section 1.4(a) shall be
made together with accrued interest to the date of such prepayment on the
principal amount prepaid. Whether or not the applicable Net Cash Proceeds or
insurance or condemnation proceeds exceed the aggregate principal amount of
advances then outstanding hereunder in any case in which a prepayment is
required hereunder, the Line of Credit shall be automatically and permanently
reduced by the amount equal to such Net Cash Proceeds or insurance or
condemnation proceeds.

          (b) Net Cash Proceeds. As used herein, "Net Cash Proceeds" means (a)
with respect to any sale, lease, transfer or other disposition of any asset by
any entity, the difference between (i) the aggregate amount received by such
entity in cash or cash equivalents (including, without limitation, any cash or
cash equivalents received by way of deferred payment pursuant to a note
receivable, other noncash consideration or otherwise, but only as and when such
cash or cash equivalents are so received) in connection with such transaction,
minus (ii) the sum of (A) the reasonable and customary fees, commissions and
other out-of-pocket expenses incurred by such entity in connection with such
transaction (other than amounts payable to affiliates of such entity), (B)
indebtedness (other than the advances hereunder) required to be paid as a result
of such transaction and (C) federal, state and local taxes incurred and paid in
connection with such transaction; (b) with respect to any sale or issuance of
any equity interests (including, without limitation, stock, member interests or
partnership interests) in any entity, or any warrants, options or other rights
to acquire such equity interests (including, without limitation, any convertible
securities), by any entity, the amount equal to the difference between (i) the
aggregate amount received by such entity in cash or cash equivalents (including,
without limitation, any cash or cash equivalents received by way of deferred
payment pursuant to a note receivable, other noncash consideration or otherwise,
but only as and when such cash or cash equivalents are so received) in
connection with such transaction, minus (ii) the reasonable and customary fees,
commissions and other out-of-pocket expenses incurred by such entity in
connection with such transaction (other than amounts payable to affiliates of
such entity); and (c) with respect to any incurrence of indebtedness by any
entity, the difference between (i) the aggregate amount received by such entity
in cash or cash equivalents in connection with such transaction, minus (ii) the
sum of (A) the reasonable and customary fees, commissions and other
out-of-pocket expenses incurred and paid or payable by such entity in connection
with such transaction (other than amounts payable to affiliates of such entity)
and (B) indebtedness (other than the advances hereunder) required to be paid as
a result of such transaction.

                                      -4-

<PAGE>

     SECTION 1.5 COLLATERAL. As security for all indebtedness of Borrower to
Bank subject hereto, Borrower hereby grants to Bank security interests of first
priority in all of Borrower's right, title and interest in and to the following,
whether now owned or hereafter acquired, whether now or hereafter existing, and
wherever located: all accounts, rights to payment, general intangibles, patents,
copyrights, trademarks, deposit accounts, chattel paper, instruments, documents,
inventory, equipment, investment property (including, without limitation, all
stock of, and other equity interests in, Borrower's Subsidiaries),
letter-of-credit rights, letters of credit and money. All of the foregoing shall
be further evidenced by and subject to the terms of such further security
agreements, financing statements and other documents as Bank shall reasonably
require, all in form and substance satisfactory to Bank, including, without
limitation, a Continuing Security Agreement--Rights to Payment and Inventory
dated as of January 13, 2000 and a Stock Pledge Agreement dated as of March 14,
2002. Borrower shall reimburse Bank immediately upon demand for all costs and
expenses incurred by Bank in connection with any of the foregoing security,
including, without limitation, filing and recording fees and costs of
appraisals, audits (including, without limitation, pursuant to Section 4.2
hereof) and title insurance.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

     SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of Delaware and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

     SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, security agreement, contract, instrument and other document required
hereby or at any time hereafter delivered to Bank in connection herewith
(collectively the "Loan Documents") have been duly authorized and, upon their
execution and delivery in accordance with the provisions hereof, will constitute
legal, valid and binding agreements and obligations of Borrower or the party
which executes the same, enforceable in accordance with their respective terms.

     SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Certificate of Incorporation
or Bylaws of Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.

     SECTION 2.4. LITIGATION. There are no pending or, to the best of Borrower's
knowledge, threatened actions, claims, investigations, suits or proceedings by
or before any governmental authority, referee, arbitrator, court or
administrative agency which could have a

                                      -5-

<PAGE>

material adverse effect on the financial condition or operation of Borrower,
other than those disclosed by Borrower to Bank in writing prior to the date
hereof.

     SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENTS. The financial statements
of Borrower dated January 25, 2002, a true copy of which has been delivered by
Borrower to Bank prior to the date hereof, (a) are complete and correct and
present fairly the financial condition of Borrower, (b) disclose all liabilities
of Borrower that are required to be reflected or reserved against under
generally accepted accounting principles, whether liquidated or unliquidated,
fixed or contingent, and (c) have been prepared in accordance with generally
accepted accounting principles consistently applied. Since the date of such
financial statements there has been no material adverse change in the financial
condition of Borrower, nor has Borrower mortgaged, pledged, granted a security
interest in or otherwise encumbered any of its assets or properties, except in
favor of Bank or as otherwise permitted by Bank in writing.

     SECTION 2.6. INCOME-TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.

     SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower is a party or by which Borrower may be bound
that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.

     SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, any and all permits, consents, approvals, franchises and licenses
required, and any and all rights to trademarks, trade names, patents, copyrights
and fictitious names necessary, to enable it to conduct the business in which it
is now engaged, in compliance with applicable law.

     SECTION 2.9. ERISA. Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"). Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"). No
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower. Borrower has met its minimum funding
requirements under ERISA with respect to each Plan. Each Plan will be able to
fulfill its benefit obligations as they come due in accordance with the Plan
documents therefor and under generally accepted accounting principles.

     SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase-money obligation or any other
material lease, commitment, contract, instrument or obligation.

     SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable federal and state environmental,
hazardous-waste, health and safety statutes, and any and all rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
operations and/or properties, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any
of the same may be amended, modified or supplemented from time to time. None of
the operations of Borrower is the subject of any federal or state investigation
evaluating whether any remedial action involving a material

                                      -6-

<PAGE>

expenditure is needed to respond to a release of any toxic or hazardous waste or
substance into the environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or substance into
the environment.

     SECTION 2.12. PATENTS. No patent has been issued in the United States to or
for the benefit of, and no patent application has been filed in the United
States by or on behalf of, Borrower or any Subsidiary thereof, except as listed
in Schedule 1 attached hereto or as otherwise disclosed to Bank in writing from
time to time.

     SECTION 2.13 CREDIT FACILITIES. Since September 30, 2001, no credit
facility has been available to Borrower or any Subsidiary thereof except for (a)
the credit facility made available to Borrower by Bank pursuant to this
Agreement or the Prior Credit Agreement, (b) the credit facility made available
to Staar Surgical AG, a Swiss corporation ("Swiss Sub"), by UBS AG, copies of
all legal documentation related to which have been delivered to Bank, (c) a
credit facility made available to Domilens GmbH, a German corporation
("Domilens"), in an amount not exceeding $500,000 (or the equivalent in one or
more currencies) and (d) such other credit facilities (including, without
limitation, the principal terms thereof) as disclosed by Borrower to Bank in
writing from time to time.

                                   ARTICLE III
                                   CONDITIONS

     SECTION 3.1. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective on the date (the "Effective Date") on which all of the conditions
specified below have been fulfilled to Bank's satisfaction.

          (a)  Approval of Bank Counsel. All legal matters incidental to the
effectiveness of this Agreement shall be satisfactory to Bank's counsel.

          (b)  Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed by the parties
thereto (other than Bank):

               (i)   this Agreement and the Line of Credit Note;

               (ii)  an amended and restated Patent Security Agreement, a
Trademark Security Agreement and a Copyright Security Agreement;

               (iii) a Perfection Certificate;

               (iv)  a certificate of the President or Chief Financial Officer
of Borrower and the Secretary of Borrower certifying (A) that there has been no
amendment to Borrower's charter documents since the date of the certification
with respect thereto referred to in Section 3.1(b)(vii), (B) that the copy of
Borrower's bylaws attached to such certificate is correct and complete and that
such bylaws are in full force and effect, (C) that Borrower is in good standing
in the States of Delaware and California, (D) that the representations and
warranties of Borrower contained in the Loan Documents are correct on and as of
the Effective Date as though made on and as of such date and (E) that no Event
of Default (as defined in Section 6.1 hereof) or event that, with the giving of
notice or the passage of time or both, would constitute

                                      -7-

<PAGE>

an Event of Default has occurred and is continuing or would be caused by the
effectiveness of this Agreement;

               (v)    one or more certificates from the State of Delaware
certifying that (A) the copy of Borrower's charter documents, including, without
limitation, all amendments, attached to such certificate is correct and
complete, (B) Borrower has paid all franchise taxes to the date of such
certificate and (C) Borrower is duly incorporated and in good standing under the
laws of the State of Delaware;

               (vi)   a good-standing certificate and a tax-status certificate
with respect to Borrower from the State of California;

               (vii)  a chart showing all of Borrower's Subsidiaries as of March
29, 2002; and

               (viii) such other documents as Bank may require.

          (c) Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower.

          (d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all of Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank and, where required
by Bank, with loss-payable endorsements in favor of Bank.

          (e) Fee, Etc. Borrower shall have paid to Bank, by Bank's debiting of
one or more of Borrower's deposit accounts with Bank, (i) a restructuring and
extension fee of $35,000.00 and (ii) all other amounts payable to Bank pursuant
to this Agreement or otherwise, to the extent that a statement for the same has
been delivered to Borrower.

     SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank
to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the conditions set
forth below.

          (a) Compliance. The representations and warranties contained herein
and in each of the other Loan Documents shall be true on and as of the date of
the signing of this Agreement and on the date of each extension of credit by
Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date no
Event of Default, and no condition, event or act which, with the giving of
notice or the passage of time or both, would constitute an Event of Default,
shall have occurred and be continuing or shall exist.

          (b) Documentation. Bank shall have received all additional documents
which may be required thereby in connection with such extension of credit.

                                   ARTICLE IV
                              AFFIRMATIVE COVENANTS

     Borrower covenants that, so long as Bank remains committed to extend credit
to Borrower pursuant hereto or any liabilities (whether direct or contingent,
liquidated or

                                      -8-

<PAGE>

unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower shall, unless Bank otherwise consents in writing, observe all
of the affirmative covenants set forth below.

     SECTION 4.1. PUNCTUAL PAYMENTS. Borrower shall punctually pay all
principal, interest, fees and other liabilities due under the Loan Documents at
the applicable time and place, and in the manner, specified therein.

     SECTION 4.2. ACCOUNTING RECORDS. Borrower shall maintain adequate books and
records in accordance with generally accepted accounting principles consistently
applied and shall permit any representative of Bank, at any reasonable time, to
inspect, audit and examine such books and records, to make copies of the same
and to inspect the properties of Borrower, including, without limitation, for
the purpose of (a) conducting collateral audits, either by Bank or an outsider
auditor retained thereby, at least semiannually with the first such audit to be
performed in June of 2002, and (b) conducting patent audit updates, by Ernst &
Young LLP or another outside auditor retained by Bank, to update, among other
things, the reports previously prepared concerning the market value and orderly
liquidation value of the patents of Borrower and its Subsidiaries.

     SECTION 4.3. FINANCIAL STATEMENTS AND OTHER INFORMATION. Borrower shall
provide to Bank all of the following, in form and detail satisfactory to Bank:

          (a) as soon as available and in any event within 90 days after the end
of each fiscal year of Borrower, the consolidated balance sheet of Borrower and
its consolidated Subsidiaries as of the end of such year and the related
consolidated statements of income, cash flows and shareholders' equity of
Borrower and its consolidated Subsidiaries for such year, setting forth in each
case in comparative form the corresponding figures for the preceding fiscal
year, together in each case with (i) an unqualified opinion thereon of
independent public accountants acceptable to Bank stating that such financial
statements present fairly, in all material respects, the consolidated financial
condition and results of operations of Borrower and its consolidated
Subsidiaries in conformity with generally accepted accounting principles as of
the end of, and for, the period presented and (ii) a copy of any letter of such
accountants to the management of Borrower in connection with such financial
statements;

          (b) as soon as available and in any event within 45 days after the end
of each of the first three quarterly fiscal periods of each fiscal year of
Borrower, the unaudited consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of the end of such period and the related unaudited
consolidated statements of income and cash flows of Borrower and its
consolidated Subsidiaries for the three, six or nine months then ended, as set
forth in Borrower's quarterly reports on Form 10-Q, together in each case with a
certificate of the Chief Financial Officer of Borrower stating that such
financial statements present fairly, in all material respects, the consolidated
financial position and results of operations of Borrower and its consolidated
Subsidiaries in conformity with generally accepted accounting principles as of
the end of, and for, the period presented (subject to normal year-end audit
adjustments and the absence of footnotes);

          (c) promptly upon Borrower's filing thereof with the United States
Securities and Exchange Commission, a copy of each document so filed by Borrower
pursuant to the Securities Exchange Act of 1934;

                                      -9-

<PAGE>

          (d) together in each case with the financial statements to be
delivered by Borrower to Bank pursuant to Sections 4.3(a) and (b) hereof,
commencing with the financial statements for the fiscal period ending on
September 27, 2002, a duly completed certificate of the Chief Financial Officer
of Borrower substantially in the form of Exhibit B hereto or otherwise in form
and scope acceptable to Bank (a "Pricing Certificate");

          (e) within 45 days after the end of each fiscal month, unaudited
consolidated and consolidating balance sheets of Borrower as of the end of such
month and unaudited consolidated and consolidating statements of income and cash
flows of Borrower for the period commencing at the end of the preceding fiscal
year and ending with the end of such month, all in form, scope and detail
satisfactory to Bank and duly certified by the Chief Financial Officer of
Borrower as having been prepared in accordance with generally accepted
accounting principles (subject to normal year-end audit adjustments and the
absence of footnotes), together in each case with (i) a narrative discussion and
analysis by such officer concerning the financial performance of Borrower, and
any variance of more than 10% from Borrower's projections attached hereto as
Schedule 2, evidenced by such financial statements and (ii) a duly completed
Compliance Certificate executed by the Chief Financial Officer of Borrower
substantially in the form of Exhibit C hereto or otherwise in form and scope
acceptable to Bank;

          (f) not later than Friday of each calendar week, (i) a projection of
the consolidated cash flow of Borrower, detailing cash receipts and cash
disbursements, for the 13-week period commencing on such Friday and (ii) a
comparison of Borrower's actual consolidated cash flow for the immediately
preceding week to the projection of such cash flow, together with a written
explanation of any variance exceeding 10%, in each case in form, scope and
detail satisfactory to Bank and duly certified by an officer of Borrower, and in
a manner, acceptable to Bank;

          (g) within 45 days after the end of each semiannual fiscal period of
Borrower, commencing with such period ending on June 28, 2002, an aged listing
of the United States domestic accounts receivable and United States domestic
accounts payable of Borrower and its United States domestic Subsidiaries as of
the last day of such period, in form, scope and detail satisfactory to Bank and
duly certified by an officer of Borrower, and in a manner, acceptable to Bank;

          (h) promptly (i) upon Borrower's becoming aware of the same, notice of
any declination by UBS AG to extend its credit facility for Swiss Sub and (ii)
upon execution of the same, copies of (A) all amendments or restatements of the
loan agreement between Swiss Sub and UBS AG and (B) all other documents executed
by Swiss Sub, Borrower or any affiliate of either thereof in connection with
such loan agreement; and

          (i) promptly upon request by Bank, such other information concerning
the business, condition (financial or otherwise), operations, performance,
properties or prospects of Borrower or any Subsidiary thereof as Bank may from
time to time reasonably request (including, without limitation, any information
described above on a more frequent basis).

     SECTION 4.4. COMPLIANCE. Borrower shall, and shall cause each Subsidiary
thereof to, (a) preserve and maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business and (b) comply with the provisions of all documents pursuant to which
it is organized and/or which govern its continued existence and with the
requirements of all laws, rules, regulations and orders of any governmental
authority applicable to it and/or its business.

                                      -10-

<PAGE>

     SECTION 4.5. INSURANCE. Borrower shall, and shall cause each Subsidiary
thereof to, (a) maintain and keep in force insurance of the types and in amounts
customarily carried in lines of business similar to that of Borrower or such
Subsidiary, as applicable, including, without limitation, fire,
extended-coverage, public-liability, flood, property-damage and workers'-
compensation insurance, with all such insurance carried with companies and in
amounts satisfactory to Bank, and (b) deliver to Bank from time to time at
Bank's request schedules setting forth all such insurance then in effect.

     SECTION 4.6. FACILITIES. Borrower shall, and shall cause each Subsidiary
thereof to, (a) keep all properties useful or necessary to its business in good
repair and condition and (b) from time to time make necessary repairs, renewals
and replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.

     SECTION 4.7. TAXES AND OTHER LIABILITIES. Borrower shall, and shall cause
each Subsidiary thereof to, pay and discharge when due any and all indebtedness,
obligations, assessments and taxes, both real and personal, including, without
limitation, federal and state income taxes and state and local property taxes
and assessments, except such (a) as Borrower may in good faith contest or as to
which a bona fide dispute may arise and (b) for which Borrower has made
provision, to Bank's satisfaction, for eventual payment thereof in the event
Borrower is obligated to make such payment.

     SECTION 4.8. LITIGATION. Borrower shall promptly give notice in writing to
Bank of any litigation pending or threatened against Borrower or any Subsidiary
thereof with a claim in excess of $500,000 (or the equivalent in one or more
currencies).

     SECTION 4.9. FINANCIAL CONDITION. Borrower shall maintain the consolidated
financial condition of it and its consolidated Subsidiaries as follows, using
generally accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
definitions herein):

          (a) Current Ratio not less than 1.10 to 1.00, tested as of the last
day of each fiscal month commencing with April of 2002, with "Current Ratio"
being defined as total current assets divided by total current liabilities;

          (b) Tangible Net Worth, tested as of the last day of each fiscal month
commencing with April of 2002, not less than (i) as of the last day of March,
April, May and June of 2002, $28,250,000 and (ii) as of the last day of each
fiscal month thereafter, the sum of $28,250,000 plus 50% of positive net income
earned after June 28, 2002, with "Tangible Net Worth" being defined as the
aggregate of total stockholders' equity plus subordinated debt less any
intangible assets;

          (c) operating cash flow (as defined in accordance with Financial
Accounting Standards Board Statement No. 95 ("FASB 95")) for each period of two
consecutive fiscal months to be greater than the sum of required lease payments
plus required debt repayments plus capital expenditures (as defined in
accordance with FASB 95) for such months, tested as of the last day of each
fiscal month commencing with April of 2002;

          (d) negative variance from projected revenues (based on the monthly
and quarterly projections attached hereto as Schedule 2) for each period of
three consecutive fiscal

                                      -11-

<PAGE>

months to be less than 15%, tested as of the last day of each fiscal month
commencing with April of 2002;

          (e) negative variance from projected net operating income or loss
(based on the monthly and quarterly projections attached hereto as Schedule 2)
for each period of three consecutive fiscal months to be less than $250,000 in
the aggregate for such months, tested as of the last day of each fiscal month
commencing with April of 2002, with "net operating income or loss" being defined
as income or loss before interest income or expense, equity in earnings of any
unconsolidated affiliate, currency-exchange gains or losses, other income or
expenses, taxes and minority interests in affiliates;

          (f) EBITDA for each fiscal month to be greater than the sum of
interest expense plus required lease payments plus required debt repayments plus
capital expenditures (as defined in accordance with FASB 95) for such month,
tested as of the last day of each fiscal month commencing with July of 2002;
provided, however, that, if Borrower fails to comply with the foregoing covenant
in respect of any fiscal month, then such failure shall not constitute a default
of such covenant unless Borrower fails to comply with such covenant when applied
to such fiscal month combined with the preceding fiscal month;

          (g) EBITDA not less than $2,100,000 for any period of 12 consecutive
fiscal months, tested as of the last day of each fiscal month commencing with
December of 2002, with "EBITDA" being defined as operating earnings before
interest expense (net of capitalized interest expense), taxes, depreciation
expense, amortization expense, noncash nonrecurring charges, and gains or losses
on sales of assets; and

          (h) ratio of Funded Debt to EBITDA (as defined above for any period of
12 consecutive fiscal months) not more than 3.75 to 1.00, tested as of the last
day of each fiscal month commencing with December of 2002, with "Funded Debt"
being defined as all indebtedness, including, without limitation, in respect of
capitalized leases, standby letters of credit and guaranteed obligations.

     SECTION 4.10. NOTICES TO BANK. Borrower shall promptly (but in no event
more than five (5) days after the occurrence of each event or matter described
below) give written notice to Bank in reasonable detail of (a) the occurrence of
any Event of Default or any condition, event or act which, with the giving of
notice or the passage of time or both, would constitute an Event of Default, (b)
any change in the name or organizational structure of Borrower, (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan, (d) any
termination or cancellation of any insurance policy which Borrower is required
to maintain, (e) any uninsured or partially uninsured loss through liability or
property damage (including, without limitation, from fire, theft or any other
cause affecting Borrower's property) in excess of an aggregate of $500,000 (or
the equivalent in one or more currencies) and (f) the filing of any application
by or on behalf of Borrower or any Subsidiary thereof with the United States
Patent and Trademark Office, the United States Copyright Office or any other
office with respect to, or the acquisition by Borrower or any Subsidiary thereof
of any interest in (including, without limitation, any interest as exclusive
licensee), any patent, trademark, copyright or other intellectual property,
together with a copy of such application or the documentation concerning such
acquisition, as applicable.

     SECTION 4.11. LIQUIDITY. Borrower shall maintain unencumbered (except for a
lien in favor of Bank) liquid assets (defined as cash, cash equivalents and/or
publicly traded or quoted

                                      -12-

<PAGE>

marketable securities acceptable to Bank) with Bank having an aggregate
fair-market value of at least $2,000,000.

                                    ARTICLE V
                               NEGATIVE COVENANTS

     Borrower covenants that, so long as Bank remains committed to extend credit
to Borrower pursuant hereto or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing,
observe all of the negative covenants set forth below.

     SECTION 5.1. USE OF FUNDS. Borrower shall not, and shall not permit any
Subsidiary thereof to, use any of the proceeds of any credit extended hereunder
except for the purposes stated in Article I hereof.

     SECTION 5.2. CAPITAL EXPENDITURES. Borrower shall not, and shall not permit
any Subsidiary thereof to, make any capital expenditure (as defined in
accordance with FASB 95) in excess of $2,000,000 (or the equivalent in one or
more currencies) in the aggregate for Borrower and its Subsidiaries in any
fiscal year.

     SECTION 5.3. LEASE EXPENDITURES. Borrower shall not, and shall not permit
any Subsidiary thereof to, incur any operating lease expense in excess of
$1,000,000 (or the equivalent in one or more currencies) in the aggregate for
Borrower and its Subsidiaries in any fiscal year.

     SECTION 5.4. OTHER INDEBTEDNESS. Borrower shall not, and shall not permit
any Subsidiary thereof to, create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans, advances,
capitalized leases or purchase-money indebtedness, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or several, except for
(a) liabilities of Borrower to Bank, (b) liabilities of Swiss Sub to UBS AG not
exceeding Swiss Francs 5,000,000, (c) liabilities of Domilens to any financial
institution not exceeding $500,000 (or the equivalent in one or more
currencies), (d) purchase-money indebtedness and capitalized leases of Borrower
or any Subsidiary thereof incurred in connection with the purchase or lease of
equipment, so long as the outstanding principal amount of indebtedness incurred
in connection with such purchase or lease of equipment, whether before or after
the date hereof, at no time exceeds $1,000,000 (or the equivalent in one or more
currencies) in the aggregate, (e) liabilities permitted by Section 5.7 hereof
and (f) any other liabilities of Borrower or any Subsidiary thereof existing as
of, and disclosed to Bank prior to, the date hereof.

     SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Borrower shall not,
and shall not permit any Subsidiary thereof to, (a) merge into or consolidate
with any other entity, (b) make any substantial change in the nature of its
business as conducted as of the date hereof, (c) acquire all or substantially
all of the assets of any other entity or (d) sell, lease, transfer or otherwise
dispose of all or a substantial or material portion of its assets, except in the
ordinary course of its business.

     SECTION 5.6. GUARANTIES. Borrower shall not, and shall not permit any
Subsidiary thereof to, guarantee or become liable in any way as surety, endorser
(other than as endorser of

                                      -13-

<PAGE>

negotiable instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, or pledge or hypothecate any
assets thereof as security for, any liabilities or obligations of any other
person or entity, except any of the foregoing in favor of Bank.

     SECTION 5.7. LOANS, ADVANCES, INVESTMENTS. Borrower shall not, and shall
not permit any Subsidiary thereof to, make any loan, advance or other extension
of credit (including, without limitation, for products sold) to, or investment
in, any person or entity, except for (a) loans, advances and other extensions of
credit by Borrower to its foreign Subsidiaries not exceeding $8,500,000 (or the
equivalent in one or more currencies) in the aggregate at any time outstanding,
(b) loans, advances and other extensions of credit by Swiss Sub or any
Subsidiary of Swiss Sub to Swiss Sub or any other Subsidiary of Swiss Sub, (c)
loans, advances and other extensions of credit to Borrower by any Subsidiary
thereof and (d) investments by Borrower in any Subsidiary thereof, and
investments by any Subsidiary of Borrower in any Subsidiary of such Subsidiary,
to the extent such investments are existing as of, and disclosed to Bank prior
to, the date hereof.

     SECTION 5.8. DIVIDENDS, DISTRIBUTIONS. Borrower shall not, and shall not
permit any Subsidiary thereof to, (a) declare or pay any dividend or
distribution either in cash, stock or any other property or (b) redeem, retire,
repurchase or otherwise acquire any shares of any class of stock or Borrower or
any Subsidiary thereof; provided, however, that any Subsidiary of Borrower may
pay dividends to Borrower, and any Subsidiary of Borrower may pay dividends to
any other Subsidiary of Borrower if and to the extent that such dividends are
used to pay dividends to Borrower.

     SECTION 5.9. PLEDGE OF ASSETS. Borrower shall not, and shall not permit any
of its Subsidiaries to, mortgage, pledge or grant or permit to exist a security
interest in, or lien upon, all or any portion of Borrower's or such Subsidiary's
assets now owned or hereafter acquired (including, without limitation, all or
any part of the shares of any direct or indirect Subsidiary of Borrower), except
any of the foregoing in favor of Bank or which are existing as of, and disclosed
to Bank in writing prior to, the date hereof.

                                   ARTICLE VI
                                EVENTS OF DEFAULT

     SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:

          (a) Borrower fails to pay any principal, interest, fee or other amount
when due hereunder or under any other Loan Document;

          (b) any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under, this Agreement or any other Loan Document proves to be incorrect,
false or misleading in any material respect when furnished or made;

          (c) Borrower defaults in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in subsections (a) and (b) above);

                                      -14-

<PAGE>

          (d) Borrower defaults in the payment or performance of any obligation,
or any defined event of default occurs, under the terms of any contract or
instrument (other than any of the Loan Documents) pursuant to which Borrower has
incurred any debt or other liability to any person or entity, including, without
limitation, Bank;

          (e) a notice of judgment lien is filed against Borrower; an abstract
of judgment is recorded against Borrower in any county in which Borrower has an
interest in real property; a notice of levy and/or of a writ of attachment or
execution, or other like process, is served against the assets of Borrower; or a
judgment is entered against Borrower;

          (f) Borrower becomes insolvent, suffers or consents to, or applies for
the appointment of, a receiver, trustee, custodian or liquidator for itself or
any of its property, generally fails to pay its debts as they become due or
makes a general assignment for the benefit of creditors; Borrower files a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time (the "Bankruptcy Code"), or under any other state
or federal law granting relief to debtors, whether now or hereafter in effect;
any involuntary petition or proceeding pursuant to the Bankruptcy Code or any
other applicable state or federal law relating to bankruptcy, reorganization or
other relief for debtors is filed or commenced against Borrower, or Borrower
files an answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition; Borrower is adjudicated a bankrupt; or
an order for relief is entered against Borrower by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors;

          (g) any event occurs or condition exists which Bank in good faith
believes impairs, or is substantially likely to impair, the prospect of payment
or performance by Borrower of its obligations under any of the Loan Documents;
or

          (h) Borrower is dissolved or liquidated; or Borrower or any of its
directors, stockholders or members takes action seeking to effect the
dissolution or liquidation of Borrower.

     SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank's option and without notice become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by Borrower; (b) the
obligation, if any, of Bank to extend any further credit under any of the Loan
Documents shall immediately cease and terminate; and (c) Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including, without limitation, the right to resort to any or
all security for any credit subject hereto and to exercise any or all of the
rights of a beneficiary or secured party pursuant to applicable law. All rights,
powers and remedies of Bank may be exercised at any time by Bank and from time
to time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.

                                      -15-

<PAGE>

                                   ARTICLE VII
                                  MISCELLANEOUS

     SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, consent or approval of any kind by
Bank of any breach of or default under any of the Loan Documents must be in
writing and shall be effective only to the extent set forth in such writing.

     SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

               Borrower:  Staar Surgical Company
                          1911 Walker Avenue
                          Monrovia, California 91016
                          Attention:  Chief Financial Officer

                   Bank:  Wells Fargo Bank, National Association
                          333 South Grand Avenue, 9th Floor
                          MAC E2064-096
                          Los Angeles, California 90071
                          Attention:  Edith R. Lim

or to such other address as either party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail,
upon the earlier of the date of receipt or three (3) days after deposit into the
U.S. mail, first-class postage prepaid; and (c) if sent by telecopy, upon
receipt.

     SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including, without limitation, reasonable attorneys' fees
(to include, without limitation, outside counsel fees and all allocated costs of
Bank's in-house counsel), expended or incurred by Bank in connection with (a)
the negotiation and preparation of this Agreement and the other Loan Documents,
Bank's continued administration hereof and thereof, and the preparation of any
amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights
and/or the collection of any amounts which become due to Bank under any of the
Loan Documents, and (c) the prosecution or defense of any action in any way
related to any of the Loan Documents, including without limitation, any action
for declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including, without limitation, any of
the foregoing incurred in connection with any bankruptcy proceeding (including,
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Borrower or any other person or entity.

     SECTION 7.4. INDEMNITY. Borrower agrees to indemnify and hold harmless Bank
and its directors, officers, employees, agents and advisors (each of the
foregoing an "Indemnified Party") from and against any and all claims, demands,
actions, damages (including, without limitation, all foreseeable and
unforeseeable consequential damages),

                                      -16-

<PAGE>

losses, assessments, liabilities, costs and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with (a) the actual or proposed use of the proceeds
of any advance hereunder, any of the Loan Documents or any of the transactions
contemplated by any of the Loan Documents, (b) the actual or alleged presence of
any hazardous material in, on or under (i) any property owned or operated by
Borrower or any Subsidiary thereof, (ii) any property to which any hazardous
material has migrated from any property owned or operated by Borrower or any
Subsidiary thereof or (iii) any property at which Borrower or any Subsidiary
thereof has disposed of any hazardous material (whether or not legal at the time
of such disposal) or (c) any environmental proceeding relating in any way to
Borrower or any Subsidiary thereof, in any case whether or not such
investigation, litigation or proceeding is brought by Borrower, any Subsidiary
thereof, any of their respective directors, shareholders or creditors or an
Indemnified Party, whether or not any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are consummated;
provided, however, that Borrower shall not be liable to the extent that any such
claim, demand, action, damage, loss, assessment, liability or expense is found
in a final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.

     SECTION 7.5. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon,
and inure to the benefit of, the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided, however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, or any
collateral required hereunder.

     SECTION 7.6. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or otherwise modified only in a writing
signed by each party to be bound by such amendment or modification.

     SECTION 7.7. NO THIRD-PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third-party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

     SECTION 7.8. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.

     SECTION 7.9. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

                                      -17-

<PAGE>

     SECTION 7.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement.

     SECTION 7.11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.

     SECTION 7.12. RELEASE OF CLAIMS. Borrower represents and warrants to Bank
that it has diligently and thoroughly investigated the existence of any Claim
(as defined below) and that, to its knowledge and belief, no Claim exists and no
facts exist that could give rise to or support a Claim. As additional
consideration for Bank's entering into this Agreement, Borrower and each of its
agents, employees, directors, officers, attorneys, affiliates, subsidiaries,
successors and assigns (each a "Releasing Party") hereby release and forever
discharge Bank and each of its agents, direct and indirect shareholders,
employees, directors, officers, attorneys, branches, affiliates, subsidiaries,
successors and assigns (each a "Released Party") from any and all damages,
losses, claims, demands, liabilities, obligations, actions and causes of action
whatsoever (collectively "Claims") that the Releasing Parties or any of them
may, as of the effective date of this Agreement, have or claim to have against
any or all of the Released Parties, in each case whether currently known or
unknown or with respect to which the facts are currently known or unknown, in
any way relating to, arising out of or based upon any Loan Document (including,
without limitation, the Prior Credit Agreement), any amendment, waiver or other
modification with respect thereto, the negotiation or documentation hereof or
thereof, any of the transactions contemplated hereby or thereby, or any act or
omission in connection with any of the foregoing, including, without limitation,
all such Claims heretofore sustained or that may arise as a consequence of the
dealings between the parties up to the effective date of this Agreement in
connection with or in any way related to any Loan Document or any amendment,
waiver or other modification with respect thereto. Each Releasing Party further
represents and warrants that it has not heretofore assigned, and covenants and
agrees that it will not hereafter sue any Released Party upon, any Claim
released or purported to be released under this section. Each Releasing Party
will indemnify and hold harmless the Released Parties against any loss or
liability on account of any actions brought by any Releasing Party or its
assigns or prosecuted on behalf of any Releasing Party and relating to any Claim
released or purported to be released under this section. It is further
understood and agreed that any and all rights under the provisions of Section
1542 of the California Civil Code are expressly waived by each of the Releasing
Parties. Section 1542 of the California Civil Code provides as follows:

     "A general release does not extend to claims which the creditor does
     not know or suspect to exist in his favor at the time of executing
     the release, which if known by him must have materially affected his
     settlement with the debtor."

Borrower acknowledges that it has had the opportunity to be advised by legal
counsel in respect of the negotiation, execution and delivery of this Agreement,
including, without limitation, this release of claims.

     SECTION 7.13. ARBITRATION.

          (a) Arbitration. The parties hereto agree, upon demand by either
party, to submit to binding arbitration all claims, disputes and controversies
between them (and their respective employees, officers, directors, attorneys and
other agents), whether arising in tort,

                                      -18-

<PAGE>

contract or otherwise arising out of or relating to in any way (i) any advance
under this Agreement, any Loan Document or the negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination of any
Loan Document or (ii) any request for additional credit.

          (b) Governing Rules. Any arbitration proceeding will (i) proceed at a
location in California selected by the American Arbitration Association (the
"AAA"); (ii) be governed by the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice-of-law provision in any of
the documents between the parties; and (iii) be conducted by the AAA, or such
other administrator as the parties shall mutually agree upon, in accordance with
the AAA's commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000 (or the equivalent in one or more
currencies) exclusive of claimed interest, arbitration fees and costs, in which
case the arbitration shall be conducted in accordance with the AAA's optional
procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial
disputes to be referred to, as applicable, as the "Rules"). If there is any
inconsistency between the terms hereof and the Rules, the terms and procedures
set forth herein shall control. Any party that fails or refuses to submit to
arbitration following a demand by any other party shall bear all costs and
expenses incurred by such other party in compelling arbitration of any dispute.
Nothing contained herein shall be deemed to be a waiver by any party that is a
bank of the protections afforded to it under 12 U.S.C. ss.91 or any similar
applicable state law.

          (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including, without limitation. those arising
from the exercise of the actions detailed in sections (i), (ii) and (iii) of
this paragraph.

          (d) Arbitrator Qualifications and Powers. Any arbitration proceeding
in which the amount in controversy is $5,000,000 (or the equivalent in one or
more currencies) or less will be decided by a single arbitrator selected
according to the Rules, who shall not render an award greater than $5,000,000
(or the equivalent in one or more currencies). Any dispute in which the amount
in controversy exceeds $5,000,000 (or the equivalent in one or more currencies)
will be decided by majority vote of a panel of three arbitrators; provided,
however, that all three arbitrators must actively participate in all hearings
and deliberations. The arbitrator will be a neutral attorney licensed in the
State of California or a neutral retired judge of the state or federal judiciary
of California, in either case with a minimum of ten years experience in the
substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In any arbitration proceeding the arbitrator will decide (by
documents only or with a hearing at the arbitrator's discretion) any pre-hearing
motions which are similar to motions to dismiss for failure to state a claim or
motions for summary adjudication. The arbitrator shall resolve all disputes in
accordance with the substantive law of California and may grant any remedy or
relief that a court of such state could order or grant within the scope hereof
and such ancillary relief as is necessary to make effective any award. The
arbitrator shall also have the power to award recovery of all costs and fees, to
impose sanctions and to take such other action as the arbitrator deems necessary
to the same extent a judge could

                                      -19-

<PAGE>

pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil
Procedure or other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including, without limitation, the plaintiff, to submit the controversy or claim
to arbitration if any other party contests such action for judicial relief.

          (e) Discovery. In any arbitration proceeding discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed not later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.

          (f) Class Proceedings and Consolidations. The resolution of any
dispute arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding, and such dispute shall not be consolidated with
other disputes or included in any class proceeding.

          (g) Payment of Arbitration Costs and Fees. The arbitrator shall award
all costs and expenses of the arbitration proceeding.

          (h) Real Property Collateral; Judicial Reference. Notwithstanding
anything herein to the contrary, no dispute shall be submitted to arbitration if
the dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single-action rule of California,
thereby agreeing that all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable. If any such dispute is
not submitted to arbitration, the dispute shall be referred to a referee in
accordance with California Code of Civil Procedure Section 638 et seq., and this
general reference agreement is intended to be specifically enforceable in
accordance with said Section 638. A referee with the qualifications required
herein for arbitrators shall be selected pursuant to the AAA's selection
procedures. Judgment upon the decision rendered by a referee shall be entered in
the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.

          (i) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.

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

                                      -20-

<PAGE>

                                     STAAR SURGICAL COMPANY


                                     By:    /s/ John Bily
                                        -------------------------------
                                     Name:  John Bily
                                          -----------------------------
                                     Title: Chief Financial Officer
                                           ----------------------------


                                     WELLS FARGO BANK, NATIONAL ASSOCIATION


                                     By:    /s/ Edith R. Lim
                                        -------------------------------
                                     Name:  Edith R. Lim
                                          -----------------------------
                                     Title: Vice President
                                           ----------------------------

                                      -21-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.84
<SEQUENCE>5
<FILENAME>dex1084.txt
<DESCRIPTION>SETTLEMENT AGREEMENT & GENERAL RELEASE DATED 3/29/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.84

                    SETTLEMENT AGREEMENT AND GENERAL RELEASE

        THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE ("Agreement") is made as
of March 29, 2002 by and among Sally M. Pollet, an individual ("Pollet"), Pollet
& Richardson, A Law Corporation ("P&R"), the Estate of Andrew F. Pollet,
deceased (the "Probate Estate"), and STAAR Surgical Company, a Delaware
corporation ("STAAR"), all of whom may hereafter be referred to as the
"Parties."

                                    RECITALS

        A.      Pollet is the widow of Andrew F. Pollet ("Andrew"). Pollet is
                also the court-approved administrator of the Probate Estate, now
                pending as case no. P075793 before the Superior Court of the
                State of California for the County of Ventura. Pollet is also
                the mother and custodian of the four (4) minor children of
                Pollet and Andrew: Troy Pollet, age 16; Austin Pollet, age 14;
                Andrew Pollet II, age 10; and Madison Pollet, age 7,
                collectively referred to herein as the "Pollet Children."

        B.      For some time prior to his death in January 2001, Andrew was an
                officer and director of STAAR. In these capacities, Andrew was
                granted various options to purchase stock in STAAR. In
                connection with the exercise of these options, Andrew executed a
                variety of promissory notes in favor of STAAR (the "Stock
                Purchase Loans"), executed on: May 26, 1992 for $733,335;
                September 4, 1998 for $987,835; August 3, 1999 for $150,000;
                September 5, 2000 for $125,000; October 23, 2000 for $465,625;
                and November 1, 2000 for $288,000. As of the above date, the
                Stock Purchase Loans total $2,749,795 in obligations, plus
                interest of $596,551.

        C.      In order to secure the Stock Purchase Loans, Andrew executed in
                favor of STAAR certain stock pledge agreements (currently
                involving 94,000 shares of STAAR stock purchased by Andrew) and
                both a second-priority and third-priority deed of trust
                encumbering Andrew and Pollet's residential property located at
                10934 Alto Court, Oak View, California 93022.

        D.      Prior to his death in January 2001, Andrew, an attorney, was the
                holder of an equity interest in P&R (the "Equity Interest").

        E.      On September 22, 2001, for a variety of reasons, Pollet filed a
                voluntary petition under chapter 11 of the Bankruptcy Code, 11
                U.S.C. Sections 101 et seq., thereby commencing case no.
                ND01-13364RR before the United States Bankruptcy Court for the
                Central District of California (the "Bankruptcy Case").

        F.      Mona Buchanan has submitted a Proof of Claim in the Bankruptcy
                Case in the amount of $70,000 (the "Mona Buchanan Claim").

                                       -1-

<PAGE>

        A dispute has arisen among the Parties regarding the remaining
obligations of Pollet to STAAR with regard to the Stock Purchase Loans, and
regarding the remaining obligations of P&R to Pollet and the Probate Estate with
regard to the Equity Interest. The Parties wish to compromise and forever settle
all disputes among them.

                                    AGREEMENT

        NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the mutual promises,
covenants and conditions herein contained, the Parties agree as follows:

        1.      Settlement Terms.

                (a)     Pollet shall execute, in favor of STAAR, a new
                        promissory note (the "Settlement Note") in the amount of
                        $2,189,795. A true and correct copy of the Settlement
                        Note is attached hereto as Exhibit "1". Subject to
                        subsection (l) below, all of the Stock Purchase Loans
                        are hereby expressly cancelled, along with all stock
                        pledge agreements and real property deeds of trust
                        executed to secure their repayment. The forgiveness by
                        STAAR of accrued interest on the Stock Purchase Loans is
                        in partial consideration for the settlement of this
                        dispute.

                (b)     Pollet and STAAR shall execute a new stock pledge
                        agreement (the "Settlement Pledge Agreement") to
                        encumber a total of 400,000 shares of STAAR's common
                        stock currently held by Pollet (and/or the Probate
                        Estate, if so held at the time of the execution of this
                        Agreement), which includes the existing 94,000 secured
                        shares plus an additional 306,000 shares. A true and
                        correct copy of the Stock Pledge Agreement is attached
                        hereto as Exhibit "2".

                (c)     The Settlement Note shall be non-recourse with regard to
                        Pollet and her assets (and Andrew and his assets and the
                        Probate Estate and its assets, if any) with the
                        exception of those assets pledged under the Stock Pledge
                        Agreement.

                (d)     Pollet shall waive any and all claims that she, her
                        bankruptcy estate, Andrew or the Probate Estate may
                        possess to the Equity Interest and to any consideration
                        due as a result of such an interest.

                (e)     P&R shall execute, in favor of STAAR, a promissory note
                        in the amount of $560,000 (the "P&R Note"). A true and
                        correct copy of the P&R Note is attached hereto as
                        Exhibit "3". The P&R Note

                                       -2-

<PAGE>

                        constitutes additional consideration by P&R to Pollet
                        and/or the Probate Estate, and by Pollet and/or the
                        Probate Estate to STAAR.

                (f)     P&R and STAAR shall execute a security agreement (the
                        "Security Agreement") to encumber P&R's accounts
                        receivable. A true and correct copy of the Security
                        Agreement is attached hereto as Exhibit "4". If, at a
                        future date, P&R obtains a line of credit (not to exceed
                        $250,000) secured by P&R's accounts receivable, STAAR
                        agrees to subordinate the Security Agreement (and any
                        lien arising thereunder) to such a lien securing such a
                        line of credit.

                (g)     P&R shall pay to Pollet the sum of $50,000 (the "Pollet
                        Payment"). A total of $40,000 of the Pollet Payment has
                        already been paid to Pollet by P&R prior to the
                        execution of this Agreement as follows: $10,000 on
                        October 16, 2001, $7,500 on November 15, 2001, $7,500 on
                        December 17, 2001, $7,500 on February 5, 2002, and
                        $7,500 on February 26,2002. P&R shall pay the remaining
                        Pollet Payment by May 30, 2002.

                (h)     P&R shall henceforth pay all premiums (not including
                        copayments and other fees) that Pollet incurs with
                        regard to insurance coverage for Pollet and/or the
                        Pollet Children (including any insurance covering the
                        residence of Pollet and/or the Pollet Children). Said
                        payments shall not exceed the sum of $12,000 in a single
                        calendar year without the written consent of P&R, and
                        shall total $120,000.

                (i)     P&R shall henceforth provide an expense account to
                        Pollet to pay the expenses of Pollet and/or the Pollet
                        Children. Said payments shall not exceed the sum of
                        $30,000 in a single calendar year without the written
                        consent of P&R, and shall total $300,000.

                (j)     P&R shall assume any and all liability of the Debtor
                        with respect to the Mona Buchanan Claim, and will take
                        all necessary steps to cause the claim to be withdrawn
                        and dismissed upon approval of this Agreement by the
                        Bankruptcy Court.

                (k)     Pollet will use her best efforts, in accord with
                        relevant law and rules of procedure, to have this
                        Agreement approved as part of a plan of reorganization
                        and STAAR and P&R agree to consent to a Plan which
                        implements this Agreement. Pollet will also use her best
                        efforts, in accord with relevant law and rules of
                        procedure, to have this Agreement approved by and/or in
                        accord with the administration of the Probate Estate.

                (l)     This Agreement is contingent upon approval by the
                        Bankruptcy Court within four years from the date hereof.
                        In the event this

                                       -3-

<PAGE>

                        Agreement is not approved by the Bankruptcy Court within
                        that time frame, any payments made by P&R to STAAR
                        pursuant to the P&R Note shall be credited as payments
                        by P&R to Pollet and by Pollet to STAAR, and the parties
                        shall otherwise be returned to their respective
                        positions as if this Agreement and the collateral
                        documents (i.e., the Settlement Note, the Settlement
                        Pledge Agreement, the P&R Note, and the Security
                        Agreement) had not been executed and the Stock Purchase
                        Loans and all related stock pledge agreements and real
                        property deeds of trust shall remain in full force and
                        effect.

                (m)     Any and all statutes of limitation arising out of either
                        the Stock Purchase Loans or the Equity Interest shall be
                        tolled (with respect to claims presented by the Parties
                        hereto against one or more of the Parties hereto) from
                        the date of the filing of the petition in Bankruptcy (on
                        September 22, 2001) through either the approval or
                        disapproval of this Agreement by the Bankruptcy Court,
                        or four years from the date hereof, whichever is first.

        2.      Time of the Essence. Time is of the essence and these settlement
terms shall be executed as provided herein or else this Agreement shall have no
force or effect.

        3.      Mutual Release. Except for the rights and obligations of the
Parties arising from this Agreement, and subject to section 1.(l) above, the
Parties hereby, for themselves, their employees, agents, partners, members,
representatives, successors and assigns, discharge and release one another,
their past and present employees, agents, executors, administrators, trustees,
heirs, spouses, attorneys, partners, representatives, assigns, predecessors,
successors and related entities (the "Released Parties"), from any and all
claims, damages, actions, judgments, obligations, attorneys' fees, indemnities,
subrogations, duties, demands, controversies and liabilities of every nature at
law or in equity, liquidated or unliquidated, known or unknown, matured or
unmatured, foreseeable or unforeseeable, which they had or have arising out of
either the Stock Purchase Loans or the Equity Interest.

        4.      Waiver of Unknown Claims. It is understood and agreed that the
Parties' releases set forth hereinabove extend to all claims of every kind,
nature and description whatsoever, known or unknown, suspected or unsuspected,
and any and all rights under the provisions of Section 1542 of the Civil Code of
California or under any comparable statute of any other jurisdiction, arising
out of the Stock Purchase Loans or Equity Interest. The Parties expressly
acknowledge that they are familiar with and expressly waive and relinquish every
right or benefit they have or may have under the provisions of Section 1542 of
the Civil Code of California which reads as follows:

        "A general release does not extend to claims which the creditor does not
        know or suspect to exist in his favor at the time of executing the
        release,

                                       -4-

<PAGE>

        which if known by him must have materially affected his settlement with
        the debtor."

        5.      Entire Agreement. This Agreement contains the sole, complete and
entire agreement and understanding of the Parties concerning the matters
contained herein and may not be altered, modified, or changed in any manner
except by a writing duly executed by the Parties. No Party is relying on any
representations other than those expressly set forth herein. No conditions
precedent to the effectiveness of this Agreement exists, other than as expressly
provided for herein. There are no oral or written collateral agreements. All
prior discussions and negotiations have been and are merged, integrated into and
superseded by this Agreement. By execution hereof, the parties specifically
disavow any desire or intention to create a "third party" beneficiary contract,
and specifically declare that no person or entity, save and except for the
parties and their permitted successors and assigns, shall have any rights
hereunder nor any right of enforcement hereof.

        6.      Waiver. The delay or failure of a Party to exercise any right,
power or privilege hereunder, or failure to strictly enforce any breach or
default, shall not constitute a waiver with respect thereto; and no waiver of
any such right, power, privilege, breach or default on any one occasion shall
constitute a waiver thereof on a subsequent occasion unless clear and express
notice thereof in writing is provided.

        7.      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 be reasonably necessary to
consummate, evidence, confirm and/or carry out the intent and provisions of this
Agreement, all without undue delay or expense.

        8.      Attorneys' Fees Upon Breach. If any action at law or in equity,
or any motion, is brought to enforce this Agreement, the prevailing Party shall
be entitled to all of its costs in bringing and prosecuting said action or
motion, including reasonable attorneys' fees.

        9.      Applicable Law. This Agreement shall be construed according to
the laws of the State of California in effect as of the date of execution,
excluding any law relating to the conflict of laws.

        10.     Advice of Counsel. The Parties represent that prior to the
execution of this Agreement they had the opportunity to seek the benefit of
independent legal counsel of their own selection regarding the substance of this
Agreement. The Parties acknowledge that STAAR is a present client of P&R (with
regard to other matters), but all of the Parties have had the assistance of
counsel other than P&R with regard to this Agreement. This Agreement was
prepared by each party in conjunction with counseling from such party's
respective attorney or the opportunity to obtain such counseling. In light of
these facts it is acknowledged that no party shall be construed to be solely
responsible for the drafting of this Agreement, and therefore any ambiguity
shall not be construed against any party as the alleged draftsman of it. Each
party shall pay all costs and expenses incurred or to be

                                       -5-

<PAGE>

incurred by such party in negotiating and preparing this Agreement and in
performing and complying with all representations, warranties, covenants,
agreements and conditions contained in this Agreement to be performed or
complied with by such party, including legal fees.

        11.     Warranties. The Parties, and each of them, warrant: (i) that no
other person or entity had or has or claims, any interest in any of the claims,
demands, causes of action, or damages covered in this Agreement; (ii) that they,
and each of them, have the sole right and exclusive authority to execute this
Agreement; and (iii) that they have not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action, obligation, damage or
liability covered in this Agreement. All of the representations, warranties,
covenants, conditions and provisions of this Agreement shall be binding upon and
shall inure to the benefit of each party and such party's respective heirs,
executors, administrators, legal representatives, successors and/or assigns.

        12.     Representation of Authority. Each individual executing this
Agreement on behalf of any Party expressly represents and warrants that he/she
has authority to execute and thereby bind the Party on behalf of which he/she
executes this Agreement to the terms of this Agreement and agrees to indemnify
and hold harmless each other party from any claim that such authority did not
exist. Pollet's authority, for the term of the Bankruptcy Case, is subject to
the authority of the Bankruptcy Court, and Pollet pledges to use her best
efforts to swiftly obtain the approval of the Bankruptcy Court (and any other
relevant and required entity) for this Agreement.

        13.     Headings. The headings included in this Agreement are for
convenience only and do not limit, alter, or affect the matters contained in
this Agreement or the paragraphs they encaption. References to this Agreement
shall include all amendments thereto. As used in this Agreement, each gender
shall be deemed to include each other gender, including neutral genders or
genders appropriate for entities, if applicable, and the singular shall be
deemed to include the plural, and vice versa, as the context requires.

        14.     Counterparts. This Agreement may be executed in one or more
counterparts, all of which together constitute one single document.

        15.     Telefacsimile Signatures. This Agreement and any documents
relating to it may be executed and transmitted to any other party by
telefacsimile, which telefacsimile shall be deemed to be, and utilized in all
respects as, an original, wet-inked document.

        16.     Date of Execution. The Parties execute this Agreement as of the
date first above set forth.

                                       -6-

<PAGE>

SALLY M. POLLET

By:      /s/ Sally M. Pollet                                    Date:    4/4/02
         -------------------
         Sally M. Pollet, an individual, and as
         personal representative of the Estate of
         Andrew F. Pollet, deceased

STAAR SURGICAL COMPANY
a Delaware corporation

By:      /s/ John Bily                                         Date:    4/4/2002
         -------------
         John Bily, Chief Financial Officer

POLLET & RICHARDSON,
A Law Corporation

By:      /s/ Erick Richardson                                   Date:    4/4/02
         --------------------
         Erick Richardson, President

CONSENT OF MONA BUCHANAN:
------------------------

I consent to releasing my claim against Pollet (the "Mona Buchanan Claim")
pursuant to the terms set forth above.

By:  /s/ Mona Buchanan                                          Date:    4/3/02
     -----------------
         Mona Buchanan

APPROVED AS TO FORM:

MICHAELSON, SUSI & MICHAELSON
A Professional Corporation

By:      /s/ Peter Susi                                         Date:    4/4/02
         --------------
         Peter Susi, Esq., Attorneys for
         Sally M. Pollet

                                       -7-

<PAGE>

SHEPPARD MULLIN RICHTER
& HAMPTON LLP

By:      /s/ Peter M. Menard                                    Date:    4-11-02
         -------------------
         Peter Menard, Esq., Attorneys for
         STAAR Surgical Company

LAW OFFICES OF NORDMAN,
CORMANY, HAIR & COMPTON

By:      /s/ Janet Anne Reese                                   Date:    4-10-02
         --------------------
         Janet Reese, Esq., Attorneys for the
         Estate of Andrew F. Pollet

POLLET & RICHARDSON,
A Law Corporation

By:      Addison Adams                                          Date:    4-3-02
         -------------
         Addison Adams, Esq., Pro Se

                                      -8-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.85
<SEQUENCE>6
<FILENAME>dex1085.txt
<DESCRIPTION>SETTLEMENT NOTE DATED 3/29/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.85

                                 SETTLEMENT NOTE

$2,189,795.00                                                     March 29, 2002
                                                         Los Angeles, California

        FOR VALUE RECEIVED, the receipt and sufficiency of which is
acknowledged, Sally M. Pollet ("Maker"), hereby promises to pay to STAAR
Surgical Company, or order ("Holder"), at the address designated on the
signature page of this Note, or at such other place as Holder may designate by
written notice to Maker, the principal sum herein below described ("Principal
Amount"), together with interest thereon, in the manner and at the times
provided and subject to the terms and conditions described herein.

        1.      PRINCIPAL AMOUNT.

                The Principal Amount means the sum of $2,189,795.00.

        2.      INTEREST.

                Interest on the Principal Amount from time-to-time remaining
unpaid shall accrue from the date of this Note at the rate of five percent (5%)
per annum, compounded annually. Interest shall be computed on the basis of a
three hundred sixty (360) day year and a thirty (30) day month. If, at anytime
during the term of this Note, the closing bid price for the common stock of
STAAR Surgical Company ("STAAR") on the NASDAQ (or on whichever other public
stock exchange STAAR common stock is trading at the time) is $8.00 or higher for
a period of twenty (20) consecutive trading days, or if STAAR common stock
permanently ceases to trade on any public stock exchange (i.e., is de-listed),
then interest shall thereafter accrue on this Note at the rate of nine and
three-quarters percent (9.75%) per annum, compounded annually.

        3.      PAYMENT OF PRINCIPAL AND INTEREST.

                Subject to paragraph 8, below, Maker shall pay the Principal
Amount and all accrued and unpaid interest on the Principal Amount and all other
indebtedness due under this Note either: (a) four (4) years from the date of
this Note, on March 29, 2006; or (b) the first date after the date of the
execution of this Promissory Note on which the closing bid price for STAAR
common stock on the NASDAQ (or on whichever other public stock exchange STAAR
common stock is trading at the time) is, and has been for twenty (20)
consecutive trading days, $10.00 or greater, whichever comes first. If the date
set for payment under this Note falls on a Saturday, Sunday, or holiday
recognized by either the United States of America or the State of California,
payment under this Note shall be due on the first subsequent business day.

        4.      SECURITY/RELEASE OF SECURITY.

                Maker shall pledge as security for the repayment of all sums
payable under this Note 400,000 shares of STAAR common stock (the "Stock").
Maker shall execute a Stock Pledge Agreement of even date herewith evidencing
Holder's security interest in the Stock. This is a nonrecourse Promissory Note
with regard to the Principal Amount and interest due (other

                                       -1-

<PAGE>

than as to the Stock), but any fees or costs incurred pursuant to Paragraph 9 of
this Note shall constitute a recourse obligation for Maker.

        5.      PREPAYMENTS.

                Maker shall have the right to prepay any portion of the
Principal Amount and interest due without prepayment penalty or premium or
discount.

        6.      MANNER OF PAYMENTS/CREDITING OF PAYMENTS.

                Payments of any amount required hereunder shall be made in
lawful money of the United States or in such other property as Holder, in its
sole and absolute discretion, may accept, without deduction or offset, and shall
be credited first against accrued but unpaid fees and costs, if any, thereafter
against accrued but unpaid interest, if any, and thereafter against the unpaid
balance of the Principal Amount.

        7.      INTEREST ON DELINQUENT PAYMENTS.

                Any payment under this Note not paid when due shall bear
interest at the same rate and method as interest is charged on the Principal
Amount from the due date until paid.

        8.      ACCELERATION UPON DEFAULT.

                At the option of Holder, all or any part of the indebtedness of
Maker hereunder shall immediately become due and payable, irrespective of any
agreed maturity date, upon the happening of any of the following events of
default:

                (a)     If Maker shall breach any condition or obligation
        imposed on Maker pursuant to the terms of this Note, the Settlement
        Agreement And General Release of even date, or the Stock Pledge
        Agreement of even date, provided however that if any such breach is
        reasonably susceptible of being cured, Maker shall be entitled to a
        grace period of fifteen (15) days following written notice of such event
        of default to cure;

                (b)     If Maker shall make an assignment for the benefit of
        creditors;

                (c)     If a custodian, trustee, receiver, or agent is appointed
        or takes possession of substantially all of the property of Maker;

                (d)     If Maker shall be adjudicated bankrupt or insolvent or
        admit in writing Maker's inability to pay Maker's debts as they become
        due;

                (e)     If any petition is filed against Maker under the
        Bankruptcy Code and either (A) the Bankruptcy Court orders relief
        against Maker, or (B) such petition is not dismissed by the Bankruptcy
        Court within thirty (30) days of the date of filing;

                (f)     If any attachment, execution or other writ is levied on
        substantially all of the assets of Maker and remains in effect for more
        than five (5) days; or

                                       -2-

<PAGE>

                (g)     If Maker shall apply for or consent to the appointment
        of a custodian, trustee, receiver, intervenor, liquidator or agent of
        Maker, or commence any proceeding related to Maker under any bankruptcy
        or reorganization statute, or under any arrangement, insolvency,
        readjustment of debt, dissolution, or liquidation law of any
        jurisdiction, whether now or hereafter in effect.

Maker shall notify Holder immediately if any event of default occurs. The
existence of the pending chapter 11 bankruptcy case, In re Sally M. Pollet, no.
ND01-13364RR before the United States Bankruptcy Court for the Central District
of California, shall not be deemed an event of default for so long as Maker
remains a debtor-in-possession, as per 11 U.S.C. Section 1107(a), in said case.
Holder's remedies, in the event of any event of default which is not cured
within the specified time period, are limited to those specified in paragraph 9
below and those specified in the Stock Pledge Agreement of even date between
Maker and Holder.

        9.      COLLECTION COSTS AND ATTORNEYS' FEES.

                Maker agrees to pay Holder all costs and expenses, including
reasonable attorneys' fees, paid or incurred by Holder in connection with the
collection or enforcement of this Note or any instrument securing payment of
this Note, including, without limitation, defending the priority of such
instrument or conducting a trustee sale thereunder. In the event any litigation
is initiated concerning the enforcement, interpretation or collection of this
Note by the parties hereto, the prevailing party in any such proceeding shall be
entitled to receive from the non-prevailing party all costs and expenses
including, without limitation, reasonable attorneys' and other fees incurred by
the prevailing party in connection with such action or proceeding.

        10.     NOTICE.

                Any notice to either party under this Note shall be given by
personal delivery or by express mail, Federal Express, DHL or similar
airborne/overnight delivery service, or by mailing such notice by first class or
certified mail, return receipt requested, addressed to such party at the address
set forth below, or to such other address as either party from time to time may
designate by written notice. Notices delivered by overnight delivery service
shall be deemed delivered the next business day following consignment to such
delivery service. Mailed notices shall be deemed delivered and received in
accordance with this provision three (3) days after deposit in the United States
mail.

11.     USURY COMPLIANCE.

                All agreements between Maker and Holder are expressly limited,
so that in no event or contingency whatsoever, whether by reason of the
consideration given with respect to this Note, the acceleration of maturity of
the unpaid Principal Amount and interest thereon, or otherwise, shall the amount
paid or agreed to be paid to Holder for the use, forbearance, or detention of
the indebtedness which is the subject of this Note exceed the highest lawful
rate permissible under the applicable usury laws. If, under any circumstances
whatsoever, fulfillment of any provision of this Note shall involve transcending
the highest interest rate permitted by law which a court of competent
jurisdiction deems applicable, then the obligations to be fulfilled

                                       -3-

<PAGE>

shall be reduced to such maximum rate, and if, under any circumstances
whatsoever, Holder shall ever receive as interest an amount that exceeds the
highest lawful rate, the amount that would be excessive interest shall be
applied to the reduction of the unpaid Principal Amount under this Note and not
to the payment of interest, or, if such excessive interest exceeds the unpaid
balance of the Principal Amount under this Note, such excess shall be refunded
to Maker. This provision shall control every other provision of all agreements
between Maker and Holder.

        12.     JURISDICTION: VENUE.

                This Note shall be governed by, interpreted under and construed
and enforced in accordance with the laws of the State of California, excluding
any law relating to the conflict of laws. Any action to enforce payment of this
Note shall be filed and heard solely in Los Angeles County, California.

        13.     BUSINESS PURPOSE.

                This Note is entered into by Maker in connection with a business
transaction and not for personal, family or household purposes.

                                             MAKER:

                                             /s/ Sally M. Pollet
                                             -------------------
                                             Sally M. Pollet

                                             MAKER'S ADDRESS:

                                             10934 Alto Court
                                             Oak View, California 93022

                                             HOLDER'S ADDRESS:

                                             STAAR SURGICAL COMPANY
                                             1911 Walker Avenue
                                             Monrovia, California 91016
                                             Attn.:   Chief Financial Officer

                                       -4-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.86
<SEQUENCE>7
<FILENAME>dex1086.txt
<DESCRIPTION>STOCK PLEDGE AGREEMENT DATED 3/29/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.86

                             STOCK PLEDGE AGREEMENT

        This STOCK PLEDGE AGREEMENT (hereinafter "Agreement") is made and
entered into as of March 29, 2002, by and between Sally M. Pollet, an individual
("Pledgor"), and STAAR Surgical Company, a Delaware corporation ("Pledgee"),
with reference to the following facts:

                                    RECITALS

        WHEREAS, Pledgor has executed in favor of Pledgee a promissory note (the
"Note"), a copy of which is attached hereto as Exhibit "1" and is incorporated
herein by this reference, for the sum of two million one hundred eighty-nine
thousand seven hundred ninety-five dollars ($2,189,795.00); and

        WHEREAS, Pledgor desires to pledge to Pledgee the interest of Pledgor in
certain common stock, which is included on Exhibit "2", attached hereto and
incorporated herein by this reference, pursuant to the terms of this Agreement,
for the purpose of securing payment of the Note;

        THEREFORE, in consideration of mutual covenants and promises contained
herein, and for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement (hereinafter collectively
"parties" and individually "party") agree as follows:

                                    AGREEMENT

        1.      PLEDGE OF STOCK AND PROCEEDS.

                (a)     Original Pledge. As collateral security for the payment
and/or performance of all of Pledgor's presently existing or hereinafter arising
obligations and liabilities to Pledgee under the Note, Pledgor hereby pledges,
grants and assigns to Pledgee a continuing first-priority security interest in
the following:

                        (i)     four hundred thousand (400,000) shares of the
common stock of STAAR Surgical Company and all certificates evidencing such
shares (the "Stock"); and

                        (ii)    the proceeds of the Stock including, without
limitation, any and all dividends, cash, instruments and other property from
time-to-time received, receivable, or otherwise distributed in respect of or in
exchange for any of the Stock ("Proceeds"). The Stock and the Proceeds shall
hereinafter be collectively referred to as the "Collateral."

                (b)     Delivery of Stock Power to Pledgee. Pledgor shall
deliver to Pledgee, concurrently with the execution of this Agreement, the
original certificates evidencing such Stock along with an Assignment of
Corporate Shares in the form of Exhibit "3" attached hereto and incorporated
herein by this reference ("Stock Assignment"), signed by Pledgor, in blank, such
Stock Assignment to be used by Pledgee in accordance with the terms of this
Agreement.

                                       -1-

<PAGE>

                (c)     Pledgee's Acceptance of Collateral and Appointment as
Pledgor's Attorney-In-Fact. Pledgee hereby agrees to accept the Collateral and
agrees to hold and dispose of the Collateral in accordance with and subject only
to the terms of this Agreement. Pledgor hereby irrevocably appoints Pledgee as
Pledgor's attorney-in-fact to arrange for the transfer of the Collateral and to
do and perform all actions that are necessary or appropriate in order to effect
the terms of this Agreement.

                (d)     Release of Collateral. Pledgee shall release the
Collateral from this Agreement and return the Collateral to Pledgor upon
satisfaction in full of Pledgor's obligations under the Note.

        2.      MATTERS PERTAINING TO THE COLLATERAL.

                (a)     Voting and Consensual Rights. Pledgor shall retain the
right to vote the Stock and to exercise any other rights pertaining to the
Stock, provided, however, so long as Pledgor is in "Default" as defined in
Paragraph 3 of this Agreement, Pledgee may vote the Stock and exercise any
rights pertaining to the Stock. Pledgor may sell the Stock, or any portion
thereof, free and clear of STAAR's first-priority security interest therein, so
long as Pledgor contemporaneously pays to Pledgee an amount equal to or greater
than five dollars and fifty cents ($5.50) per share of the Stock so sold.
Pledgee shall apply such payments against all amounts due under the Note.

                (b)     Rights to Dividends and Distributions. Pledgee, rather
than Pledgor, shall be entitled to collect and receive all of the following
types of proceeds, which shall be added to and shall become a part of the
Collateral:

                        (i)     all proceeds paid or payable, and all
instruments and other property distributed in respect of, or in exchange for,
the Stock;

                        (ii)    all proceeds paid or payable with respect to the
Stock in connection with a partial or total liquidation or dissolution of the
issuing corporation or in connection with a reduction of capital, capital
surplus or paid-in surplus of the issuing corporation; and

                        (iii)   all proceeds distributed in redemption of, or in
exchange for, the Stock. To the extent the foregoing proceeds exceed the amount
of Pledgor's obligations and liabilities under the Note and/or this Agreement,
Pledgor shall be entitled to receive these excess proceeds.

                (c)     Stock Adjustments. In the event that, during the term of
this Agreement, any stock dividend, reclassification, readjustment, or other
change is declared or made in the capital structure of the issuing corporation,
all new, substituted and additional shares or other securities issued with
respect to the Stock by reason of any such change shall be delivered to and held
by Pledgee under the terms of this Agreement in the same manner as the Stock.

                                       -2-

<PAGE>

        3.      DEFAULT AND REMEDY ON DEFAULT.

                At the option of Pledgee, upon the happening of any of the
following events of default ("Default"):

                (a)     Default Under Note. If an event of default, as set forth
in paragraph 8 of the Note, occurs and is not cured as specifically provided
therein; or

                (b)     Default Under This Agreement. If Pledgor defaults in the
due performance or observance of any representation or obligation under this
Agreement;

Pledgee shall have all of the rights and remedies set forth in this Stock Pledge
Agreement and paragraph 9 of the Note, in addition to the rights and remedies of
a secured party under Division 9 of the California Uniform Commercial Code. Upon
default, the right of Pledgor to vote the Stock and to exercise any other rights
pertaining to the Stock shall cease.

        4.      PLEDGOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

                Pledgor represents, warrants and covenants to Pledgee as
follows:

                (a)     Upon delivery to Pledgee as contemplated hereby, and
upon approval by the United States Bankruptcy Court for the Central District of
California in case no. ND01-13364RR, the Collateral will be free of any security
interests, liens, pledges or encumbrances created by Pledgor or her
predecessors-in-interest (except for the security interest created hereby), or
any claims of third parties of any nature whatsoever, charges, escrows, options,
rights of first refusal, or other agreements, restrictions, arrangements,
commitments or obligations, written or oral, created by Pledgor or her
predecessors-in-interest, affecting the legal or beneficial ownership of the
Collateral.

                (b)     From and after the date hereof, Pledgor shall not make
any agreements restricting in any manner the transferability of the Collateral
or otherwise affecting the Collateral;

                (c)     Pledgor shall, at Pledgor's expense, take any steps
necessary to preserve Pledgee's rights in the Collateral against any claims of
third parties;

                (d)     Pledgor has arrangements for keeping informed of changes
or potential changes affecting the Collateral (including, without limitation,
rights to convert, rights to subscribe, payment of dividends, reorganization or
other exchanges, tender offers and voting rights), and Pledgee shall not have
any responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto; and

                (e)     Pledgor's full and correct legal name is Sally M.
Pollet. Pledgor's principal residence is located at 10934 Alto Court, Oak View,
California. Pledgor shall notify Pledgee within five (5) days of changing either
Pledgor's full and correct legal name or Pledgor's principal residence.

                                       -3-

<PAGE>

        5.      MISCELLANEOUS.

                (a)     It is acknowledged by each party that such party either
had separate and independent advice of counsel or the opportunity to avail
himself or itself of same. This Agreement was prepared by each party in
conjunction with counseling from such party's respective attorney or the
opportunity to obtain such counseling. In light of these facts it is
acknowledged that no party shall be construed to be solely responsible for the
drafting of this Agreement, and therefore any ambiguity shall not be construed
against any party as the alleged draftsman of it. Each party shall pay all costs
and expenses incurred or to be incurred by such party in negotiating and
preparing this Agreement and in performing and complying with all
representations, warranties, covenants, agreements and conditions contained in
this Agreement to be performed or complied with by such party, including legal
fees.

                (b)     Each party agrees, without further consideration, to
cooperate and diligently perform any further acts, deeds and things and to
execute and deliver any documents that may be reasonably necessary to
consummate, evidence, confirm and/or carry out the intent and provisions of this
Agreement, all without undue delay or expense. Pledgor shall reimburse Pledgee
for any costs and expenses incurred by Pledgee in connection with any breach or
default of Pledgor under this Agreement, including collection efforts, whether
or not suit is commenced or judgment is entered. Further, should any party
institute or should the parties otherwise become a party to any action or
proceeding to enforce or interpret this Agreement, the prevailing party in any
such action or proceeding shall be entitled to receive from the non-prevailing
party all costs and expenses of prosecuting or defending the action or
proceeding. Pledgor's liability, if any, under this paragraph, shall constitute
a recourse liability. This Agreement and the rights of each party under this
Agreement shall be governed by, interpreted under, and construed and enforced in
accordance with the laws of the State of California, excluding any law relating
to the conflict of laws.

                (c)     Any agreement hereafter made shall be ineffective to
modify, supplement or discharge the terms of this Agreement, in whole or in
part, unless such agreement is in writing and signed by the party against whom
enforcement of the modification, supplement or discharge is sought. By execution
hereof, the parties specifically disavow any desire or intention to create a
"third party" beneficiary contract, and specifically declare that no person or
entity, save and except for the parties and their permitted successors, and
assigns, shall have any rights hereunder nor any right of enforcement hereof. No
waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof. If any term or
provision of this Agreement or the application thereof to any person or
circumstance shall, to any extent, be determined to be invalid, illegal or
unenforceable, then the remaining part of this Agreement shall nevertheless not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law. This Agreement is to be read, construed and applied
together with the Note and that certain Settlement Agreement And General Release
of even date, which, taken together, set forth the complete understanding and
agreement of the parties with respect to the matters referred to herein and
therein.

                (d)     Pledgor may not delegate its duties under this
Agreement, in whole or in part, without the prior written consent of Pledgee,
which consent may be withheld in Pledgee's sole and arbitrary discretion.
Notwithstanding the preceding sentence, no such delegation shall

                                       -4-

<PAGE>

release Pledgor from any liability or obligation under this Agreement without
the written consent of Pledgee, which consent may be withheld in Pledgee's sole
and arbitrary discretion. Subject to the foregoing, all of the representations,
warranties, covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of each party and such party's
respective heirs, executors, administrators, legal representatives, successors
and/or assigns.

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

                (f)     All notices, demands, requests, consents, approvals or
other communications ("Notices") given hereunder shall be as provided in the
Note.

                (g)     If a Default is not cured within the prescribed time
period, whether or not any of the Collateral has been effectively registered
under the Securities Act of 1933, as amended, or other applicable laws, Pledgee
may, in its sole and absolute discretion, sell all or any part of such
Collateral at private sale in such manner and under such circumstances as
Pledgee may deem necessary or advisable in order that the sale may be lawfully
conducted. Without limiting the following, Pledgee may (i) approach and
negotiate with a limited number of potential purchasers, and (ii) restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing such Collateral for their own account for investment and not
with a view to the distribution or resale thereof. If Collateral is sold at
private sale, Pledgor agrees that if such Collateral is sold for a price which
Pledgee in good faith believes to be reasonable under the circumstances then
existing, then (a) the sale shall not be deemed to be commercially unreasonable
by reason of price, (b) Pledgor shall not be entitled to a credit against the
Note in any amount in excess of the purchase price, and (c) Pledgee shall not
incur any liability or responsibility to Pledgor in connection therewith,
notwithstanding the possibility that a substantially higher price might have
been realized at a public sale. Pledgor recognizes that a ready market may not
exist for such Collateral if it is not regularly traded on a recognized
securities exchange, and that a sale by Pledgee of any such Collateral for an
amount substantially less than a pro rata share of the fair market value of the
issuer's assets minus liabilities may be commercially reasonable in view of the
difficulties that may be encountered in attempting to sell a large amount of
such Collateral or Collateral that is privately traded.

                          (continued on following page)

                                       -5-

<PAGE>

        WHEREFORE, the parties hereto have executed this Agreement as of the
date first set forth above.

                                                  PLEDGOR:

                                                  ------------------------------
                                                  Sally M. Pollet
                                                  10934 Alto Court
                                                  Oak View, California  93022

                                                  PLEDGEE:

                                                  STAAR SURGICAL COMPANY
                                                  1911 Walker Avenue
                                                  Monrovia, California  91016

                                                  By: --------------------------
                                                           John Bily, CFO

                                       -6-

<PAGE>

        WHEREFORE, the parties hereto have executed this Agreement as of the
date first set forth above.

                                                  PLEDGOR:

                                                  /s/Sally M. Pollet
                                                  ------------------
                                                  Sally M. Pollet
                                                  10934 Alto Court
                                                  Oak View, California  93022

                                                  PLEDGEE:

                                                  STAAR SURGICAL COMPANY
                                                  1911 Walker Avenue
                                                  Monrovia, California  91016

                                                  By:  /s/ John Bily
                                                       -------------
                                                           John Bily, CFO

                                       -7-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.87
<SEQUENCE>8
<FILENAME>dex1087.txt
<DESCRIPTION>PROMISSORY NOTE DATED 3/29/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.87

                                    P&R NOTE

$560,000.00                                                       March 29, 2002
                                                         Los Angeles, California

        FOR VALUE RECEIVED, the receipt and sufficiency of which is
acknowledged, Pollet & Richardson, A Law Corporation ("Maker"), hereby promises
to pay to STAAR Surgical Company, or order ("Holder"), at the address designated
on the signature page of this Note, or at such other place as Holder may
designate by written notice to Maker, the principal sum herein below described
("Principal Amount"), together with interest thereon, in the manner and at the
times provided and subject to the terms and conditions described herein.

        1.      PRINCIPAL AMOUNT.

                The Principal Amount means the sum of $560,000.00.

        2.      INTEREST.

                Interest on the Principal Amount from time-to-time remaining
unpaid shall accrue from the Commencement Date (as that term is defined herein)
at the rate of five percent (5%) per annum, compounded annually. Interest shall
be computed on the basis of a three hundred sixty (360) day year and a thirty
(30) day month.

        3.      PAYMENT OF PRINCIPAL AND INTEREST.

                Subject to paragraph 9, below, Maker shall pay the Principal
Amount and all accrued and unpaid interest on the Principal Amount and all other
indebtedness due under this Note in forty-seven (47) equal monthly installments
of ten thousand dollars ($10,000) each, commencing one (1) month from the
Commencement Date, and concluding three (3) years and eleven (11) months from
the Commencement Date, and one (1) payment due four (4) years from the
Commencement Date, for all sums remaining due under this Note (i.e., approx.
$153,552). If the date set for payment by Maker of any installment or other sum
due under this Note falls on a Saturday, Sunday or holiday recognized by either
the United States of America or the State of California, payment under this Note
shall be due on the first subsequent business day.

        4.      COMMENCEMENT DATE.

                The Commencement Date shall be June 1, 2002.

        5.      SECURITY/RELEASE OF SECURITY.

                Maker shall pledge as security for the repayment of all sums
payable under this Note all of Maker's accounts receivable, both those existing
at the time of the execution of this Note and those which come into existence at
a future date prior to the exoneration of this Note. Maker shall execute a
Security Agreement of even date evidencing Holder's security interest in the
accounts receivable. If, at a future date, Maker obtains a line of credit from a
third party, not to exceed $250,000, secured by Maker's accounts receivable,
Holder's security interest in

                                       -1-

<PAGE>

Maker's accounts receivable will be subordinated to the security interest of the
party which extends the line of credit to Maker. This Note shall be recourse as
to Maker, but non-recourse as to Maker's shareholders, officers, directors,
agents and employees.

        6.      PREPAYMENTS.

                Maker shall have the right to prepay any portion of the
Principal Amount and interest due without prepayment penalty or premium or
discount.

        7.      MANNER OF PAYMENTS/CREDITING OF PAYMENTS.

                Payments of any amount required hereunder shall be made in
lawful money of the United States or in such other property as Holder, in its
sole and absolute discretion, may accept, without deduction or offset, and shall
be credited first against accrued but unpaid fees and costs, if any, thereafter
against accrued but unpaid interest, if any, and thereafter against the unpaid
balance of the Principal Amount.

        8.      INTEREST ON DELINQUENT PAYMENTS.

                Any payment under this Note not paid when due shall bear
interest at the same rate and method as interest is charged on the Principal
Amount from the due date until paid.

        9.      ACCELERATION UPON DEFAULT.

                At the option of Holder, all or any part of the indebtedness of
Maker hereunder shall immediately become due and payable, irrespective of any
agreed maturity date, upon the happening of any of the following events of
default:

                        (a)     If Maker shall breach any condition or
        obligation imposed on Maker pursuant to the terms of this Note, the
        Settlement Agreement And General Release of even date, or the Security
        Agreement of even date, provided however that if any such breach is
        reasonably susceptible of being cured, Maker shall be entitled to a
        grace period of fifteen (15) days following written notice of such event
        of default to cure;

                        (b)     If Maker shall make an assignment for the
        benefit of creditors;

                        (c)     If a custodian, trustee, receiver, or agent is
        appointed or takes possession of substantially all of the property of
        Maker;

                        (d)     If Maker shall be adjudicated bankrupt or
        insolvent or admit in writing Maker's inability to pay Maker's debts as
        they become due;

                        (e)     if any petition is filed against Maker under the
        Bankruptcy Code and either (A) the Bankruptcy Court orders relief
        against Maker, or (B) such petition is not dismissed by the Bankruptcy
        Court within thirty (30) days of the date of filing;

                        (f)     If any attachment, execution or other writ is
        levied on substantially all of the assets of Maker and remains in effect
        for more than five (5) days; or

                                       -2-

<PAGE>

                        (g)     If Maker shall apply for or consent to the
        appointment of a custodian, trustee, receiver, intervenor, liquidator or
        agent of Maker, or commence any proceeding related to Maker under any
        bankruptcy or reorganization statute, or under any arrangement,
        insolvency, readjustment of debt, dissolution, or liquidation law of any
        jurisdiction, whether now or hereafter in effect.

Maker shall notify Holder immediately if any event of default occurs.

        10.     COLLECTION COSTS AND ATTORNEYS' FEES.

                Maker agrees to pay Holder all costs and expenses, including
reasonable attorneys' fees, paid or incurred by Holder in connection with the
collection or enforcement of this Note or any instrument securing payment of
this Note, including without limitation, defending the priority of such
instrument or conducting a trustee sale thereunder. In the event any litigation
is initiated concerning the enforcement, interpretation or collection of this
Note by the parties hereto, the prevailing party in any such proceeding shall be
entitled to receive from the non-prevailing party all costs and expenses
including, without limitation, reasonable attorneys' and other fees incurred by
the prevailing party in connection with such action or proceeding.

        11.     NOTICE.

                Any notice to either party under this Note shall be given by
personal delivery or by express mail, Federal Express, DHL or similar
airborne/overnight delivery service, or by mailing such notice by first class or
certified mail, return receipt requested, addressed to such party at the address
set forth below, or to such other address as either party from time to time may
designate by written notice. Notices delivered by overnight delivery service
shall be deemed delivered the next business day following consignment to such
delivery service. Mailed notices shall be deemed delivered and received in
accordance with this provision three (3) days after deposit in the United States
mail.

        12.     USURY COMPLIANCE.

                All agreements between Maker and Holder are expressly limited,
so that in no event or contingency whatsoever, whether by reason of the
consideration givenwith respect to this Note, the acceleration of maturity of
the unpaid Principal Amount and interest thereon, or otherwise, shall the amount
paid or agreed to be paid to Holder for the use, forbearance, or detention of
the indebtedness which is the subject of this Note exceed the highest lawful
rate permissible under the applicable usury laws. If, under any circumstances
whatsoever, fulfillment of any provision of this Note shall involve transcending
the highest interest rate permitted by law which a court of competent
jurisdiction deems applicable, then the obligations to be fulfilled shall be
reduced to such maximum rate, and if, under any circumstances whatsoever, Holder
shall ever receive as interest an amount that exceeds the highest lawful rate,
the amount that would be excessive interest shall be applied to the reduction of
the unpaid Principal Amount under this Note and not to the payment of interest,
or, if such excessive interest exceeds the unpaid balance of the Principal
Amount under this Note, such excess shall be refunded to Maker. This provision
shall control every other provision of all agreements between Maker and Holder.

                                       -3-

<PAGE>

        13.     JURISDICTION; VENUE.

                This Note shall be governed by, interpreted under and construed
and enforced in accordance with the laws of the State of California, excluding
any law relating to the conflict of laws. Any action to enforce payment of this
Note shall be filed and heard solely in Los Angeles County, California.

        14.     BUSINESS PURPOSE.

                This Note is entered into by Maker in connection with a business
transaction and not for personal, family or household purposes.

                                   MAKER:

                                   Pollet & Richardson
                                   A Law Corporation

                                   By: /s/ Erick E. Richardson, Jr.
                                       ----------------------------
                                           Erick E. Richardson, Jr., President

                                   MAKER'S ADDRESS:

                                   10900 Wilshire Boulevard, Suite 500
                                   Los Angeles, California 90024

                                   HOLDER'S ADDRESS:

                                   STAAR SURGICAL COMPANY
                                   1911 Walker Avenue
                                   Monrovia, California 91016
                                   Attn.: Chief Financial Officer

                                       -4-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.88
<SEQUENCE>9
<FILENAME>dex1088.txt
<DESCRIPTION>SECURITY AGREEMENT DATED 3/29/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.88

                               SECURITY AGREEMENT

        This Security Agreement (the "Agreement") is made on March 29, 2002 by
Pollet & Richardson, A Law Corporation ("Obligor"), in favor of STAAR Surgical
Company, a Delaware corporation ("STAAR").

        For and in consideration of the extension of credit now made by STAAR to
Obligor as evidenced by the Promissory Note of even date (the "Note"), a true
and correct copy of which is attached hereto as Exhibit "1", or any extension,
renewal or forbearance from enforcement of said Note or other credit, and for
other good and valuable consideration, Obligor agrees as follows:

1.      DEFINITIONS. When used herein, the following terms shall have the
following meanings:

        "Account Debtor" shall mean the party who is obligated on or under any
Account.

        "Account" shall mean any right of Obligor to payment for legal services
rendered, whether or not such right to payment has been earned by performance,
and all interest and service charges thereon, and any other account of Obligor
as such term is defined in Article 9 of the California Commercial Code.

        "Collateral" shall mean all property or rights in which a security
interest is granted hereunder or arises pursuant hereto.

        "Liabilities" shall mean the liabilities and obligations of Obligor to
STAAR pursuant to the Note and any full or part extensions or renewals thereof
(whether greater or less than any such specified obligation), along with any
reasonable costs and expenses incurred by STAAR in connection with any breach or
default of Obligor under this Agreement.

        Except as otherwise provided herein, all other terms used in this
Agreement shall have the meanings given under Division 9 of the California
Commercial Code, or in any other Division if not defined in Division 9.

2.      GRANT OF SECURITY INTEREST. As security for the payment of all
Liabilities, Obligor hereby agrees that STAAR shall have and, to that end,
assigns and grants to STAAR a continuing first-priority security interest in all
Accounts of Obligor, whether now or hereafter existing or acquired; and all
products and proceeds (whether cash or non-cash proceeds) of any of the
foregoing. If, at a future date, Obligor obtains a line of credit from a third
party (not STAAR), not to exceed $250,000, secured by Obligor's Accounts,
STAAR's security interest in Obligor's Accounts will be subordinated to the
security interest of the party which extends the line of credit to Obligor.

3.      WARRANTIES. Obligor warrants to STAAR that: (a) the Liabilities and
every portion thereof will be paid as and when the same become due; (b) no
financing statement (other than any which may have been filed on behalf of
STAAR) covering any of the Collateral is on file in any public office; (c)
Obligor is and will be the lawful owner of all Collateral, free of all liens and
claims whatsoever, other than the security interest granted hereunder, and with
good right to

                                       -1-

<PAGE>

subject the same to said security interest and Obligor will not permit any tax
lien or other lien or other security interest other than in favor of STAA.R or
with regard to the line of credit referenced in Section 2 above to attach to the
Collateral; (d) all information with respect to Accounts and Account Debtors set
forth in any schedule, certificate or other writing and all other written
information at any time heretofore or hereafter furnished by Obligor to STAAR is
and will be true and correct as of the date furnished; (e) all Accounts included
in the Collateral arose in the ordinary course of Obligor's business, for legal
services rendered, and are fully collectible without offset or deduction; (f)
the Collateral and all records concerning the Collateral are located at the
place(s) set forth in Section 9 below; (g) Obligor's chief executive office is
located at the address set forth under Obligor's signature hereto and has been
located at such address for the preceding five years, and (h) Obligor's accounts
receivable exceed $560,000.

4.      COLLECTION OF AMOUNTS DUE. Obligor will, at its own expense, endeavor to
collect, as and when due, all amounts due Obligor under the Collateral,
including the taking of such action with respect to such collection as Obligor
may deem advisable, and may use such amounts collected in the ordinary course of
its business, and may, in the ordinary course of business, grant to any party
obligated on any of the Collateral any rebate, refund or adjustment to which
such party may be lawfully entitled or is deemed advisable in the reasonable
discretion of Obligor. Obligor's rights under this section are subject to
STAAR's remedies under Section 7 below.

5.      AGREEMENTS OF OBLIGOR. Obligor will:

        (a)     execute or cause to be executed all financing statements,
endorsements, assignments and other writings and do such other acts and things
as STAAR may from time to time request to establish, maintain and/or continue
the perfected status of the security interest of STAAR in the Collateral (free
of all other liens and claims not provided for herein) to secure payment of the
Liabilities or to implement or further effectuate the terms or purpose of this
Agreement;

        (b)     keep, at the address designated below for its records, all
records concerning the Collateral, which records will be of such character as
will enable STAAR or its designees to determine at any time the status of the
Collateral;

        (c)     not create or permit to exist any lien on or security interest
in any Collateral (or any interest therein) to or in favor of anyone other than
STAAR, other than one securing repayment of a line of credit as referenced in
Section 2 of this Agreement; and

        (d)     not use or permit the use of any of the Collateral for any
unlawful purpose, and will register, use, operate and control the Collateral in
accordance with statutes, laws, ordinances and regulations relating thereto.

6.      DEFAULT. There shall be a default ("Default") under this Agreement if
any of the following events occur:

        (a)     If Obligor shall breach any condition or obligation imposed on
Obligor pursuant to the terms of this Note, the Settlement Agreement And General
Release of even date, or the Security Agreement of even date, provided however
that if any such breach is reasonably

                                       -2-

<PAGE>

susceptible of being cured, Obligor shall be entitled to a grace period of
fifteen (15) days following written notice of such event of default to cure;

        (b)     If Obligor shall make an assignment for the benefit of
creditors;

        (c)     If a custodian, trustee, receiver, or agent is appointed or
takes possession of substantially all of the property of Obligor;

        (d)     If Obligor shall be adjudicated bankrupt or insolvent or admit
in writing Obligor's inability to pay Obligor's debts as they become due;

        (e)     If any petition is filed against Obligor under the Bankruptcy
Code and either (A) the Bankruptcy Court orders relief against Obligor, or (B)
such petition is not dismissed by the Bankruptcy Court within thirty (30) days
of the date of filing;

        (f)     If any attachment, execution or other writ is levied on
substantially all of the assets of Obligor and remains in effect for more than
five (5) days; or

        (g)     If Obligor shall apply for or consent to the appointment of a
custodian, trustee, receiver, intervenor, liquidator or agent of Obligor, or
commence any proceeding related to Obligor under any bankruptcy or
reorganization statute, or under any arrangement, insolvency, readjustment of
debt, dissolution, or liquidation law of any jurisdiction, whether now or
hereafter in effect.

Obligor shall notify STAAR immediately if any event of default occurs.

7.      REMEDIES UPON DEFAULT. Upon the occurrence of any Default hereunder,
STAAR may do one or more of the following:

        (a)     declare each of the Liabilities (notwithstanding any provisions
thereto, at the option of STAAR, and without demand or notice of any kind)
immediately due and payable;

        (b)     upon notice to Obligor, notify any parties obligated on any of
the Collateral to make payment to STAAR of any amounts due or to become due
thereunder and enforce collection of any of the Collateral by suit or otherwise
and surrender, release or exchange all or any part thereof, or compromise or
extend or renew for any period (whether or not longer than the original period)
any indebtedness thereunder or evidenced thereby and

        (c)     exercise the rights and remedies afforded a secured party under
Division 9 of the California Uniform Commercial code.

        STAAR shall apply the proceeds of any collection or disposition of the
Collateral to the satisfaction of the Liabilities to STAAR secured by the
Collateral, the application of proceeds to the Liabilities to be in such order
and manner as STAAR elects. STAAR shall not be required to examine the validity
of or to exchange or to collect on any Collateral or to take any action
necessary to hold any corporation, issuer or other person or party liable on the
Collateral; and diligence in looking after, preserving, or acting with respect
to the Collateral or collecting the same is hereby waived by Obligor.

                                       -3-

<PAGE>

8.      GENERAL. Any notice to Obligor or to STAAR provided for in this
Agreement shall be given by personal delivery or by express mail, Federal
Express, DHL or similar airborne/overnight delivery service, or by mailing such
notice by first class or certified mail, return receipt requested, addressed to
the party at the address set forth below where this Agreement is executed, or to
such other address as the party may designate by written notice to the other
party. Mailed notices shall be deemed delivered and received three (3) days
after deposit in accordance with this provision in the United States mail.

        Obligor makes, constitutes and appoints STAAR its true and lawful
attorney-in-fact with full power of substitution to take any action in
furtherance of this Agreement, including, but not limited to, the signing of
financing statements, endorsing of instruments, and the execution and delivery
of all documents and agreements necessary to obtain or accomplish any protection
for or collection or disposition of any part of the Collateral. Such appointment
shall be deemed irrevocable and coupled with an interest. Without limiting the
foregoing Obligor hereby specifically authorizes STAAR to endorse, negotiate and
reduce to cash in the name of Obligor, any check or other item, howsoever
received by STAAR and whether received before or after any Default, representing
any payment on or other proceeds of any of the Collateral.

        No delay on the part of STAAR in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by STAAR of
any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy. This Agreement shall be a continuing
Agreement in every respect and STAAR's security interest in the Collateral as
granted herein shall continue in full force and effect until all of the
Liabilities are paid in full and STAAR has filed a termination statement in the
form prescribed under the California Commercial Code.

        This Agreement has been delivered at Los Angeles, California and shall
be construed in accordance with the laws of the State of California, excluding
any law relating to the conflict of laws. Whenever possible each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. The rights and
privileges granted STAAR hereunder shall inure to the benefit of its successors
and assigns. The rights granted hereunder are cumulative and in addition to any
other rights STAAR may have by agreement or under applicable law.

9.      COLLATERAL AND RECORDS LOCATION(S). The Collateral and records relating
to it are located at 10900 Wilshire Boulevard, Suite 500, Los Angeles,
California 90024-6525.

                                       -4-

<PAGE>

        IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.

Pollet & Richardson, A Law Corporation       Accepted and Approved:

By: /s/ Erick E. Richardson, Jr.             /s/ John Bily
    ----------------------------             -------------
    Erick E. Richardson, Jr., President      John Bily, Chief Financial Officer
    10900 Wilshire Boulevard, Suite 500      STAAR Surgical Company
    Los Angeles, CA 90024-6525               1911 Walker Avenue
                                             Monrovia, CA 91016

                                       -5-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.89
<SEQUENCE>10
<FILENAME>dex1089.txt
<DESCRIPTION>1ST AMEND. TO THE AMENDED & RESTATED CREDIT AGRMT. DATED 7/31/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.89

                                  July 31, 2002

Staar Surgical Company
1911 Walker Avenue
Monrovia, California 91016

Attention:   John Bily
             Chief Financial Officer

        Re:   First Amendment to Amended and Restated Credit Agreement

Ladies and Gentlemen:

        We refer to the Amended and Restated Credit Agreement dated as of March
29, 2002 (the "Credit Agreement") between Staar Surgical Company, a Delaware
corporation (the "Borrower"), and Wells Fargo Bank, National Association, a
national banking association (the "Bank"). Terms defined in the Credit Agreement
and not otherwise defined herein have the same respective meanings when used
herein.

        1.      Amendments to Credit Agreement. As of the effective date of this
letter amendment but subject to satisfaction of the terms and conditions
specified herein, the Credit Agreement is hereby amended as set forth below.

                (a)     Section 1.1(a) of the Credit Agreement is amended by
deleting the amount "$7,000,000" and substituting "$7,000,000, as such amount is
reduced from time to time pursuant to Sections 1.1(c) and 1.4(a)."

                (b)     Section 1.1 of the Credit Agreement is amended by adding
a new subsection (c) to read as follows:

                        "(c)    Mandatory Reduction of Line of Credit. On each
        date specified in Schedule 3, the Line of Credit shall be automatically
        and permanently reduced to the amount set forth opposite such date under
        the heading `Line of Credit,' but only if and to the extent that the
        Line of Credit has not previously been reduced to such amount or less
        pursuant to Section 1.4(a)."

                (c)     The table set forth in Section 1.2(c) of the Credit
Agreement is amended in full to read as follows:

<PAGE>

Staar Surgical Company
July 31, 2002
Page 2

Level    Funded Debt to EBITDA Ratio            Applicable Interest Margin
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
1 greater than or =0.00:1.00 but less than 2.00:1.00     1.00% per annum
-----------------------------------------------------------------------------
2 greater than or =2.00:1.00 but less than 4.00:1.00     2.00% per annum
-----------------------------------------------------------------------------
3 greater than or =4.00:1.00 but less than 6.00:1.00     3.00% per annum
-----------------------------------------------------------------------------
4 greater than or =6.00:1.00 or less than 0.00:1.00      4.00% per annum
-----------------------------------------------------------------------------

                (d)     The table set forth in Section 1.2(f) of the Credit
Agreement is amended in full to read as follows:


Level    Funded Debt to EBITDA Ratio            Applicable Fee Rate
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
1 greater than or =0.00:1.00 but less than 2.00:1.00     0.25% per annum
-----------------------------------------------------------------------------
2 greater than or =2.00:1.00 but less than 4.00:1.00     0.50% per annum
-----------------------------------------------------------------------------
3 greater than or =4.00:1.00 but less than 6.00:1.00     0.75% per annum
-----------------------------------------------------------------------------
4 greater than or =6.00:1.00 or less than 0.00:1.00      1.00% per annum
-----------------------------------------------------------------------------

                (e)     Section 1.4 of the Credit Agreement is amended by adding
a new subsection (c) to read as follows:

                        "(c)    Overadvances. If at any time the aggregate
        principal amount of advances outstanding under this Agreement exceeds
        the maximum amount of the Line of Credit, Borrower will immediately,
        without any notice or request by Bank, repay the advances in the amount
        equal to such excess."

                (f)     Section 4.2 of the Credit Agreement is amended by
deleting the word "June" therein and substituting "the third quarter."

                (g)     Section 4.3(e) of the Credit Agreement is amended by
inserting "for such month and" immediately after the second reference to
"Borrower."

                (h)     Section 4.3 of the Credit Agreement is further amended
by deleting the word "and" immediately after the semicolon in subsection (h), by
re-lettering subsection (i) as subsection (j) and by inserting a new subsection
(i) to read as follows:

                        "(i)    within 45 days after the end of each fiscal
        quarter of Borrower, written notice in reasonable detail of (i) the
        filing during such quarter of any application by or on behalf of
        Borrower or any Subsidiary thereof with the United States Patent and
        Trademark Office, the United States Copyright

<PAGE>

Staar Surgical Company
July 31, 2002
Page 3

        Office or any other office with respect to, or the acquisition during
        such quarter by Borrower or any Subsidiary thereof of any interest in
        (including, without limitation, any interest as exclusive licensee), any
        patent, trademark, copyright or other intellectual property, together
        with a copy of such application or the documentation concerning such
        acquisition, as applicable, and (ii) in the event that no such filing or
        acquisition has been made during such quarter, a certificate executed by
        the Chief Financial Officer of Borrower certifying to that effect; and."

                (i)     Section 4.9 of the Credit Agreement is amended by
restating subsections (b), (c), (d), (e), (f), (g) and (h) in full to read as
follows:

                        "(b)    Tangible Net Worth, tested as of the last day of
        each fiscal month commencing with August of 2002, not less than
        $26,500,000, with `Tangible Net Worth' being defined as the aggregate of
        total stockholders' equity plus subordinated debt less any intangible
        assets;

                        "(c)    for each fiscal month of Borrower, operating
        cash flow (as defined in accordance with Financial Accounting Standards
        Board Statement No. 95 (`FASB 95')) to be greater than the sum of
        required capitalized lease payments plus required debt repayments plus
        capital expenditures (as defined in accordance with FASB 95), tested as
        of the last day of each such fiscal month commencing with August of
        2002; provided, however, that, if Borrower fails to comply with the
        foregoing covenant in respect of any fiscal month, then such failure
        shall not constitute a default of such covenant unless Borrower fails to
        comply with such covenant when applied to such fiscal month combined
        with the immediately preceding fiscal month; further provided, however,
        that, if Borrower fails to comply with the foregoing covenant in respect
        of any fiscal month and the immediately preceding fiscal month, then
        such failure shall not constitute a default of such covenant unless
        Borrower fails to comply with such covenant when applied to such fiscal
        month combined with the immediately preceding two fiscal months;

                        "(d)    for each fiscal month of Borrower, negative
        variance from projected revenues (based on the monthly and quarterly
        projections attached hereto as Schedule 2) to be less than 15%, tested
        as of the last day of each fiscal month commencing with August of 2002;
        provided, however, that, if Borrower fails to comply with the foregoing
        covenant in respect of any fiscal month, then such failure shall not
        constitute a default of such covenant unless Borrower fails to comply
        with such covenant when applied to such fiscal month combined with the
        immediately preceding fiscal month; further provided, however, that, if

<PAGE>

Staar Surgical Company
July 31, 2002
Page 4

        Borrower fails to comply with the foregoing covenant in respect of any
        fiscal month and the immediately preceding fiscal month, then such
        failure shall not constitute a default of such covenant unless Borrower
        fails to comply with such covenant when applied to such fiscal month
        combined with the immediately preceding two fiscal months;

                        "(e)    negative variance from projected net operating
        income or loss (based on the monthly and quarterly projections attached
        hereto as Schedule 2) for each period of three consecutive fiscal months
        to be less than $250,000 in the aggregate for such months, tested as of
        the last day of each fiscal month commencing with August of 2002, with
        `net operating income or loss' being defined as income or loss before
        interest income or expense, equity in earnings of any unconsolidated
        affiliate, currency-exchange gains or losses, any other income or
        expenses, taxes and minority interests in affiliates;

                        "(f)    [Intentionally Omitted.];

                        "(g)    [Intentionally Omitted.]; and

                        "(h)    ratio of total liabilities to Tangible Net Worth
        not more than 0.80 to 1.00, tested as of the last day of each fiscal
        month commencing with August of 2002."

                (j)     Section 4.10 of the Credit Agreement is amended by
inserting the word "and" immediately before subsection (e) therein, by deleting
the word "and" immediately before subsection (f) therein and by deleting
subsection (f) in its entirety.

                (k)     Section 4.11 of the Credit Agreement is amended by
adding the following before the period at the end thereof:

        "; provided, however, that, on August 7, 2002, $2,000,000 in cash
        proceeds of such liquid assets shall be released from the lien in favor
        of Bank and applied to the principal amount of advances outstanding
        under this Agreement, and the remainder, if any, of such liquid assets
        shall be subject to the instructions of Borrower."

                (l)     Schedule 2 to the Credit Agreement is amended in full to
be in the form attached hereto as Schedule 2.

                (m)     A new Schedule 3 is added to the Credit Agreement to be
in the form attached hereto as Schedule 3.

<PAGE>

Staar Surgical Company
July 31, 2002
Page 5

                (n)     Exhibit A to the Credit Agreement is amended in full to
be in the form attached hereto as Exhibit A.

                (o)     Exhibit C to the Credit Agreement is amended in full to
be in the form attached hereto as Exhibit C.

        2.      Waiver of Events of Default under Credit Agreement. As of the
effective date of this letter amendment but subject to satisfaction of the terms
and conditions specified herein, the Bank hereby waives (subject, in the case of
clause (a) below, to the provisions of paragraph 5 hereof) the Events of Default
caused by the Borrower's violation of (a) the covenant contained in Section
4.3(a)(ii) of the Credit Agreement by failing to deliver a copy of a letter of
Borrower's accountants to the management of Borrower in connection with
Borrower's 2001 annual audited financial statements, (b) the covenant contained
in Section 4.9(c) of the Credit Agreement with respect to April, May, June and
July of 2002 and (c) the covenant contained in Section 4.9(e) of the Credit
Agreement with respect to April, May, June and July of 2002.

        3.      Representations and Warranties. The Borrower hereby represents
and warrants for the benefit of the Bank that (a) the representations and
warranties of the Borrower contained in the Loan Documents are correct in all
material respects on and as of the effective date of this letter amendment,
before and after giving effect to the same, as if made on and as of such date,
and (b) no event has occurred and is continuing, or would result from the
effectiveness of this letter amendment, that constitutes an Event of Default.

        4.      Conditions Precedent. This letter amendment shall become
effective as of the date first set forth above, subject to the condition
subsequent set forth in paragraph 5 below, when and if (a) the Borrower and the
Bank execute counterparts of this letter amendment and deliver them to each
other, (b) the Borrower executes a new Line of Credit Note substantially in the
form of Exhibit A to the Credit Agreement, as amended, and delivers it to the
Bank, (c) the Bank receives from the Borrower an amendment fee in the amount of
$11,250 (i.e., 0.25% of $4,500,000) and (d) the Borrower, the Bank and Wells
Fargo Brokerage Services, LLC execute counterparts of a letter substantially in
the form of Exhibit A attached hereto and deliver them to each other.

        5.      Condition Subsequent. The Borrower's delivery to the Bank, not
later than September 30, 2002, of a copy of the letter prepared by BDO Seidman
to the management of Borrower in connection with the Borrower's 2001 annual
audited financial statements shall be a condition subsequent to the
effectiveness of this letter amendment.

<PAGE>

Staar Surgical Company
July 31, 2002
Page 6

        6.      Release of Claims. The Borrower represents and warrants to the
Bank that it has diligently and thoroughly investigated the existence of any
Claim (as defined below) and that, to its knowledge and belief, no Claim exists
and no facts exist that could give rise to or support a Claim. As additional
consideration for the Bank's entering into this letter amendment, the Borrower
and each of its agents, employees, directors, officers, attorneys, affiliates,
subsidiaries, successors and assigns (each a "Releasing Party") hereby release
and forever discharge the Bank and each of its agents, direct and indirect
shareholders, employees, directors, officers, attorneys, branches, affiliates,
subsidiaries, successors and assigns (each a "Released Party") from any and all
damages, losses, claims, demands, liabilities, obligations, actions and causes
of action whatsoever (collectively "Claims") that the Releasing Parties or any
of them may, as of the effective date of this letter amendment, have or claim to
have against any or all of the Released Parties, in each case whether currently
known or unknown or with respect to which the facts are known (or should have
been known), that could give rise to or support a Claim on account of or in any
way relating to, arising out of or based upon any Loan Document, any amendment,
waiver or other modification with respect thereto, the negotiation or
documentation hereof or thereof, any of the transactions contemplated hereby or
thereby, or any action or omission in connection with any of the foregoing,
including all such damages, losses, claims, demands, liabilities, obligations,
actions and causes of action heretofore sustained or that may arise as a
consequence of the dealings between the parties up to the effective date of this
letter amendment in connection with or in any way related to any Loan Document
or any amendment, waiver or other modification with respect thereto. Each
Releasing Party further represents and warrants that it has not heretofore
assigned, and covenants and agrees that it will not hereafter sue any Released
Party upon, any Claim released or purported to be released under this section.
Each Releasing Party will indemnify and hold harmless the Released Parties
against any loss or liability on account of any actions brought by any Releasing
Party or its assigns or prosecuted on behalf of any Releasing Party and relating
to any Claim released or purported to be released under this section. It is
further understood and agreed that any and all rights under the provisions of
Section 1542 of the California Civil Code are expressly waived by each of the
Releasing Parties. Section 1542 of the California Civil Code provides as
follows:

        "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
        NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
        THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
        SETTLEMENT WITH THE DEBTOR."

        7.      Reference to and Effect on Loan Documents. On and after the
effective date of this letter amendment, (a) each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement," "thereunder,"

<PAGE>

Staar Surgical Company
July 31, 2002
Page 7

"thereof," "therein" or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement as amended by this letter
amendment, and (b) each reference in the other Loan Documents to "the Line of
Credit Note," "thereunder," "thereof," "therein" or words of like import
referring to the Line of Credit Note shall mean and be a reference to the new
Line of Credit Note executed by the Borrower in connection with this letter
amendment. The Credit Agreement, as amended by this letter amendment, is and
shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects.

        8.      Execution in Counterparts. This letter amendment may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same letter amendment.

        9.      GOVERNING LAW. THIS LETTER AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THEREOF.

                                             Very truly yours,

                                             WELLS FARGO BANK,
                                              NATIONAL ASSOCIATION

                                             By:   /s/ Edith R. Lim
                                                 ---------------------------
                                             Name:    Edith R. Lim
                                                   -------------------------
                                             Title:   Vice President
                                                    ------------------------

Agreed as of the date first written above:

STAAR SURGICAL COMPANY

By:        /s/ John Bily
    -----------------------------------
Name:         John Bily
      ---------------------------------
Title:   Chief Financial Officer
       --------------------------------

<PAGE>

               AMENDED AND RESTATED REVOLVING LINE OF CREDIT NOTE

$7,000,000.00                                               Monrovia, California
                                                                   July 31, 2002

        FOR VALUE RECEIVED, the undersigned, STAAR SURGICAL COMPANY, a Delaware
corporation ("Borrower"), promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association ("Bank"), at its office at
333 South Grand Avenue, Los Angeles, California 90071, or at such other place as
the holder hereof may designate, in lawful money of the United States of America
and in immediately available funds, the principal amount of seven million
dollars ($7,000,000.00), or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.

INTEREST:

        (a)     Interest. The outstanding principal balance of this Note shall
bear interest (computed on the basis of a 360-day year and actual days elapsed)
at a rate per annum equal at all times to the sum of the Prime Rate (as defined
in the Credit Agreement referred to below) in effect from time to time plus the
Applicable Interest Margin (as defined in the Credit Agreement).

        (b)     Payment of Interest. Interest accrued on this Note shall be
payable on the first business day of each calendar month, commencing on April 1,
2002.

        (c)     Default Interest. Upon the occurrence and during the
continuation of any Event of Default (as defined in the Credit Agreement
referred to below), the outstanding principal balance of this Note shall bear
interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year and actual days elapsed) equal to four percent (4%)
above the rate of interest from time to time otherwise applicable to this Note.

BORROWING AND REPAYMENT:

        (a)     Borrowing and Repayment. Borrower may from time to time during
the term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of the Amended and Restated Credit Agreement dated
as of March 29, 2002, as amended by a First Amendment to Amended and Restated
Credit Agreement dated as of July 31, 2002 (as it may be further amended,
restated or otherwise modified from time to time, the "Credit Agreement"),
between Borrower and Bank and any other document executed in connection with or
governing this Note; provided, however, that the total outstanding borrowings
under this Note shall not at any time exceed the principal amount stated above
(subject to reduction as provided in the Credit Agreement). The unpaid principal
balance of this Note at any time shall be the total

<PAGE>

Staar Surgical Company
July 31, 2002
Page 2

amount advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for Borrower, which balance may be endorsed hereon
from time to time by the holder. The outstanding principal balance of this Note
shall be due and payable in full on March 31, 2003.

        (b)     Advances. Advances hereunder, to the total amount of the
principal amount stated above (subject to reduction as provided in the Credit
Agreement), may be made by the holder at the oral or written request of (i)
those persons who are authorized from time to time by Borrower (as evidenced by
such documents as Bank may require) to request advances and direct the
disposition of any advances, until written notice of the revocation of such
authority is received by the holder at the office designated above, or (ii) any
person, with respect to advances deposited to the credit of any deposit account
of Borrower, which advances, when so deposited, shall be conclusively presumed
to have been made to or for the benefit of Borrower regardless of the fact that
persons other than those authorized to request advances may have authority to
draw against such account. The holder shall have no obligation to determine
whether any person requesting an advance is or has been authorized by Borrower.

        (c)     Application of Payments. Each payment made on this Note shall be
credited, first, to any interest then due and, second, to the outstanding
principal balance hereof.

CREDIT AGREEMENT:

        This Note is made pursuant to, and is subject to the terms and
conditions of, the Credit Agreement.

MISCELLANEOUS:

        (a)     Remedies. Upon the occurrence of any Event of Default, the
holder of this Note, at the holder's option, may declare all amounts of
principal and interest outstanding hereunder to be immediately due and payable,
without presentment, demand, notice of nonperformance, notice of protest,
protest or notice of dishonor, all of which are expressly waived by Borrower,
and the obligation, if any, of the holder to extend any further credit hereunder
shall immediately cease and terminate. Borrower shall pay to the holder,
immediately upon demand, the full amount of all payments, advances, charges,
costs and expenses, including, without limitation, reasonable attorneys' fees
(to include, without limitation, outside counsel fees and all allocated costs of
the holder's in-house counsel), expended or incurred by the holder in connection
with the enforcement of the holder's rights and/or the collection of any amounts
which become due to the holder under this Note, and the prosecution or defense
of any action in any way related to this Note, including, without limitation,
any action for declaratory relief, whether incurred at the trial or appellate
level, in an arbitration proceeding or otherwise, and including, without
limitation, any of the foregoing

                                       2

<PAGE>

Staar Surgical Company
July 31, 2002
Page 3

incurred in connection with any bankruptcy proceeding (including, without
limitation, any adversary proceeding, contested matter or motion brought by Bank
or any other person) relating to Borrower or any other person or entity.

        (b)     Obligations Joint and Several. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower shall
be joint and several.

        (c)     Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of California.

        (d)     Amendment and Restatement. This Note amends and restates the
Revolving Line of Credit Note dated March 29, 2002 made by Borrower in favor of
Bank.

        IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.

                                             STAAR SURGICAL COMPANY

                                             By:    /s/ John Bily
                                                 ---------------------------
                                             Name:     John Bily
                                                   -------------------------
                                             Title: Chief Financial Officer
                                                   -------------------------

                                       3

<PAGE>

                                                                       EXHIBIT A
                                                              TO FIRST AMENDMENT
                                        TO AMENDED AND RESTATED CREDIT AGREEMENT

                           RELEASE OF RESTRICTED FUNDS

<PAGE>

                                                                       EXHIBIT C
                                        TO AMENDED AND RESTATED CREDIT AGREEMENT

                             COMPLIANCE CERTIFICATE

<PAGE>

                                                                      SCHEDULE 2
                                        TO AMENDED AND RESTATED CREDIT AGREEMENT

                        MONTHLY AND QUARTERLY PROJECTIONS

<PAGE>

                                                                      SCHEDULE 3
                                        TO AMENDED AND RESTATED CREDIT AGREEMENT

                      MANDATORY REDUCTION OF LINE OF CREDIT

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.90
<SEQUENCE>11
<FILENAME>dex1090.txt
<DESCRIPTION>3RD AMEND. TO THE AMENDED & RESTATED CREDIT AGRMT DATED 11/25/02
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.90

                  [TO BE PLACED ON WELLS FARGO BANK LETTERHEAD]

November 25, 2002

Staar Surgical Company
1911 Walker Avenue
Monrovia, California 91016

Attention:  John Bily
            Chief Financial Officer

     Re:    Third Amendment to Amended and Restated Credit Agreement

Ladies and Gentlemen:

     We refer to the Amended and Restated Credit Agreement dated as of March 29,
2002, as amended by a First Amendment to Amended and Restated Credit Agreement
dated July 31, 2002 and a Second Amendment to Amended and Restated Credit
Agreement dated October 25, 2002 (said Agreement, as so amended, herein called
the "Credit Agreement") between Staar Surgical Company, a Delaware corporation
(the "Borrower"), and Wells Fargo Bank, National Association, a national banking
association (the "Bank"). Terms defined in the Credit Agreement and not
otherwise defined herein have the same meanings when used herein.

     1. Amendment to Credit Agreement. As of the effective date of this letter
amendment but subject to satisfaction of the terms and conditions specified
herein, Section 4.3(j) of the Credit Agreement is hereby restated in its
entirety as follows:

          "(j) not later than December 13, 2002, projections for fiscal year
     2003; and."

     2. Waiver of Events of Default under Credit Agreement. As of the effective
date of this letter amendment but subject to satisfaction of the terms and
conditions specified herein, the Bank hereby waives (a) the Event of Default
caused by the Borrower's violation of the covenant contained in Section 4.9(c)
of the Credit Agreement with respect to October of 2002 and (b) the Event of
Default expected to be caused by the Borrower's violation of the covenant
contained in Section 4.9(c) of the Credit Agreement with respect to November of
2002.

     3. Representations and Warranties. The Borrower hereby represents and
warrants for the benefit of the Bank that (a) the representations and warranties
of the Borrower contained in the Loan Documents are correct in all material
respects on and as of the effective

<PAGE>

date of this letter amendment, before and after giving effect to the same, as if
made on and as of such date, and (b) no event has occurred and is continuing, or
would result from the effectiveness of this letter amendment, that constitutes
an Event of Default. The Credit Agreement, as modified by this letter amendment,
is and shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects. Except as specifically provided herein, the
execution, delivery and effectiveness of this letter amendment shall not operate
as a waiver of any right, power or remedy of the Bank under any of the Loan
Documents or constitute a waiver of any provision of any of the Loan Documents.

     4. Conditions Precedent. This letter amendment shall become effective as of
the date first set forth above, when and if the Borrower and the Bank execute
counterparts of this letter amendment and deliver them to each other.

     5. Release of Claims. The Borrower represents and warrants to the Bank that
it has diligently and thoroughly investigated the existence of any Claim (as
defined below) and that, to its knowledge and belief, no Claim exists and no
facts exist that could give rise to or support a Claim. As additional
consideration for the Bank's entering into this letter amendment, the Borrower
and each of its agents, employees, directors, officers, attorneys, affiliates,
subsidiaries, successors and assigns (each a "Releasing Party") hereby release
and forever discharge the Bank and each of its agents, direct and indirect
shareholders, employees, directors, officers, attorneys, branches, affiliates,
subsidiaries, successors and assigns (each a "Released Party") from any and all
damages, losses, claims, demands, liabilities, obligations, actions and causes
of action whatsoever (collectively "Claims") that the Releasing Parties or any
of them may, as of the effective date of this letter amendment, have or claim to
have against any or all of the Released Parties, in each case whether currently
known or unknown or with respect to which the facts are known (or should have
been known), that could give rise to or support a Claim on account of or in any
way relating to, arising out of or based upon any Loan Document, any amendment,
waiver or other modification with respect thereto, the negotiation or
documentation hereof or thereof, any of the transactions contemplated hereby or
thereby, or any action or omission in connection with any of the foregoing,
including all such damages, losses, claims, demands, liabilities, obligations,
actions and causes of action heretofore sustained or that may arise as a
consequence of the dealings between the parties up to the effective date of this
letter amendment in connection with or in any way related to any Loan Document
or any amendment, waiver or other modification with respect thereto. Each
Releasing Party further represents and warrants that it has not heretofore
assigned, and covenants and agrees that it will not hereafter sue any Released
Party upon, any Claim released or purported to be released under this section.
Each Releasing Party will indemnify and hold harmless the Released Parties
against any loss or liability on account of any actions brought by any Releasing
Party or its assigns or prosecuted on behalf of any Releasing Party and relating
to any Claim released or purported to be released under this section. It is
further understood and agreed that any and all rights under the provisions of
Section 1542 of the California Civil Code are expressly waived by each of the
Releasing Parties. Section 1542 of the California Civil Code provides as
follows:

     "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
     KNOW OR SUSPECT TO EXIST IN HIS

<PAGE>

     FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
     MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

     6. Reference to and Effect on Loan Documents. On and after the effective
date of this letter amendment, (a) each reference in the Credit Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement," "thereunder," "thereof," "therein" or words
of like import referring to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended by this letter amendment, and (b) each
reference in the other Loan Documents to "the Line of Credit Note,"
"thereunder," "thereof," "therein" or words of like import referring to the Line
of Credit Note shall mean and be a reference to the new Line of Credit Note
executed by the Borrower in connection with this letter amendment. The Credit
Agreement, as amended by this letter amendment, is and shall continue to be in
full force and effect and is hereby ratified and confirmed in all respects.

     7. Execution in Counterparts. This letter amendment may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which counterparts shall be an original and all of which taken together shall
constitute one and the same letter amendment.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

<PAGE>

     8. GOVERNING LAW. THIS LETTER AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THEREOF.

                                           Very truly yours,

                                           WELLS FARGO BANK,
                                            NATIONAL ASSOCIATION

                                           By:      /s/ Edith R. Lim
                                               ---------------------------------
                                           Name:        Edith R. Lim
                                                 -------------------------------
                                           Title:      Vice President
                                                 -------------------------------



Agreed as of the date first written above:

STAAR SURGICAL COMPANY


By:       /s/ John Bily
    ---------------------------------
Name:         John Bily
      -------------------------------
Title:   Chief Financial Officer
       ------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.91
<SEQUENCE>12
<FILENAME>dex1091.txt
<DESCRIPTION>ASSIGNMENT AGREEMENT DATED 1/3/03
<TEXT>
<PAGE>

                                                                   Exhibit 10.91


  English Translated Summary of Purchase Agreement for Domilens share capital
                           effective January 3, 2003

                   Negotiated in Pinneberg on January 22, 2003

The undersigned individual parties personally known and appearing before me,
Axel Mallick, Notary Public, having a principal place of business in Pinneberg,
Germany having requested notarizing of the following agreement:

        1.      Herr Guenther Roepstorff, born August 05, 1945, Merchant,
        residence of Achtern Felln 20, 25474 Hasloh, Germany.

        2.      Herr Dr. Volker D. Anhaeusser, born August 28, 1955, Attorney at
        Law, principle place of business Kriegsstr. 85, 76133 Karlsruhe,
        Germany, acting as trustee for STAAR Surgical AG, Hauptstr. 104,
        2560 Nidau, Switzerland.

                 AGREEMENT OF THE ASSIGNMENT OF SHARE CAPITAL OF
                DOMILENS VERTRIEB FUER MEDIZINISCHE PRODUKTE GmbH
                  PRINCIPAL PLACE OF BUSINESS HAMBURG, GERMANY

PREAMBLE

We are the sole and only shareholders of Domilens Vertrieb fuer medizinische
Produkte GmbH, registered at the Court of Registration of the Municipal Court of
Hamburg, Germany, under section B register number 38182. The share capital is
Deutsche Mark 1.0 million par value.

Guenther Roepstorff holds in ownership one share capital in the amount of
Deutsche Mark 200,000 par value. Volker D. Anhaeusser holds in ownership in his
capacity as trustee of STAAR Surgical AG, Nidau, Switzerland two separate units
of share capital, one in the amount of Deutsche Mark 600,000 and one in the
amount of the Deutsche Mark 200,000 par value.

Guenther Roepstorff owes to the company by January 03, 2003 (euro) 989,145.62,
as defined in Exhibit 1 to this Agreement. The debt and accrued interest is over
due.

On the other hand, Domilens owes to Guenther Roepstorff the payout of bonus
payments for the years 2001 and 2002 in the amount of (euro) 38,858.18 (2001)
and approx. (euro) 51,700 (2002), totaling (euro) 90,558.18. The parties hereby
agree that Mr. Roepstorff offset his before mentioned claims against Domilens
GmbH against the debts he owes to Domilens. By executing the offset agreement,
Guenther Roepstorff's debts are considered to be reduced by this amount.

Guenther Roepstorff has decided to sell his interest in Domilens to fulfill his
financial obligations towards the Company. The parties are aware that Mr.
Roepstorff will not be able to sell his minority interest in the Company of only
20 per cent on the free market, therefore Dr. Volker D. Anhaeusser, acting in
his capacity as trustee of STAAR Surgical AG, Switzerland, has decided to accept
the offer of Mr. Roepstorff to sell his remaining 20 per cent interest in
DOMILENS GmbH on behalf of STAAR Surgical AG.

                                      - 1-

<PAGE>


I.      ASSIGNMENT OF SHARE CAPITAL BY GUENTHER ROEPSTORFF

GUENTHER ROEPSTORFF hereby assigns his share capital in the amount of Deutsche
Mark 200.000 par value to VOLKER D. ANHAEUSSER.

VOLKER D. ANHAEUSSER accepts the assignment in his capacity as the trustee of
STAAR Surgical AG.

According to Section 6 of the bylaws of the Company the assignment of share
capital or parts hereof requires prior consent of the majority of the
shareholders (the total share capital of the Company).

The assignment of the share capital is considered to be executed by January 03,
2003.

GUENTHER ROEPSTORFF and VOLKER D. ANHAEUSSER are the only shareholders of the
Company. They hereby agree and confirm by signing this agreement prior consent
of all shareholders for the assignment of the share capital.

GUENTHER ROEPSTORFF in his capacity as the managing director of Domilens GmbH
acknowledges on behalf of the Company by signing this agreement that he has been
notified about the purchase and transfer of the share capital in the amount of
Deutsche Mark 200,000 par value through assignment by and to VOLKER D.
ANHAEUSSER.

II.     PURCHASE AGREEMENT

Mr. Guenther Roepstorff, thereafter called the Seller, sells his share capital
of par value DM 200,000, including all appertaining rights to future profits and
other ancillary rights effective as of January 03, 2003.

The economic transitional key date is January 03, 2002.

PURCHASE PRICE

The purchase price is (euro) 900.000. The parties have agreed and determined
that the before mentioned purchase price is a fair and reasonable price for the
minority interest of only 20% in Domilens. They estimated the value of the
company under respect of the financial performance of the Company in the fiscal
years 2000, 2001 and 2002. The valuation of this company has been approved by an
independent CPA that determined the value of a unit of 20 % to be at least the
before mentioned price. The valuation of the Company has been made under respect
of the criteria shown in the valuation memo, attached as Exhibit 2 of this
agreement.

The Buyer in his capacity as the trustee for STAAR AG will grant an exemption
from all debts due to the Company that are set forth in Exhibit 1 of this
agreement. The parties assume and take into consideration that Mr. Roepstorff
can immediately offset his bonus payment claims against the claims of Domilens
GmbH against him so he has to pay back debts in the amount of (euro) 898,587.44.
Therefore the Buyer has actually to exempt Guenther Roepstorff from debts due in
the amount of (euro) 898,587.44 under respect of the offset as described in
Exhibit 2.

                                     - 2 -

<PAGE>

In addition the seller Guenther Roepstorff has agreed to surrender all STAAR
Surgical stock options that were granted to him by STAAR SURGICAL Inc.,
Monrovia, CA. Guenther Roepstorff has received 75,000 stock options. He has
received 50,000 options at a strike price of US$11.25, expiring on July 2, 2005
and 25,000 options at a strike price of US$10.63 expiring on June 15, 2009.
Instead of transferring ownership to the Buyer, Dr. Volker D. Anhaeusser in his
capacity as trustee for STAAR Surgical AG, Nidau, CH, the Buyer, instructs
Guenther Roepstorff to directly surrender said stock options to the issuer STAAR
Surgical Inc., Monrovia, CA, USA upon the signing of this agreement. The
clearing and offset agreement is set forth in Exhibit 2 of this agreement.

Except what the parties have otherwise agreed to in this agreement, there will
be no obligation to contribute cash payments from the Buyer to the Seller. As
set forth above it is mandatory that the purchase price will be performed by the
Buyer paying off the debts due to the Company that are shown in Exhibit 1 of
this agreement. STAAR AG will fulfill the seller's debts that are due to the
Company and set forth in Exhibit 1 to this agreement.

This clearing agreement is mutually regarded as made on account of performance.

WARRANTIES AND REPRESENTATIONS OF THE SELLER

The Seller represents and warrants as follows:

(1)     The nominal share capital has been paid completely. The Seller did not
take any action that could be qualified as a repayment of share capital.  The
share capital is not encumbered with any rights of a third party.

(2)     The annual financial statements for 2000 and 2001 are set up completely
in accordance with all applicable (international) accounting standards. The
continuity of the balance is by all means preserved and guaranteed. Such
financial statements reflect the actual and true financial conditions, the
current financial situation of the company as well as the profit situation.

Depreciation, devaluations, valuation adjustments as well as reserves,
especially for taxes, have been made in a sufficient amount.

(3)     The Seller has not entered into any agreement between him and the
company, including but not limited to such agreements that affect the
shareholder situation, except for the employment agreement as the managing
director of the Company.

The Seller also confirms that he did not conclude or enter into any agreements
such as co-operation agreements and joint venture agreements with third
parties, unless such agreements have explicitly been reported to and agreed by
the buyer.

(4)     There are no letters of support in favor of any third party.

(5)     There are no pending business matters where exceptional and particular
risks may occur. The seller guarantees that he has no knowledge and also is not
aware of any circumstances that might conceal the risk of affecting the
intrinsic value or the earnings power of the Company permanently.

                                     - 3 -

<PAGE>

(6)     To cover the performance of all financial obligations towards third
parties sufficient accrued reserves have been set aside. Therefore is secured,
that the reserves are sufficient to cover the performance of the existing and
the to be expected obligations of the Company.

(7)     The Company is not involved of in any lawsuit or legal dispute. The
Seller guarantees that the Company will not be involved in any future lawsuit or
legal dispute.

(8)     All existing tax obligations are completely paid off.

III.    THE EMPLOYMENT AGREEMENT OF THE SELLER AS THE MANAGING DIRECTOR OF THE
        COMPANY

The current employment agreement of the Seller will basically be continued at
the same financial conditions, however some of the terms and conditions that are
important to the Buyer will be changed, as shown in Exhibit 3 attached to this
agreement.

It was important and essential to the Buyer for the determination of the
purchase price that also in the future a trustworthy cooperation between the
parties of this agreement and the Company be secured. In particular, the Seller
guarantees unreservedly that he does accept the policy of the current
management, that generally and in principal no loans will be contributed to
executives and the Board. Therefore, the Seller agrees personally as well as in
his capacity as managing director of DOMILENS GmbH that in case he breaches this
provision he will have to pay back immediately any and all moneys he may have
taken from the accounts of the Company to the Company, and in addition he has to
pay to STAAR Surgical AG as a penalty 50% of the moneys he may have taken
unilaterally from the Company. The Seller is aware and agrees that taking any
kind of money from the Company would also be a cause to immediately terminate
his employment agreement. It was also equally important to the Buyer and
accepted from the Seller that in the event the relationship between the Company
and the Seller comes to an end an adequate successor as managing director will
be available. Therefore the Seller guarantees that he will inform the
shareholder immediately if he has decided to resign as managing director of the
Company. In addition, he agrees that in all cases of termination as well as in
case of his stepping back as managing director of the Company as well as if he
will be removed from the managing board of the Company he will train his
successor(s) ahead of time of the termination of his relationship as a managing
director of the Company. Such terms already have been subject of the previous
agreements with which the buyer bought the first units of the share capital from
the Seller and third party. To emphasize the importance of this term, the
parties have included this term as a reminder of this already existing
obligation. For clarification, the parties of this agreement confirm that they
have no intention of changing the content of the previous before mentioned
agreement in the sense to limit the existing rights of the buyer. The current
agreement shall by all means have no influence on any previous agreement.

IV.     NON-COMPETITION AGREEMENT

(1)     The Seller will neither directly nor indirectly compete with the Buyer,
the Company (Domilens Vertrieb fuer medizinische Produkte GmbH, Hamburg,
Germany) or any legal entity that is connected to the Company or the cestui que
trust (a person for whom another is trustee) or its shareholder (STAAR Surgical
AG, Nidau, Switzerland; STAAR Surgical Inc., Monrovia, CA, USA) for a period of
ten years from the date of this agreement. The obligation not to compete is
limited to such business purposes that are pursued by any of the before
mentioned Companies.

                                     - 4 -

<PAGE>

(2)     The parties of this agreement unanimously agree, that the restrictions
to compete as set forth in the Non-Competition Agreement were essential for the
Buyer to enter into this agreement. In addition, the parties agree that the
non-competition agreement was also an essential factor for the assessment of the
purchase price.

V.      COSTS AND EXPENSES

The costs for the notarizing this agreement will be solely covered by the
Seller. Costs relating to the valuation of the Company will be borne by the
Seller and the beneficiary Buyer, on an equal basis. All other costs, such as
attorney's fees, will be born by each party.

VI.     PURCHASE THROUGH A TRUSTEE

(1)     Both parties are aware and agree that the share capital of the seller
will be purchased by Dr. Volker D. Anhaeusser, a Director of STAAR Surgical
Inc., Monrovia, CA, U.S.A. resident of Karlsruhe, Germany, in his capacity as
trustee of STAAR Surgical AG, Nidau, Switzerland.

(2)     The parties furthermore agree, although the purchase agreement is
concluded between the trustee and the seller, to treat each other in the same
way as if STAAR Surgical AG, Nidau, Switzerland, would be the direct contractual
partner.

VII.    JURISDICTION AND GOVERNING LAW

All disputes arising out of or in connection with this Agreement, as well as
from all existing or futures side - and additional agreements, including any
question regarding its existence, validity or termination shall be finally
settled by a court of arbitration, ruling through three (3) arbitrators. The
parties have entered into an arbitration Agreement in a separate document.

This agreement shall be construed and interpreted as in accordance with the law
of Germany. The application of the UN Convention on Contracts for the
International Sale of Goods of April 11, 1980 shall be excluded.

VIII.   LIMITATION OF ACTIONS

The parties agree a uniform limitation period of four years for all claims
resulting from the contractual relationship between the parties of this
agreement.

IX.     WRITTEN FORM

Changes and any complementing to this agreement require written form in order to
be legally effective. Written form is also mandatory if the parties intend to
change the written form clause.

X.      ESCAPE CLAUSE

(1)     If any of the provisions of this Agreement are or become legally
unenforceable, as well as any and all changes and any and all supplements of
this Agreement that shall be made in the

                                     - 5 -

<PAGE>

future might become legally unenforceable and/or null and void shall not affect
the validity of the remainder of the provisions of this Agreement. The same rule
applies if the agreement has a gap in the provisions.

(2)     Rather any such unenforceable and/or invalid provision shall be replaced
by a legally valid provision that reflects the economic effect of the invalid
provision as much as possible.

(3)     The same rule also applies if a provision is unenforceable or invalid
based on a measure of performance or the time (deadline) specified in the
Agreement. In this case, the legally permissible measure of performance or time
(deadline) is regarded to be implied as the valid provision.

(4)     The parties are obliged to formally agree in writing to a modified or
supplemented provision that is in accordance with the before mentioned section 1
to 3 of this clause.

(5)     The validity of this purchase agreement is subject of board approval of
the Board of the buyer's Company

The foregoing has been read to and approved by the parties present.

This document signed by the parties of the agreement as well as by the notary
public as follows:


By:    /s/ Guenther Roepstorff       By:    /s/ Volker D. Anhaeusser
    ------------------------------       ------------------------------
         Guenther Roepstorff                  Volker D. Anhaeusser
          Achtern Felln 20                  Director, STAAR Surgical
            25474 Hasloh                          Company AG


By:       /s/ Axel Mallick
    ------------------------------
            Axel Mallick
             Pinneberg

                                     - 6 -

<PAGE>

754/97
                                              Nr. 174 der Urkundenrolle fur 2003

                               V e r h a n d e l t

                                  zu Pinneberg

                              am 11. Dezember 2001

                         Vor mir, dem amtierenden Notar

                               AXEL M A L L I C K

                          mit dem Amtssitz in Pinneberg

erschien heute, von Person bekannt:

1.      Herr Gunther Roepstorff, geboren am 05.08.1945
        wohnhaft: Achtern Felln 20, 25474 Hasloh

        handelnd fur sich und aufgrund nachzureichender Genehmigung zugleich
        fur:

2.      Herrn Dr. Volker D. Anhausser, geboren am 28.08.1955, Rechtsanwalt,
        geschaftsansassig: Kriegsstrabe 85, 76133 Karlsruhe,
        dieser handelnd fur sich selbst, jedoch in Ansehung seiner
        Treuhandstellung fur die STAAR Surgical AG, Hauptstr. 104,2560 Nidau,
        Schweiz.

        Die Erschienenen baten den Notar um Beurkundung des nachstehenden

        Vertrages uber die Abtretung und den Erwerb eines Geschaftsanteils
                                       der
                Domilens Vertrieb fur medizinische Produkte GmbH
                             mit dem Sitz in Hamburg

<PAGE>

                                   -Seite 2-

                                    PRAAMBEL

Wir sind die alleinigen Gesellschafter der im Handelsregister des Amtsgerichts
Hamburg in Abteilung B unter der Nummer 38 182 eingetragenen Domilens Vertrieb
fur medizinische Produkte GmbH. Das Stammkapital der Gesellschaft betragt DM
1.000.000.

Der Erschienene zu 1 ist mit einer Stammeinlage von DM 200.000 und der
Erschienene zu 2 mit zwei Stammeinlagen von DM 600.000 und DM 200.000 beteiligt.

Der Erschienene Ziffer 1 schuldet der Gesellschaft zum Stichtag 31.10.2002 einen
Betrag in Hohe von (euro) 989,145.62. Die Einzelbetrage, die diese Schuldsumme
ergeben sich aus der

                                   -ANLAGE 1-

zu dieser Vereinbarung.

Die vorgenannte Schuldsumme einschlieblich der aufgelaufenen Schuldzinsen
ist schon langst zur Zahlung fallig.

Andererseits schuldet Domilens Gunther Roepstorff die Auszahlung der Tantieme
fur die Jahre 2001 und 2002 in Hohe von (euro) 38,858.18 (2001) und etwa (euro)
51.700,00 (2002). Dies ergibt in Summe (euro) 95.558,18. Die Parteien sind sich
daruber einig, dass Herr Gunther Roepstorff mit den vorgenannten Anspruchen
gegen Anspruche der Domilens gegen ihn aus Darlehen in der genannten Hohe von
Euro 95.558,18 die Aufrechnung erklart. Mit der wirksam erklarten Aufrechnung
erloschen demgemass die Darlehensanspruche der Domilens GmbH in dieser Hohe.


Der Erschienene zu 1 ist jedoch nicht in der Lage, seinen
Zahlungsverpflichtungen gegenuber der Gesellschaft nachzukommen.

Er hat sich deshalb entschlossen, um seine Zahlungsverpflichtungen gegenuber der
Gesellschaft erfullen zu konnen, den von ihm gehaltenen Geschaftsanteil an der
vorgenannten Gesellschaft an den Erschienen Ziffer 2, der als Treuhander fur die
STAAR Surgical AG, Nidau, Schweiz, handelt, zu verkaufen. Die Parteien sind sich
daruber im klaren, dass Herr Roepstorff seinen Minderheits-Geschaftsanteil von
nur 20 % auf dem freien Markt nicht verkaufen kann, selbst wenn der andere
Gesellschafter, Dr. Anhausser, einem Verkauf an einen Dritten zustimmen wurde.
Dr. Anhausser hat zwar - in seiner Eigenschaft als Treuhander der STAAR Surgical
AG - grundsatzliches Interesse gezeigt, den Geschaftsanteil zu erwerben, jedoch
wollte er zum gegenwartigen Zeitpunkt einem Erwerb nicht naher treten. Auf der
anderen Seite hat Herr Roepstorff ein starkes Interesse zum Ausdruck gebracht,
seine finanziellen Verhaltnisse jetzt so schnell als moglich zu bereinigen. In
Anbetracht der Tatsache, dass Herr Roepstorff das Unternehmen hinsichtlich des
Verkaufs gut gefuhrt hat, hat Herr Dr. Anhausser in seiner Eigenschaft als
Treuhander der STAAR Surgical AG seinen Willen zum Ausdruck gebracht, dass er
Herrn Roepstorff so gut als moglich unterstutzen will.

<PAGE>

                                   -Seite 3-

Herr Dr. Anhausser hat sich deshalb in seiner Eigenschaft als Treuhander der
STAAR Surgical AG entschlossen, das Angebot von Herrn Roepstorff, den ihm
verbliebenen Geschaftsanteil von 20 % des Stammkapitals zu kaufen anzunehmen.

                                       I.
           ABTRETUNG DES GESCHAFTSANTEILS DURCH DEN ERSCHIENENEN ZU 1

Der Erschienene zu 1 tritt seinen Geschaftsanteil im Nennbetrag von DM 200.000
hiermit an den Erschienenen zu 2 ab.

Der Erschienene zu 2 nimmt diese Abtretung an. Er handelt auch insoweit als
Treuhander der STAAR Surgical AG, Nidau, Schweiz.

Nach Section 6 Abs. 1 der Satzung der Gesellschaft bedarf die Abtretung von
Geschaftsanteilen oder Teilen hiervon der vorherigen schriftlichen Einwilligung
der Mehrheit der Kapitalanteile.

Die Abtretung des Geschaftsanteils erfolgt mit Wirkung zum 03. Januar 2003.

Die Erschienenen sind die alleinigen Gesellschafter der Gesellschaft. Sie
erteilen durch Unterzeichnung dieser Urkunde die Einwilligung zur Abtretung des
vorgenannten Geschaftsanteils an den Erschienenen zu 2.

Der Erschienene zu 1, Gunther Roepstorff , nimmt in seiner Eigenschaft als
Geschaftsfuhrer der Domilens GmbH fur die Gesellschaft von dem Ubergang bzw. der
Abtretung des Geschaftsanteils in Hohe von DM 200.000 Kenntnis und erklart mit
Unterzeichnung der vorliegenden Urkunde zugleich, dass ihm hierdurch der Erwerb
des Geschaftsanteils durch den Erschienenen zu 2, Dr. Volker D. Anhausser, unter
Nachweis des Ubergangs angemeldet worden ist.

Der amtierende Notar wird ermachtigt, von dieser Verhandlung teilweise, nur
diese Abtretung enthaltende Ausfertigungen und beglaubigte Ablichtungen zu
erteilen.

                                       II.
                                   KAUFVERTRAG

Herr Gunther Roepstorff, nachfolgend Verkaufer genannt, verkauft Herrn Dr.
Volker D. Anhausser, nachfolgend Kaufer genannt, seinen Geschaftsanteil im
Nennbetrag von DM 200.000 mit allen dazugehorenden Gewinnanspruchen und
sonstigen Nebenrechten mit Wirkung zum 03.01.2003.

<PAGE>

                                   -Seite 4-

Wirtschaftlicher Ubergangsstichtag fur den im vorstehenden Absatz bezeichneten
Geschaftsanteil ist der 03.01.2003.

                                   KAUFPREIS

Der Kaufpreis betragt (euro) 900.000. Die Parteien sind sich daruber einig und
haben bestimmt, dass der genannte Kaufpreis ein fairer und angemessener Preis
fur die Minderheitsanteile von 20 % an der Domilens ist. Diese Bewertung wurde
unter Berucksichtigung der finanziellen Performance der Gesellschaft in den
Jahren 2000, 2001 und 2002 bestimmt. Diese Bewertung der Gesellschaftsanteile
wurde auch von einem unabhangigen Wirtschaftsprufer bestatigt. Er hielt diesen
Preis als Mindestpreis fur diesen 20 %igen Geschaftsanteil fur gerechtfertigt.
Die Bewertung der Gesellschaftsanteile wurde anhand der Kriterien vorgenommen,
die aus dem Bewertungsgutachten ersichtlich sind, das diesem Vertrag als

                                    ANLAGE 2

beigeschlossen ist.

Der Kaufer, der Erschienene zu 2, der als Treuhander fur die STAAR AG, Nidau,
Schweiz, handelt, verpflichtet sich als Treuhander fur die STAAR AG, Nidau,
Schweiz, dafur Sorge zu tragen, dass die STAAR AG, Nidau den Verkaufer, den
Erschienen Ziff. 1, Gunter Roepstorff, von den in Anlage 1 bezeichneten
Verbindlichkeiten in der sich daraus ergebenden Hohe freizustellen. Die Parteien
nehmen an und haben in Betracht gezogen und berucksichtigt, dass die Domilens
GmbH bzw. Gunther Roepstorff sofort mit den Anspruchen des Gunther Roepstorff
auf Tantiemezahlung gegen die Anspruche der Domilens GmbH aus Darlehen aufrechen
kann. Nach erfolgter Aufrechnung verbleiben daher noch Verbindlichkeiten des
Herrn Roepstorff gegenuber der Domilens GmbH in Hohe von Euro 898,587.44. Der
Kaufer muss demgemass Gunther Roepstorff von Verbindlichkeiten in Hohe von
(euro) Euro 898,587.44 44 freistellen.

Der Verkaufer hat zusatzlich zugestimmt, alle ihm von der STAAR Surgical Inc.
ubergebenen Aktienoptionen dieser Gesellschaft an STAAR Surgical zuruckzugeben.
Hierum wurde er vom Kaufer, der als Treuhander der STAAR Surgical AG handelt,
gebeten. Dem Verkaufer wurden 75.000 Stuck Optionen gewahrt. Dies waren 50.000
Optionen zu einem Ausubungspreis von US$ 11.25, die bis zum 2. Juli 2005
ausgeubt werden mussen. Auberdem 25.000 Optionen zu einem Ausubungspreis
von US$ 10.63, die bis zum 15. Juni 2009 ausgeubt werden konnen. Diese werden
von ihm im Zeitpunkt der Unterzeichnung dieser Vereinbarung an die Herausgeberin
der Optionen zuruckgegeben.

<PAGE>

                                   -Seite 5-

Die Verrechnungsvereinbarung ist im einzelnen in der

                                    ANLAGE 3

zu dieser Vereinbarung geregelt.

Soweit die Parteien nichts anderes vereinbart haben muss der Kaufer an den
Verkaufer keine Geldzahlungen leisten. Wie oben geregelt ist es zwingend, dass
der Kaufpreis vom Kaufer dadurch geleistet wird, dass er die Schulden des
Verkaufers, dies sich aus der Anlage 1 ergeben, gegenuber der Gesellschaft
Domilens GmbH tilgt. Die Tilgungsleistungen werden anstelle vom Kaufer
ausschlieblich von der STAAR Surgical AG erbracht, da der Kaufer
ausschlieblich als Treuhander dieser Gesellschaft handelt. Demgemass
erfullt nur die STAAR Surgical AG die Schulden des Verkaufers gegenuber der
Domilens GmbH, soweit sie sich aus der Anlage 1 zu dieser Vereinbarung ergeben.

Der Vereinbarung erfolgt in allseitiger Zustimmung erfullungshalber.

                               VERKAUFERGARANTIEN

Der Verkaufer gewahrleistet dem Kaufer was folgt:

(1)
Das Stammkapital ist voll eingezahlt. Ruckzahlungen aus dem zur Erhaltung des
Stammkapitals erforderlichen Vermogen sind nicht erfolgt. Die Geschaftsanteile
sind nicht mit Rechten Dritter belastet.

(2)
Die Jahresabschlusse 2000 und 2001 sind nach den Grundsatzen der
ordnungsgemaben Buchfuhrung und unter Wahrung der Bilanzkontinuitat
erstellt. Sie geben die tatsachlichen Verhaltnisse des Unternehmens hinsichtlich
Vermogens- Finanz- und Ertragslage wieder. Abschreibungen, Abwertungen, soweit
vorgenommen, Wertberichtigungen und Ruckstellungen, insbesondere fur Steuern,
wurden in ausreichender Hohe vorgenommen.

(3)
Der Verkaufer hat uber den Anstellungsvertrag als Geschaftsfuhrer hinaus keine
Vertrage zwischen ihm und der Gesellschaft abgeschlossen, auch nicht solche, die
das Gesellschaftsverhaltnis beruhren.

Ebenso wenig wurden seit dem ersten Anteilserwerb des Kaufers keine Vertrage
uber Kooperationen bzw. Joint Venture - Vertrage u.a. abgeschlossen uber die der
Kaufer nicht ausdrucklich hingewiesen worden ist.

<PAGE>

                                   -Seite 6-

(4)
Patronatserklarungen zugunsten Dritter gibt es nicht.

(5)
Es schweben keine Geschafte, die mit aubergewohnlichen Risiken behaftet
sind. Dem Verkaufer sind auch keine sonstigen Umstande bekannt, die die Gefahr
einer nachhaltigen Beeintrachtigung des Substanzwertes oder der Ertragsfahigkeit
der Gesellschaft in sich bergen.

(6)
Soweit die Gesellschaft Verbindlichkeiten gegenuber Dritten hat, wurden fur
diese Verbindlichkeiten Ruckstellungen in ausreichender Hohe gebildet, so dass
sicher ist, dass die Ruckstellungen ausreichen, um letztendlich die vorhandenen
und zu erwartenden Verbindlichkeiten auszugleichen.

(7)
Die Gesellschaft ist weder an einem Rechtsstreit oder Verwaltungsverfahren
beteiligt noch droht ein Rechtsstreit oder ein Verwaltungsverfahren.

(8)
Alle bekannten Steuerverbindlichkeiten sind vollstandig bezahlt.

                                      III.
                   GESCHAFTSFUHRERDIENSTVERTRAG DES VERKAUFERS

Der derzeitige Dienstvertrag des Verkaufers wird im Wesentlichen zu gleichen
finanziellen Bedingungen fortgesetzt, jedoch in seiner Ausgestaltung im ubrigen,
wie aus der

                                   -ANLAGE 4-

ersichtlich geandert.

Fur den Kaufentschluss der Kauferin und fur die Bemessung des Kaufpreises war es
von erheblicher Bedeutung und auch wesentlich, dass die kunftige vertrauensvolle
Zusammenarbeit mit dem Verkaufer auch zukunftig gesichert ist. Insbesondere
garantiert der Verkaufer uneingeschrankt und bedingungslos die Geschaftspolitik
des derzeitigen Managements der US amerikanischen Muttergesellschaft der STAAR
Surgical AG, Nidau, CH, der STAAR Surgical Inc., Monrovia, CA, USA, wonach
generell und im besonderen den leitenden Mitarbeitern des Konzerns sowie den
Mitgliedern der jeweiligen Board of Directors keine Darlehen gewahrt werden.
Daher verpflichtet sich der Verkaufer personlich und in seiner Eigenschaft als
Geschaftsfuhrer der DOMILENS GmbH, dass er im Falle eines Verstobes gegen
dieses Prinzip der Geschaftspolitik den dadurch erlangten Betrag sofort an die
DOMILENS GmbH zuruckzuzahlen hat. Zusatzlich verpflichtet er sich fur jeden Fall
der Zuwiderhandlung zur Zahlung einer Vertragsstrafe an die STAAR Surgical AG in
Hohe von 50 % des unberechtigt genommenen Geldes.

<PAGE>

                                   -Seite 7-

Der Verkaufer ist sich daruber im Klaren, dass ein solcher VerstoB
gleichzeitig auch fristloser Kundigungsgrund hinsichtlich des
Geschaftsfuhrerdienstvertrages ist. Es ist fur den Kaufer gleichsam wichtig und
deshalb Geschaftsgrundlage dieser Vereinbarung, dass die
Geschaftsfuhrernachfolge gesichert wird und im Zeitpunkt seines Ausscheidens ein
adaquater Nachfolger zur Verfugung steht. Aufgrund letzterem wird vom Verkaufer
zugesichert, dass er seines Absicht, aus dem Unternehmen auszuscheiden so
rechtzeitig bekannt gibt, dass ein geeigneter Nachfolger gesucht werden kann.
Zusatzlich verpflichtet er sich, in allen Fallen der Beendigung der
Vertragsbeziehung einschlieblich im Falle seines Rucktritts, seinen
Nachfolger einzuarbeiten. Dies gilt auch im Falle der Beendigung der
Vertragsbeziehung aus wichtigem Grund.
Solche Bedingungen waren schon Gegenstand der fruheren Vereinbarung, mit der der
Kaufer vom Verkaufer und einem Dritten die ubrigen (ersten) Geschaftsanteile an
der Domilens GmbH erworben hatte. Um die Wichtigkeit dieser Vertragsklausel in
besonderer Weise zu betonen, haben die Parteien diese Vertragsklausel auch an
dieser Stelle noch einmal in das Vertragswerk aufgenommen, um dadurch noch
einmal ausdrucklich auf die insoweit schon bestehende Verpflichtung des
Verkaufers hinzuweisen. Die Parteien bestatigen hierdurch zur Klarstellung noch
einmal ausdrucklich, dass keine Absicht besteht, mit der vorliegenden
Vereinbarung die alte Vereinbarung in irgend einer Weise inhaltlich zu
verschlechtern. Die heutige Vereinbarung hat daher keinerlei Einfluss auf
irgendeine fruhere Vereinbarung.

                                       IV.
                               WETTBEWERBSREGELUNG

(1)
Der Verkaufer wird weder unmittelbar noch mittelbar mit dem Kaufer, der
Gesellschaft (Domilens Vertrieb fur Medizinische Produkte GmbH, Hamburg) oder
einem mit einem von diesen verbundenen Unternehmen ( STAAR Surgical AG, Nidau,
Schweiz, STAAR Surgical Inc., Monrovia, CA, USA) fur die Dauer von 10 Jahren vom
Tag des Vertragsschlusses an gerechnet in Wettbewerb treten. Dieses
Wettbewerbsverbot beschrankt sich auf den Tatigkeitsbereich der Gesellschaft.

(2)
Zwischen den Parteien besteht Einigkeit daruber, dass die wettbewerblichen
Restriktionen eine wesentliche Uberlegung fur den Kaufer waren, diesen Vertrag
abzuschlieben. Daruber hinaus besteht Einigkeit daruber, dass dieser
Umstand fur die Bemessung der Kaufpreises von erheblicher Bedeutung war.

                                       V.
                                 VERTRAGSKOSTEN

Die Notarkosten fur die Beurkundung dieses Vertrages tragen die Beteiligten je
zur Halfte. Die Kosten fur die Bewertung der Gesellschaft werden von dem
Verkaufer getragen. Alle anderen Kosten, wie z.B. ihre Beratungskosten, behalt
jede Partei auf sich.

<PAGE>

                                   -Seite 8-

                                       VI.
                             ERWERB DURCH TREUHANDER

(1)
Beide Parteien sind sich daruber einig, dass die Geschaftsanteile durch Herrn
Dr. Volker D. Anhausser, Karlsruhe als Treuhander fur die STAAR Surgical AG,
Nidau, Schweiz, erworben werden.

(2)
Es besteht weiter Einigkeit daruber, dass sich die Vertragspartner auch wenn der
Kauf durch den Treuhander erfolgt, sie sich wechselseitig so behandeln, als ware
die STAAR Surgical AG, Nidau, Schweiz der unmittelbare Vertragspartner.

                                      VII.
                          GERICHTSSTAND UND RECHTSWAHL

Alle Streitigkeiten aus und in Verbindung mit diesem Vertragsverhaltnis sowie
aus allen gegenwartigen und zukunftigen Neben- und Zusatzvereinbarungen
einschlieblich solcher Fragestellungen, die die Existenz, die
Werthaltigkeit sowie die Beendigung der Domilens Gesellschaft betreffen werden
abschliebend durch ein Schiedsgericht entschieden, das durch drei Richter
entscheidet. Die Parteien haben zu diesem Zweck in separater Urkunde eine
Schiedsgerichtsvereinbarung geschlossen. Uber samtliche Rechtsstreitigkeiten aus
diesem Vertrag und aus samtlichen bestehenden und zukunftigen Neben- und
Zusatzvereinbarungen entscheidet unter Ausschluss des ordentlichen Rechtsweges
ein Schiedsgericht nach Mabgabe des in gesonderter Urkunde abgeschlossenen
Schiedsvertrages.

Diese Vereinbarung unterliegt dem Recht der Bundesrepublik Deutschland. Die UN
Convention uber den internationalen Warenkauf vom 11. April 1980 findet
vorliegend keine Anwendung.

                                      VIII.
                                   VERJAHRUNG

Die Parteien vereinbaren eine einheitliche Verjahrungsfrist von 4 Jahren fur
alle Anspruche aus dem vorliegenden Vertragsverhaltnis.

                                       IX.
                                   SCHRIFTFORM

Anderungen und Erganzungen dieses Vertrages bedurfen der Schriftform, soweit
nicht von Gesetzes wegen notarielle Form erforderlich ist. Dies gilt auch fur
eine Abanderung dieser Schriftformklausel. Die Schriftformklausel soll nicht
formlos, insbesondere nicht mundlich abbedungen werden konnen.

<PAGE>

                                   -Seite 9-

                                       X.
                              SALVATORISCHE KLAUSEL

(1)
Sollten Bestimmungen dieses Vertrags oder eine kunftig in ihn aufgenommene
Bestimmung ganz oder teilweise nicht rechtswirksam oder nicht durchfuhrbar sein
oder ihre Rechtswirksamkeit oder Durchfuhrbarkeit spater verlieren, so soll
hierdurch die Gultigkeit der ubrigen Bestimmungen nicht beruhrt werden. Das
gleiche gilt, soweit sich herausstellen sollte, dass der Vertrag eine
Regelungslucke enthalt.

(2)
Anstelle der unwirksamen oder undurchfuhrbaren Bestimmung oder zur Ausfullung
der Lucke soll eine angemessene Regelung gelten, die, soweit rechtlich moglich,
dem am nachsten kommt, was die Parteien gewollt haben, oder nach Sinn und Zweck
des Vertrags gewollt haben wurden, sofern sie bei Abschluss des Vertrags oder
bei spaterer Aufnahme einer Bestimmung den Punkt bedacht hatten.


(3)
Das gleiche gilt auch, wenn die Unwirksamkeit einer Bestimmung etwa auf einem,
in dem Vertrag vorgeschriebenen MaB der Leistung oder Zeit (Frist oder
Termin) beruht; es soll dann ein dem gewollten moglichst nahekommendes rechtlich
zulassiges Mab der Leistung oder Zeit (Frist oder Termin) gelten.

(4)
Die Parteien sind verpflichtet, dasjenige, was nach Abs. 1 - 3 Geltung hat,
durch eine formliche Anderung oder Erganzung des Wortlauts des Vertrags in
gehoriger Form festzuhalten.

Das Vorstehende wurde den Erschienenen vom Notar vorgelesen und von ihnen
genehmigt. Diese Niederschrift wurde von den Erschienenen und dem Notar
eigenhandig wie folgt unterzeichnet:

                         gez. Roepstorff
                L.S.     gez. Mallick, Notar

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.92
<SEQUENCE>13
<FILENAME>dex1092.txt
<DESCRIPTION>CREDIT AGREEMENT DATED 1/13/03
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.92

                       English Translation and Summary of
        Credit Agreement between Postbank and Domilens Gmbh date 1/13/03

Terms of Current Account Credit Line

Domilens and Postbank agree to the following:

1) Maximum Credit Line: EUR 210,000.

2) Credit costs: The actual interest rate is 8.5% per annum. The interest rate
can be adjusted.

3) Termination/Duration of the contract
The credit line is due November 30, 2003

4) Special agreement
During the duration of this agreement, Domilens needs to provide to the Postbank
quarterly results. Domilens will not payout, throughout the entire term of this
Credit Line Agreement, any retained earnings in the amount of EUR 2,746,639 (as
per balance sheet of December 31, 2001).

5) Securities
The credit facility is personally guaranteed by the President of the German
Subsidiary.

6) ...

7) ....

8) Costs...

9) Governing Law

<PAGE>

Deutsche Postbank AG                                          [LOGO OF POSTBANK]
-nachstehend die Postbank genannt-

Kontokorrentkredit                               Konto Nr.: 0174.022.202
                                                 Ort, Datum: Hamburg, 19.12.2002

DOMILENS Vertrieb fur medizinische Produkte GmbH
Holsteiner Chaussee 303a

22457 Hamburg

-nachstehend der Kreditnehmer genannt - schliesst/schliessen mit der
Postbank folgenden Vertrag uber einen Kredit in laufender Rechnung

bis zum Hochstbetrage von 210.000, - EUR
1    Krediteinraumung
Der Kredit wird in genannter Hohe auf Girokonto Nr. 0174.022.202 zur Verfugung
gestellt/1/.

2    Kreditkosten
Fur die jeweils in Anspruch genommene Kreditvaluta sind die von der Postbank fur
Kredite dieser Art jeweils festgesetzen Zins- und Provisionssatze zu zahlen.
Anderungen der Satze werden dem Kreditnehmer mitgeteilt.

Der Zinssatz betragt zur Zeit 8,50 v. H. pro Jahr.

Sowelt der zugesagte Kredit nicht in Anspruch genommen ist, wird als Entgelt fur
die Bereithaltung der gesamten Kreditvaluta eine Kreditprovision von - v.H. pro
Jahr berechnet/2/
Daneben werden erhoben/2/
--

Zu jedem Rechnungsabschluss werden die bis dahin angefallenen Kreditkosten
belastet. Wird dadurch der eingeraumte Kredit uberschritten, so berechnet die
Postbank fur den uberzogenen Betrag-wie bei jeder Kredituberschreltung.-

[X]  die fur Uberziehungen jeweils festgesetzten UBERZIEHUNGSZINSEN, zur Zeit
15,00 v.H. pro Jahr.

[ ]  neben den o.g. Kreditkosten die bei ihr fur Uberziehungen jeweils
festgesetzte UBERZIEHUNGSPROVISION, zur Zeit  v.H. pro Jahr.
Der Kreditnehmer verpflichtet sich, die Uberziehung jeweils umgehend
auszugleichen.

3    Laufzeit Kundigung
Die Krediteinraumung erfolgt unbefristet, soweit nachfolgend keine Befristung
gesondert vereinbart ist.

[X]  Die Krediteinraumung ist bis 30.11.2003 befristet.
      Fur die Kundigung gilt. Nr. 18 der Allgemeinen Geschaftsbedingungen der
Postbank.

4    Besondere Vereinbarungen
Wahrend der Laufzeit dieses Kreditvertrag stellt der Kreditnehmer der Postbank
unaufgefordert regelmassig aktuelle Zwischenzahlen (Betriebswirtschaftliche
Auswertung mit Summen- uns Saldenliste), und zwar jeweils per 30.3., 30.06.,
30.09., 30.12. eines jeden Jahres, zur Verfugung. Es gilt als vereinbart, das
wahrend der Laufzeit dieses Kreditvertrags die im Jahresabschluss 2001 unter der
Position "Bilanzgewinn" ausgewiesenen Betrage in Hohe von Insgesamt EUR
2,746,639.25 nicht ausgeschuttet werden und im Unternehmen verbleiben. Zu dem in
der durch den Gesellschafter Gunther Roepstorff in der Selbstauskunft vom
01.09.2002 angegebenen Immobilienvermogen ist uns ein aktueller vollstandiger
Grundbuchauszug nachzureichen.

5    Sicherheiten
Der Kredit kann erst in Anspruch genommen werden, wenn alle Voraussetzungen
dafur erfullt sind, dass die vereinbarten Sicherheiten der Postbank zur
Verfugung stehen und der Postbank hieruber ggf. eine Bestatigung vorliegt. Der
Kreditnehmer stellt der Postbank - unbeschadet der Haftung etwa bereits
bestehender oder kunftiger Sicherheiten im Rahmen ihres Sicherungszwecks - in
besonderen Vertragen folgende Sicherheiten: - Stellung einer
selbstschuldnerischen Mochstbetragsburgschaft in Hohe von EUR 210.000,00 durch
den Gesellschafter Gunther Roepstorff.

<PAGE>

6    Mehrere Kreditnehmer

Mehrere Kreditnehmer haften fur die Verbindlichkeiten aus diesem Vertrag als
Gesamtschuldner. Wird die Postbank von einem Kreditnehmer befriedigt, so pruft
sie nicht, ob diesem Anspruche auf von ihr nicht mehr benotigte Sicherheiten
zustehen. Sie wird solche Sicherheiten grundsatzlich an den Sicherungsgeber
zuruckgeben, soweit der leistende Kreditnehmer nicht nachweist, dass die
Zustimmung des Sicherungsgebers zur Herausgabe an ihn Vorliegt.

7    Offenlegungs- und Auskunftspflicht

Der Kreditnehmer hat der Postbank oder einer von ihr beauftragten Stelle wahrend
der gesamten Laufzeit dieses Kredites jederzeit, mindestens einmal jahrlich,
Einblick in die aktuellen wirtschaftlichen Verhaltnisse zu gewahren, durch
Ubergabe aussagefahiger Unterlagen (z. B. Bilanzen/Jahresabschlusse,
Einkommensteuerbescheide und -erklarungen, Vermogensubersichten usw.), jede
gewunschte Auskunft zu erteilen und die Besichtigung seines Betriebes zu
ermoglichen. Die Postbank ist auch aufgrund gesetzlicher Vorgaben (Section 18
KWG) verpflichtet sich die wirtschaftlichen Verhaltnisse des Kreditnehmers
offenlegen zu lassen.

Die Postbank kann die dafur erforderlichen Unterlagen direkt bei den Beratern
des Kreditnehmers in Buchfuhrungs- und Steuerangelegenheiten nach Rucksprache
mit dem Kreditnehmer anfordern. Soweit die genannten Unterlagen auf Datentrager
gespeichert sind, ist der Kreditnehmer verpflichtet, diese in angemessener Frist
lesbar zu machen.

Fur den Fall, dass der Kreditnehmer diese Verpflichtungen nicht erfullt, ist die
Postbank berechtigt, das Kreditverhaltnis zur sofortigen Ruckzahlung zu
kundigen.

Die Postbank ist berechtigt, jederzeit die offentlichen Register sowie das
Grundbuch und die Grundakten einzusehen und auf Rechnung des Kreditnehmers
einfache oder beglaubigte Abschriften und Auszuge zu beantragen, ebenso
Auskunfte bei Versicherungen, Behorden und sonstigen Stellen, insbesondere
Kreditinstituten, einzuholen, die sie zur Beurteilung des Kreditverhaltnisses
fur erforderlich halten darf.

8    Kosten des Vertrages

Alle durch den Abschluss und Vollzug dieses Vertrages einschliesslich
der Sicherheitenbestellung entstehenden Kosten tragt der Kreditnehmer.

9    Gerichtsstand

Soweit sich die Zustandigkeit des allgemeinen Gerichtsstandes der Postbank nicht
bereits aus Section 29 ZPO ergibt, kann die Postbank ihre Anspruche im Klageweg
an ihrem allgemeinen Gerichtsstand verfolgen, wenn der im Klageweg in Anspruch
zu nehmende Kreditnehmer Kaufmann oder eine juristische Person im Sinne der Nr.
6 AGB ist oder bei Vertragsabschluss keinen allgemeinen Gerichtsstand im
inland hat oder spater seinen Wohnsitz oder gewohnlichen Aufenthaltsort aus der
Bundesrepublik Deutschland verlegt oder sein Wohnsitz oder gewohnlicher
Aufenthaltsort im Zietpunkt der Klageerhebung nicht bekannt ist.

10   Allgemeine Geschaftsbedingungen

Erganzend gelten die Allgemeinen Geschaftsbedingungen der Deutschen Postbank AG.
Der Wortlaut der AGB kann in den Geschaftsstellen der Deutschen Postbank AG
eingesehen werden. Der Kunde kann auch die Zusendung der AGB verlangen.

Der Vertrag und die Durchschrift sind von allen auf der Vorderseite genannten
Kreditnehmern zu unterschreiben!

Ort. Datum       (falls abweichend von Seite 1)
Hamburg 13.01.03

Legitimation

[X]  1. Pers. bek. und bereits legitimiert bei Konto _________ Ausgewiesen durch
     [ ] Personalausweis [ ] Reisepass Nr. _______ ausgestellt von __________

[ ]  2. Pers. bek. und bereits legitimiert bei Konto _________ Ausgewiesen durch
     [ ] Personalausweis [ ] Reisepass Nr. _______ ausgestellt von __________

[ILLEGIBLE]

Firma and Unterschrift(en) der Kreditnehmer

Der/Die Kreditnehemer handelt/handeln fur eigene Rechnung:

[X] Ja.    [ ] Nein

/s/ G. Roepstorff

Domilens GmbH

Fur die Postbank:

[ILLEGIBLE] /s/
        13.01.03

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.93
<SEQUENCE>14
<FILENAME>dex1093.txt
<DESCRIPTION>SETTLEMENT AGREEMENT & MUTUAL GENERAL RELEASE DATED 2/27/03
<TEXT>
<PAGE>


                                                                   EXHIBIT 10.93

                 SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

         This Settlement Agreement and Mutual General Release ("Settlement
Agreement") is made effective the 27th day of February 2003, by and between
Richard Leza ("Leza") and STAAR Surgical Company ("Staar").

                                    RECITALS

         A.       There is pending, in the Superior Court of California for the
Los Angeles County Superior Court, an action entitled Richard Leza v. Staar
Surgical Company, et al., filed under Case No. BC257159 in which, among other
things, Leza alleges that Staar acted wrongfully in connection with Leza's
employment at Staar (the "Action"); and

         B.       Leza and Staar desire to settle all disputes that exist
between them, including, but not limited to those related to the Action.

                                    AGREEMENT

         WHEREFORE, in full settlement and satisfaction of all of the claims and
potential claims of Leza and Staar against each other, whether relating to the
Action or otherwise, for valuable consideration, including the promises as set
forth below, Leza and Staar (collectively "the Parties") agree as follows:

         1.       Payment by Staar to Leza.  Staar shall pay Leza and his
counsel of record, Lafayette & Kumagai LLP, as jointly directed by them, the
total amount of $180,000 as follows:

                  a.       $15,000 by March 4, 2003, with $10,000 paid to Leza
                           and $5,000 paid to Lafayette & Kumagai LLP;

                  b.       $15,000 by March 15, 2003, with $10,000 paid to Leza
                           and $5,000 paid to Lafayette & Kumagai LLP;

                                     1 of 15

<PAGE>


                  c.       $10,000 a month by the first of each month for 15
                           months commencing April 1, 2003 and concluding June
                           1, 2004, with $5,000 paid each month to Leza and
                           $5,000 paid each month to Lafayette & Kumagai LLP;

                  d.       All payments to Leza will be made to "AI Research
                           Corporation" and will be directly deposited into
                           Wells Fargo Account #0072-025729, and all payments to
                           Lafayette & Kumagai LLP will be mailed to its offices
                           at 100 Spear Street, Suite 400, San Francisco, CA
                           94105.

                  e.       In the event that any payment is not made within 5
                           days of the date it is due, that payment shall bear
                           simple interest at the rate of 5% per annum until
                           paid.

                  f.       In the event Staar fails to make any payment due
                           within 59 days of the date it is due, Leza may apply
                           for and have judgment entered against Staar in the
                           amount of all remaining unpaid amounts under this
                           paragraph 1, which Staar expressly waives its right
                           to dispute.

         2.       Consulting Agreement and Stock Options. Leza and Staar agree
to enter into a consulting agreement in the form attached hereto as Exhibit A,
which is incorporated herein by reference and made a part of this Agreement. In
consideration for Leza's agreement to provide services as a consultant in
investor relations under the terms of the attached consulting agreement, Staar
shall immediately issue Leza an unrestricted option certificate expiring
February 1, 2005 to purchase 75,000 shares of Staar common stock at $3.50, which
option shall vest immediately upon execution of this Settlement Agreement and
may be

                                     2 of 15

<PAGE>

exercised by Leza, subject to the subparagraphs below, by taking the option
certificate to any brokerage firm and exercising his option in a cashless
action:

                  a.       If Leza exercises any portion of his stock option
                           prior to February 1, 2004, Staar shall have no
                           further obligations to Leza under this paragraph 2.

                  b.       If the "Target Date," which is defined as the first
                           date that the NASDAQ closing price for Staar common
                           stock is $6.17 or higher, occurs on or before
                           February 1, 2004, and Leza has not exercised any
                           portion of his stock option, as of the Target Date,
                           Staar shall have no further obligations to Leza under
                           this paragraph 2, other than to allow Leza to
                           exercise his option if he so chooses prior to its
                           expiration.

                  c.       If the Target Date does not occur on or before
                           February 1, 2004, and Leza has not exercised any
                           portion of his stock option, Staar shall execute no
                           later than February 5, 2004 a promissory note in
                           favor of Leza in the amount of $200,000 principal,
                           with no interest to accrue thereon, and in the form
                           attached hereto as Exhibit B, which is incorporated
                           herein by reference and made a part of this
                           Agreement. The promissory note will be payable
                           commencing February 1, 2005 in monthly payments of at
                           least $10,000 for up to five months, with any balance
                           remaining to be paid the following month, subject to
                           subparagraphs (d) and (e), below.

                  d.       If the Target Date occurs after February 1, 2004 and
                           before February 1, 2005, and Staar has not exercised
                           its rights under subparagraph (e),

                                     3 of 15

<PAGE>

                           below, Staar shall be deemed to have paid the
                           promissory note in full and Staar shall have no
                           further obligations to Leza under this paragraph 2,
                           other than to allow Leza to exercise his option if he
                           so chooses prior to its expiration;

                  e.       At any time after February 1, 2004 and before
                           February 1, 2005, Staar, upon giving Leza 48 hours
                           written notice, may elect to effect a "virtual
                           exercise" of Leza's option, and the net amounts that
                           would have been realized by Leza if he had exercised
                           his option at the NASDAQ closing price for Staar
                           common stock at the end of that 48-hour notice period
                           shall be deducted from the $200,000 principal due
                           under the promissory note, and Staar shall pay Leza
                           the balance due in monthly payments of at least
                           $10,000 for up to five months, with any balance
                           remaining to be paid the following month, commencing
                           the first day of the first month after Staar elects
                           the "virtual exercise." Notwithstanding Staar's
                           election of a "virtual exercise," Leza retains the
                           right to actually exercise his option if he so
                           chooses prior to its expiration.

                  g.       In the event that any installment under the
                           promissory note is not paid within 15 days of the
                           date it is due, the whole of the principal shall
                           become immediately due without notice or demand,
                           together with all interest that has accrued, and Leza
                           may apply for and have judgment entered against Staar
                           in the amount of all remaining unpaid amounts under
                           the note, which Staar expressly waives its right to
                           dispute.

                                     4 of 15

<PAGE>

         3.       Loan Forgiveness. Staar shall issue Leza a Form 1099
reflecting the forgiveness in calendar year 2003 of the principal and interest
due on Staar's earlier $120,000 loan to him. Staar shall further hand deliver to
Leza an original, signed and notarized Reconveyance of the Deed of Trust to the
real property commonly known as 2090 Liliano Drive, Sierra Madre, California,
which Deed of Trust Staar holds as security for the $120,000 loan to Leza. The
Reconveyance of the Deed of Trust shall be in a form suitable for recording in
the Los Angeles County Recorders Office.

         4.       Dismissal of Action With Prejudice. Leza's counsel shall
immediately dismiss the Action with prejudice.

         5.       Continuing Jurisdiction of Court in Action. The Parties agree
that the Court in the Action shall retain jurisdiction to enforce the terms of
this Settlement Agreement pursuant to California Code of Civil Procedure section
664.6.

         6.       General Release of All Claims by Leza and Staar.

                  a.       Leza and Staar, for themselves and on behalf of their
                           respective present and former agents, employees,
                           employers, officers and directors, corporations
                           (including, but not limited to, professional
                           corporations), parent and subsidiary corporations,
                           partners, joint venturers, heirs, spouses, children,
                           relatives, issue, estates, beneficiaries,
                           representatives, executors, administrators, current
                           attorneys, trustors, trustees, insurers,
                           predecessors, successors and assigns, and each of
                           them, and all those claiming by, through, under or in
                           concert with them or any of them (collectively
                           "Releasing Parties"), hereby absolutely, forever and
                           fully, generally and specifically, release and
                           discharge the other and their

                                     5 of 15

<PAGE>

                           respective present and former agents, employees,
                           employers, officers and directors, corporations
                           (including, but not limited to, professional
                           corporations), parent and subsidiary corporations,
                           partners, joint venturers, heirs, spouses, children,
                           relatives, issue, estates, beneficiaries,
                           representatives, executors, administrators, current
                           attorneys (excluding Pollet & Richardson and Pollet,
                           Richardson & Patel), trustors, trustees, insurers,
                           predecessors, successors and assigns, and each of
                           them, and all those claiming by, through, under or in
                           concert with them or any of them (collectively the
                           "Released Parties"), from any and all claims,
                           contentions, rights, debts, liabilities, demands,
                           accounts, reckonings, obligations, duties, promises,
                           costs, expenses (including, but not limited to,
                           attorneys' fees), liens, subrogation rights,
                           indemnification rights, damages, losses, actions, and
                           causes of action, of any kind whatsoever whether
                           asserted by way of affirmative claims or causes of
                           action, affirmative defenses, offset or otherwise in
                           any proceeding whatsoever whether due or owing in the
                           past, present or future and whether based upon
                           contract, tort, statute or any other legal or
                           equitable theory of recovery, and whether known or
                           unknown, suspected or unsuspected, fixed or
                           contingent, matured or unmatured, with respect to,
                           pertaining to, or arising from any matters, acts,
                           omissions, events, conduct or occurrences at any time
                           prior to the date of this Settlement Agreement,
                           including, without limiting the generality of the
                           foregoing provisions, any and all causes of action or
                           claims referred to

                                     6 of 15

<PAGE>

                           or based upon the facts alleged in the Action and any
                           affirmative defenses or claims of offset based
                           thereon.

                  b.       Notwithstanding anything in subparagraph a, above,
                           the Parties do not release Pollet & Richardson, or
                           Pollet, Richardson & Patel or any individual attorney
                           associated therewith, in any regard whatsoever.

         7.       Waiver of Civil Code Section 1542. The Parties and each of
them, hereby waive any and all rights or benefits which any of them may have
under Section 1542 of the Civil Code of the State of California, providing that:

                  "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
                  CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
                  TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         The Parties, and each of them, hereby represent and warrant, and each
of them, that they understand the effect of this waiver of said Civil Code
section and that they are represented and have been advised in this General
Release by an attorney licensed to practice law in the State of California.

         8.       Release of Unknown Claims. The Parties, and each of them,
acknowledge that they, or any of them, may hereafter discover Claims and/or
facts now unknown or unsuspected, or in addition to, or different from, those
which the Parties now know or believe to be true with respect to this Settlement
Agreement. Nevertheless, the Parties, and each of them, intend by this
Settlement Agreement to release fully, finally, and forever all claims

                                     7 of 15

<PAGE>

released hereby. Accordingly, this Settlement Agreement shall remain in full
force as a complete release of such claims notwithstanding the discovery or
existence of any such additional or different claims and/or facts before or
after the date of this Settlement Agreement.

         9.       Representations and Warranty by Releasing Parties. The
Parties, and each of them, represent and warrant, that they (a) are the lawful
owners of everything released hereunder, (b) have all necessary power and
authority to make such release, including any necessary consent or approval from
any person or Board of Directors and including the absence of any duty or
obligation that would prevent, or be put in breach or default by, such release,
and (c) have not heretofore transferred or attempted to transfer all or any part
of any such thing released in any manner whatsoever, including by way of
subrogation or operation of law. The Parties, and each of them, shall indemnify
and hold each of the other Parties harmless with respect to any liability, cost,
expense, or claim with respect to, pertaining to, or arising from any assertion
of any such obligation or transfer or lack of such power or authority including,
but not limited to, reasonable attorneys' fees and costs. The Parties, and each
of them, represent and warrant further to each other, that this Settlement
Agreement is executed voluntarily, and without duress or undue influence on the
part of or on behalf of the Parties, or any other person or entity whatsoever.

         10.      Representations and Warranties of Each Party. Each Party
hereto represents and warrants to the other that he or it has the full power and
authority to execute, deliver and perform under this Settlement Agreement and
all documents referred to herein, and that any needed consent or approval from
any other person has been obtained, including, but not limited to, valid
corporate franchise and approval of the board of directors for any corporate

                                     8 of 15

<PAGE>

party, and including the absence of any duty or obligation that would prevent,
or be put in breach or default by, such execution, delivery or performance; and
each Party shall indemnify and hold the other Party or Parties harmless with
respect to any and all liability, cost, expense (including reasonable attorneys'
fees), or claim with respect to, pertaining to, or arising from any assertion of
any such obligation or lack of such power or authority.

         11.      Compromise of Disputed Claim; No Admissions. This Agreement
constitutes a compromise and settlement of claims which are denied and contested
and nothing in this Settlement Agreement or any document referred to herein, nor
any act (including, but not limited to, the execution of this Settlement
Agreement and/or in the consideration for this Settlement Agreement) of any
Party hereto, nor any transaction occurring between any Parties hereto prior to
the date hereof, is or shall be treated, construed or deemed as an admission by
any Party hereto of any liability, fault, responsibility, or guilt of any kind
to any other Party hereto or to any person, as to any allegation or claim in the
various actions or otherwise, for any purpose whatsoever, all such liability,
fault, responsibility and guilt of any kind being expressly denied.

         12.      Binding Effect. The settlement, and this Settlement Agreement
and all documents referred to herein, shall bind and inure to the benefit of
each of the Parties hereto and the Released Parties and their respective
successors in interest. This Settlement Agreement is not for the benefit of any
person not a Party hereto or specifically identified as a beneficiary herein or
specifically identified herein as a person or entity released hereby, and is not
intended to constitute a third party beneficiary contract.

         13.      Final Integrated Agreement. This Settlement Agreement and the
documents referred to herein constitute the entire, final and binding
understanding between the Parties

                                     9 of 15

<PAGE>

hereto; that no other statement or representation, written or oral, express or
implied, has been received or relied upon in the settlement, and that all prior
discussions, statements and negotiations made or which have occurred prior to
the date of the Settlement Agreement shall be deemed merged into this Settlement
Agreement and the documents referred to herein, and shall not be used for any
other purpose whatsoever.

         14.      Understanding of Agreement. Each Party hereto understands and
agrees to the terms and conditions contained in this Settlement Agreement and in
the documents referred to herein, and has relied upon his, her or its own
judgment, belief, knowledge, understanding and expertise after careful
consultation with his, her or its own legal counsel concerning the legal effect
of the settlement and all of the terms of this Settlement Agreement.

         15.      Voluntary Settlement. Each Party hereto enters into the
settlement, this Settlement Agreement and the documents referred to herein,
knowingly and voluntarily, in the total absence of any fraud, mistake, duress,
coercion, or undue influence and after careful thought and reflection upon the
settlement, this Settlement Agreement and the documents referred to herein; and
accordingly, by signing this document and the documents referred to herein, each
signifies full understanding, agreement and acceptance.

         16.      Investigation of Facts. Each Party hereto has investigated the
facts pertaining to the settlement and the Settlement Agreement and all matters
pertaining thereto as deemed necessary by each. Each Party hereto fully assumes
the risk that the investigation they have conducted, if any, relating to all
matters herein may be inadequate in that the facts with respect to which this
Settlement Agreement is executed may hereafter be found to be different from the
facts which such Party now believes to be true. Each Party assumes the risk of
such

                                    10 of 15

<PAGE>

possible differences of facts and hereby agrees that this Settlement Agreement
shall remain in effect notwithstanding such difference of fact.

         17.      No Additional Representations. Except as may be set forth in
this Settlement Agreement, no statement or representation, written or oral,
express or implied, has been made to the Parties by any of the other Parties, or
any of their respective agents, representatives, employees, attorneys or any
other person regarding any matter, including, but not limited to, the federal or
state income tax consequences of the Settlement Agreement to any Party. Each of
the Parties expressly acknowledges and agrees that each shall be responsible for
their own taxes arising out of this Settlement Agreement and that each has
relied solely upon the advice of their own attorneys and/or accountants as to
the tax consequences of the Settlement Agreement.

         18.      No Other Actions. The Parties have not commenced or prosecuted
and will not commence or prosecute any other action or proceeding for recovery
of damages or for any form of equitable relief, declaratory relief or any other
form of action or proceeding or arbitration against any Party or other person
based upon the claims released in this Settlement Agreement, including, but not
limited to, the claims that are the subject of the Action or any other action.
This Settlement Agreement shall constitute a judicial bar to the institution of
any such action or proceeding or any assignment thereof.

         19.      Ambiguities or Uncertainties. The settlement, this Settlement
Agreement and the documents referred to herein, and any ambiguities or
uncertainties herein or therein, shall be equally and fairly interpreted and
construed without reference to the identity of the Party or Parties preparing
this document or the documents referred to herein, on the express understanding
and agreement that the Parties participated equally in the negotiation and

                                    11 of 15

<PAGE>

preparation of the Settlement Agreement and the documents referred to herein, or
have had equal opportunity to do so. Accordingly, the Parties hereby waive the
benefit of California Civil Code Section 1654 and any successor or amended
statute, providing that in cases of uncertainty, language of a contract should
be interpreted most strongly against the Party who caused the uncertainty to
exist.

         20.      Survival of Executory Provisions. Any and all executory
provision under this Settlement Agreement and the documents referred to herein
shall survive the consummation of this Settlement Agreement and shall continue
in full force and effect until fully performed and satisfied.

         21.      Attorneys' Fees and Costs. Each Party hereto shall bear his,
her or its own attorneys' fees and costs.

         22.      Confidentiality. Leza represents and warrants that he will not
discuss the terms of this Settlement Agreement or the negotiations leading
thereto with anyone (with the exception of his parents, attorneys, financial
advisors, including CPA, and fiance/spouse) and that he will not make public or
disclose to anyone in any manner the terms of this Settlement Agreement or the
negotiations leading thereto unless required to do so by law. To the extent the
existence or terms of this Settlement Agreement must be disclosed to the
individuals set forth above, Leza will advise them of, and they shall be bound
by, this Confidentiality provision.

         23.      California Law. The settlement, this Settlement Agreement, and
the documents referred to herein, shall be governed by and construed and
interpreted in accordance with, the laws of the State of California. In the
language of this document and the documents referred to herein, the singular and
plural numbers, and the masculine, feminine and neutral genders,

                                    12 of 15

<PAGE>

shall each be deemed to include all others, and the word "person" shall be
deemed to include corporations and every other entity, as the context may
require.

         24.      Severability. In the event that any provision of this
Settlement Agreement should be held to be void, voidable or unenforceable, the
remaining portions hereof shall remain in full force and effect.

         25.      Waiver, Modification and Amendment. No breach of this
Settlement Agreement or of any provision herein can be waived except by an
express written waiver executed by the Party waiving such breach. Wavier of any
one breach shall not be deemed a waiver of any other breach of the same or other
provisions of this Settlement Agreement. The Settlement Agreement may be
amended, altered, modified or otherwise changed in any respect or particular
only by new consideration and a writing duly executed by the Parties hereto or
their authorized representatives.

         26.      Effective Date/Additional Documents. This Settlement Agreement
shall be effective as of the date first above written. The Parties shall execute
any additional documents reasonably necessary to effectuate the intent and
purposes of this Settlement Agreement.

         27.      Notices. All notices under this Settlement Agreement shall be
in writing and shall be deemed effective on the date of delivery if delivered
personally (and a receipt obtained therefor), or on the third calendar day after
mailing if mailed by first class mail, registered or certified, postage prepaid;
and shall be addressed as follows, or as may be amended by a communication
delivered pursuant to this paragraph 23):

         To Leza:                   Richard Leza
                                    2090 Liliano Drive
                                    Sierra Madre, CA 91024

                                    13 of 15

<PAGE>

         With a copy to:            Gary T. Lafayette, Esq.
                                    Lafayette & Kumagai LLP
                                    100 Spear Street, Suite 400
                                    San Francisco, CA 94105
                                    Telephone: (415) 357-4600

         To Staar:                  Diann H. Kim, Esq.
                                    Winston & Strawn
                                    333 So. Grand Avenue, 38th Floor
                                    Los Angeles, CA 90071-1543
                                    Telephone: (213) 615-1700

         With a copy to:            David Bailey, President
                                    STAAR Surgical Company
                                    1991 Walker Avenue
                                    Monrovia, CA  91016

         28.      Captions. Section, paragraph and other captions or headings
contained in this Settlement Agreement are inserted as a matter of convenience
and for reference, and in no way define, limit, extend or otherwise describe the
scope or intent of this Settlement Agreement or any provision hereof and shall
not affect in any way the meaning or interpretation of this Settlement
Agreement.

         29.      Execution in Several Counterparts. This Settlement Agreement
may be executed in several counterparts and as so executed, shall constitute one
agreement binding on all the Parties, notwithstanding that all the Parties are
not signatories to the original or same counterparts.

         IN WITNESS WHEREOF, the Parties to this Settlement Agreement execute
this Settlement Agreement as of the day and year first above written.

DATE:  February     28     , 2003
               ------------
                                            /s/ Richard Leza
                                          -------------------------
                                          Richard Leza

                                    14 of 15

<PAGE>

DATE:  February     28     , 2003
               ------------
                                            /s/ David Baily
                                          -------------------------
                                          David Bailey, Chief Executive Officer,
                                          on behalf of Staar Surgical Company

APPROVED AS TO FORM AND CONTENT:

LAFAYETTE & KUMAGAI LLP

By:  /s/ Eric DeWalt
   ---------------------------------
         Eric DeWalt, Esq.
         Attorney for Richard Leza

WINSTON & STRAWN

By:  /s/ Diann H. Kim
   ---------------------------------
         Diann H. Kim, Esq.
         Attorney for Staar Surgical Company

                                    15 of 15

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.94
<SEQUENCE>15
<FILENAME>dex1094.txt
<DESCRIPTION>WAIVER OF CERTAIN COVENANT VIOLATIONS DATED 2/27/03
<TEXT>
<PAGE>


                                                                   EXHIBIT 10.94

                                February 27, 2003

Staar Surgical Company
1911 Walker Avenue
Monrovia, California 91016

Attention:        John Bily
                  Chief Financial Officer

        Re:       Waiver of Certain Covenants

Ladies and Gentlemen:

         We refer to the Amended and Restated Credit Agreement dated as of March
29, 2002 (as amended to date, the "Credit Agreement") between Staar Surgical
Company, a Delaware corporation (the "Borrower"), and Wells Fargo Bank, National
Association, a national banking association (the "Bank"). Terms defined in the
Credit Agreement and not otherwise defined herein have the same meanings when
used herein.

         1.       As of the effective date of this waiver letter but subject to
satisfaction of the terms and conditions specified herein, the Bank hereby
waives (a) the Events of Default caused by the Borrower's violation of the
covenants contained in Sections 4.9(b) and 4.9(h) of the Credit Agreement with
respect to December of 2002 and January of 2003, and (b) the Events of Default
expected to be caused by the Borrower's violation of the covenants contained in
Sections 4.9(b) and 4.9(h) of the Credit Agreement with respect to February and
March of 2003.

         2.       The Borrower hereby represents and warrants for the benefit of
the Bank that (a) the representations and warranties of the Borrower contained
in the Loan Documents are true and correct in all material respects on and as of
the effective date of this waiver letter, before and after giving effect to the
same, as if made on and as of such date, and (b) no event has occurred and is
continuing, or would result from the effectiveness of this waiver letter, that
constitutes an Event of Default. Except as specifically provided herein, the
execution, delivery and effectiveness of this waiver letter shall not operate as
a waiver of any right, power or remedy of the Bank under any of the Loan
Documents or constitute a waiver of any provision of any of the Loan Documents.

         3.       This waiver letter shall become effective as of the date first
set forth above, when and if the Borrower and the Bank execute counterparts of
this waiver letter and deliver them to each other.

         4.       The Borrower represents and warrants to the Bank that it has
diligently and thoroughly investigated the existence of any Claim (as defined
below) and that, to its knowledge and belief, no Claim exists and no facts exist
that could give rise to or support a Claim. As additional consideration for the
Bank's entering into this waiver letter, the Borrower and each of its agents,
employees, directors, officers, attorneys, affiliates, subsidiaries, successors
and assigns (each a "Releasing Party") hereby release and forever discharge the
Bank and each of its agents, direct and indirect shareholders, employees,
directors, officers, attorneys, branches, affiliates, subsidiaries, successors
and assigns (each a "Released Party") from any and all damages, losses, claims,
demands, liabilities, obligations, actions and causes of action whatsoever
(collectively "Claims") that the Releasing Parties or any of them may, as of the
effective date of this waiver letter, have or claim to have against any or all
of the Released Parties, in

<PAGE>



each case whether currently known or unknown or with respect to which the facts
are known (or should have been known), that could give rise to or support a
Claim on account of or in any way relating to, arising out of or based upon any
Loan Document, any amendment, waiver or other modification with respect thereto,
the negotiation or documentation hereof or thereof, any of the transactions
contemplated hereby or thereby, or any action or omission in connection with any
of the foregoing, including all such damages, losses, claims, demands,
liabilities, obligations, actions and causes of action heretofore sustained or
that may arise as a consequence of the dealings between the parties up to the
effective date of this waiver letter in connection with or in any way related to
any Loan Document or any amendment, waiver or other modification with respect
thereto. Each Releasing Party further represents and warrants that it has not
heretofore assigned, and covenants and agrees that it will not hereafter sue any
Released Party upon, any Claim released or purported to be released under this
section. Each Releasing Party will indemnify and hold harmless the Released
Parties against any loss or liability on account of any actions brought by any
Releasing Party or its assigns or prosecuted on behalf of any Releasing Party
and relating to any Claim released or purported to be released under this
section. It is further understood and agreed that any and all rights under the
provisions of Section 1542 of the California Civil Code are expressly waived by
each of the Releasing Parties. Section 1542 of the California Civil Code
provides as follows:

         "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
         NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
         SETTLEMENT WITH THE DEBTOR."

         5.       This waiver letter may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
counterparts shall be an original and all of which taken together shall
constitute one and the same waiver letter.

         6.       THIS WAIVER LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THE STATE OF CALIFORNIA.

                                        Very truly yours,

                                        WELLS FARGO BANK,
                                        NATIONAL ASSOCIATION

                                        By:  /s/ Edith R. Lim
                                           --------------------------
                                        Name:    Edith R. Lim
                                             ------------------------
                                        Title:  Vice President
                                              -----------------------

Agreed as of the date first written above:
STAAR SURGICAL COMPANY

By:  /s/ John Bily
   ---------------------------
Name:    John Bily
     -------------------------
Title: Chief Financial Officer
      ------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>16
<FILENAME>dex21.txt
<DESCRIPTION>LIST OF SIGNIFICANT SUBSIDIARIES
<TEXT>
<PAGE>



                                                                      EXHIBIT 21


                        LIST OF SIGNIFICANT SUBSIDIARIES

<TABLE>
<CAPTION>
                                                State or Other Jurisdiction of Incorporation
                                                  or Organization of each such Significant
                                                 Subsidiary, and Names (if any) under which
Name of Significant Subsidiary                 Each such Significant Subsidiary does Business
-----------------------------------         ----------------------------------------------------
<S>                                         <C>
STAAR Surgical AG                                               Switzerland
</TABLE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>17
<FILENAME>dex991.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
<PAGE>

                                                                   EXHIBIT 99.1

               CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
       ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

   The undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to
their knowledge, the Annual Report on Form 10-K for the year ended January 3,
2003 of STAAR Surgical Company (the "Company") fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
as amended, and that the information contained in such periodic report fairly
presents, in all material respects, the financial condition and results of
operations of the Company as of, and for, the periods presented in such report.

Very truly yours,

David Bailey

/s/  DAVID BAILEY
Chief Executive Officer

John Bily

/s/  JOHN BILY
Chief Financial Officer

Dated:  April 2, 2003

   A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to
the Securities and Exchange Commission or its staff upon request.

</TEXT>
</DOCUMENT>
</SUBMISSION>
