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SETTLEMENT AGREEMENT
     ARTICLE 1  DEFINITIONS
  1.1
    
    Actions means the following legal proceedings:
 1.1.1
    
    IRIDEX Corporation v. Synergetics USA, Inc. and Synergetics, Inc.,United
States District Court for the Eastern District of Missouri, Case No. 4:05-cv-01916-CDP
(the First Missouri Case);1.1.2
    
    Synergetics, Inc. v. IRIDEX Corporation,United States District Court for
the Eastern District of Missouri, Case No. 4:07-cv-358-MLM (the Second Missouri
Case); and1.1.3
    
    Synergetics, Inc. v. Peregrine Surgical, Ltd., Innovatech Surgical, Inc.,
and IRIDEX Corporation,United States District Court for the Eastern District of
Pennsylvania, Case No. 2:06-cv-00107-TMG (the Pennsylvania Case).
 1.2
    
    Intuitive Patent Applications means U.S. Patent Applications 60/444,060,10/765,350, and
11/035,694, any patent issuing therefrom and all reissues, reexaminations and extensions of
any of such patents, and any other patents issuing from continuations, continuations-in-part
and divisions of these applications, and all patent applications and issued patents (both
foreign and domestic) that claim priority from them.
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1.3
    
    IRIDEX Patent means U.S. Patent No. 5,085,492 (the 492 Patent), all reissues,
reexaminations and extensions of any of such patent, and any other patents issuing from
continuations, continuations-in-part and divisions of the application on which such patent is
based, and all patent applications and issued patents (both foreign and domestic) that claim
priority from the 492 Patent.1.4
    
    Person shall mean an individual, trust, corporation, partnership, joint venture, limited
liability company, association, unincorporated organization or other legal or governmental
entity.1.5
    
    Synergetics Patent means U.S. Patent No. 6,984,230 (the 230 Patent), all reissues,
reexaminations and extensions of any of such patents, and any other patents issuing from
continuations, continuations-in-part and divisions of the application on which such patent is
based, and all patent applications and issued patents (both foreign and domestic) that claim
priority from the230 Patent. The definition of Synergetics Patent does not include U.S.
Patent No. 6,572,608.
 ARTICLE 2  DISMISSALS, RELEASES, LICENSES AND MANUFACTURING
AGREEMENT
 2.1
    
    Dismissal. Within five (5) business days of the Effective Date of this Settlement
Agreement, the Parties shall jointly execute and file dismissals with prejudice of the
Actions, with each Party bearing its own attorneys fees and costs. With respect to the
Pennsylvania Case, Synergetics will dismiss with prejudice its claims against IRIDEX.
Synergetics will dismiss without prejudice as to Peregrine Surgical Ltd. but hereby waives and
releases its claim for past damages as alleged in the Pennsylvania Case against Peregrine
Surgical Ltd. through the Effective Date of this Settlement Agreement. Except as explicitly
waived or released herein, Synergetics specifically reserves all claims, causes of action,
demands, damages, losses or other right to sue Peregrine Surgical Ltd., including but not
limited to patent infringement for future damages and injunctive relief if Peregrine continues
to make, use, sell, offer to sell or otherwise infringe Synergetics patents beyond the
Effective Date of this Settlement Agreement, provided, however, that Peregrine may continue to
make laser probes for IRIDEX pursuant to IRIDEXs license under Section 2.5.1 until
one-hundred, twenty-five (125) days after the Effective Date or until Synergetics provides
IRIDEX a Notice of Ready pursuant to the Supply Agreement attached hereto as Exhibit B,
whichever is later. This Settlement Agreement shall have no effect with regards to Innovatech
Surgical, Inc. and does not require Synergetics to dismiss its claim against Innovatech
Surgical, Inc.2.2
    
    Synergetics Release. Synergetics, and Synergetics successors, predecessors, parents,
subsidiaries, affiliates, officers, directors, shareholders, employees and agents, hereby
release, relinquish and discharge IRIDEX, and all of IRIDEXs successors, predecessors,
parents, subsidiaries, affiliates, officers, directors, shareholders, employees, customers,
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and agents from any and all claims, causes of action, demands, damages, liabilities
and losses of any nature, as of the Effective Date of this Settlement Agreement.2.3
    
    IRIDEX Release. IRIDEX, and IRIDEXs successors, predecessors, parents, subsidiaries,
affiliates, officers, directors, shareholders, employees and agents, hereby release,
relinquish and discharge Synergetics, and all of Synergetics successors, predecessors,
parents, subsidiaries, affiliates, officers, directors, shareholders, employees, customers,
and agents from any and all claims, causes of action, demands, damages, liabilities and losses
of any nature, as of the Effective Date of this Settlement Agreement.2.4
    
    IRIDEX License.
 2.4.1
    
    IRIDEX hereby grants to Synergetics a perpetual, fully paid-up, royalty free,
worldwide, non-exclusive, non-transferable, non-sublicensable license under the IRIDEX
Patent to make, have made, use, sell, offer to sell, and import Synergetics Licensed
Products. No license is granted to Synergetics to practice any IRIDEX Patent except in
the form of a Synergetics Licensed Product.2.4.2
    
    Synergetics Licensed Product(s) means any existing product, any product in
development, or any product developed and released in the future that is a disposable
laser delivery device that uses a connector comprising an RCA plug and SMA connector
(what the Parties have referred to as the new connector in the First Missouri Case),
in substantially the form shown in Exhibit A, to connect to an IRIDEX laser. The
definition of Synergetics Licensed Product(s) excludes products using the
adapter-based Quick Disconnect connector system that was also accused of infringement
in the First Missouri Case.2.4.3
    
    IRIDEX hereby grants to Synergetics a perpetual, fully paid-up, royalty free,
worldwide, non-exclusive, non-transferable, non-sublicensable license under the
Intuitive Patent Applications to make, have made, use, sell, offer to sell, and import
any product and use any method.2.4.4
    
    Both parties agree to mark their products in compliance with the patent laws
with the licensed patent numbers of the other party. If a party identifies that the
other party is not properly marking its products, the party owning the patent shall
send notice and the non-marking party shall thereafter take diligent steps to properly
mark products sold under license of the patent and provide written assurance to the
other party that it has done so.
 2.5
    
    Synergetics License.
 2.5.1
    
    Synergetics hereby grants to IRIDEX a perpetual, fully paid-up, royalty
free, worldwide, non-exclusive, non-transferable, non-sublicensable license under the
Synergetics Patent to make, have made, use, sell, offer to sell, and import any
product and use any method.
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2.5.2
    
    Section 2.4.4 is incorporated herein by reference with respect to
Indexs marking obligations for products that it sells under license of the
Synergetics Patent.
 2.6
    
    Representation and Warranty.Each Party represents and warrants that it holds the full right,
title, and interest necessary to grant the licenses herein granted.2.7
    
    No Admission.The Parties agree that the settlement of the Actions is intended solely as a
compromise of disputed claims, counterclaims and defenses, all as more particularly described
in this Settlement Agreement. Neither the fact of a Partys entry into this Settlement
Agreement nor the terms hereof nor any acts undertaken, pursuant hereto shall constitute an
admission or concession by any Party relating to any Action regarding liability or the
validity of any claim, counterclaim, or defense in the Actions.2.8
    
    The Parties each acknowledge that they are familiar with Section 1542 of the Civil Code of
the State of California, which provides as follows:A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
  2.9
    
    Iridex agrees to exclusively engage Synergetics to manufacture directional laser probes
pursuant to the license granted by Synergetics under Section 2.5 and pursuant to the Supply
Agreement attached hereto as Exhibit B. Any material breach or default under the Supply
Agreement shall constitute a material breach under this Settlement Agreement, provided that
the obligation to pay the amounts specified in Section 4.1 is absolute and unconditional, and
shall not be subject to any set-off, claim or defense for any reason, including any breach of
the Supply Agreement, except that if IRIDEX enters any proceeding under Chapter 7 of the
Bankruptcy Code, any then-executory payments will be excused, and that Synergetics may set-off
any uncontested amount due Synergetics under the Supply Agreement that is past due by thirty
days or more and is confirmed to be uncontested in writing by IRIDEX, which confirmation shall
not unreasonably be withheld.
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ARTICLE 3  COOPERATION 3.1
    
    The Parties agree to use commercially reasonable efforts to ensure the present and
continuing validity and enforceability of the Synergetics Patent and the Intuitive Patent
Applications and to cooperate in good faith to the extent lawfully permissible with respect
to the Synergetics Patent and the Intuitive Patent Applications to promote their mutual
interests, including their interests in maintaining the Synergetics Patent and the Intuitive
Patent Applications valid and enforceable.3.2
    
    The Parties agree to jointly prepare a mutually acceptable press release to announce the
settlement of their litigation, such press release to be issued after the Effective Date,
and no further press releases regarding this Settlement Agreement shall be made by any
Party, its employees, agents or representatives, except for purposes of reporting on this
Settlement Agreement to shareholders or otherwise complying with tax and securities laws.
 ARTICLE 4  PAYMENT
 4.1
    
    In consideration of the licenses granted hereunder, Synergetics shall pay to IRIDEX
the following sums, due and payable according to the following schedule:
 Amount
    
    Due and payable2.5 million dollars (US $2,500,000)
    
    April 16, 2007Eight hundred thousand dollars (US $800,000)
    
    April 16, 2008Eight hundred thousand dollars (US $800,000)
    
    April 16, 2009Eight hundred thousand dollars (US $800,000)
    
    April 16, 2010Eight hundred thousand dollars (US $800,000)
    
    April 16, 2011Eight hundred thousand dollars (US $800,000)
    
    April 16, 2012
 4.2
    
    Payments by Synergetics to IRIDEX shall be made by wire transfer of funds to the
following account or such other account as Iridex may reasonably direct:
 
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4.3
    
    In the event that Synergetics fails to pay any amount due under Section 4.1, each
of the as-yet unpaid amounts listed in Section 4.1 shall become immediately due and payable,
subject to Section 6.1, which requires written notice of a breach and the ability to cure.
 ARTICLE 5  DISCLAIMERS
 5.1
    
    Disclaimers.Nothing in this Settlement Agreement shall be construed as:
       ARTICLE 6  MISCELLANEOUS PROVISIONS
 6.1
    
    Remedies for Breach.In the event of a breach of this Settlement Agreement, the non-defaulting Party shall have all rights and remedies available to it at law or equity, in
addition to the rights and remedies provided for in this Settlement Agreement. The
non-defaulting Party shall provide written notice describing the nature of the breach to the
Party in breach of this Settlement Agreement, and the non-defaulting Party shall provide the
defaulting Party five (5) business days from the date of the notice to cure its breach before
taking or instituting any legal action or otherwise withholding performance under this
Settlement Agreement, provided, however, that Synergetics shall have thirty (30) days from
notice of breach of a payment obligation under Section 4.1 to cure that breach if IRIDEX did
not give notice of the upcoming payment obligation thirty days in advance of the due date
specified in Section 4.1.6.2
    
    Representation.Each Party hereby declares and represents that it is executing this
Settlement Agreement after consultation with its own independent legal counsel.
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6.3
    
    Further Acts. Each Party agrees to perform any further acts, and to execute and deliver
any further documents that may be reasonably necessary to carry out the provisions of this
Settlement Agreement.6.4
    
    Notices. All notices required or permitted to be given hereunder shall be in writing and
shall be made by depositing the writing with Federal Express or other similar express letter
carrier, expenses prepaid for overnight delivery with receipt signature required. Notices
shall be deemed effective upon execution of the receipt signature. Notices shall be
addressed as follows:
 If to Synergetics:
    
    Synergetics USA, Inc.Attention: Chief Executive Officer3845 Corporate Centre DriveOFallon, MO 63368If to IRIDEX:
    
    IRIDEX CorporationAttention: Chief Executive Officer1212 Terra Bella AvenueMountain View, CA 94043
 6.5
    
    Severability. If any provision of this Settlement Agreement is held to be illegal or
unenforceable, such provision shall be limited or eliminated to the minimum extent necessary
so that the remainder of this Settlement Agreement will continue in full force and effect and
be enforceable. The Parties agree to negotiate in good faith an enforceable substitute
provision for any invalid or unenforceable provision that most nearly achieves the intent and
effect of such provision.6.6
    
    Entire Agreement.This Settlement Agreement, with Exhibit A, embodies the entire
understanding of the Parties with respect to the subject matter hereof, and merges all prior
discussions and agreements (written or oral) between them, and none of the Parties shall be
bound by any conditions, definitions, warranties, understandings, or representations with
respect to the subject matter hereof other than as expressly provided herein. No oral
explanation or oral information by any Party hereto shall alter the meaning or interpretation
of this Settlement Agreement.6.7
    
    Modification. No modification or amendment to this Settlement Agreement will be effective
unless it is in writing and executed by authorized representatives of the Parties, nor will
any waiver of any rights be effective unless assented to in writing by the Party to be
charged. The waiver of any breach or default will not constitute a waiver of any subsequent
breach or default.6.8
    
    Construction. Any rule of construction to the effect that ambiguities are to be resolved
against the drafting Party will not be applied in the construction or interpretation of this
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Settlement Agreement. As used in this Settlement Agreement, the words include and
including, for example, such as and variations thereof, will not be deemed to be terms
of limitation, but rather will be deemed to be followed by the words
without limitation.
The headings in this Settlement Agreement will not be referred to in connection with the
construction or interpretation of this Settlement Agreement.6.9
    
    Counterparts. This Settlement Agreement may be executed in identical counterparts or
duplicate originals, both of which shall be regarded as one and the same instrument, and which
shall be the official arid governing version in the interpretation of this Settlement
Agreement. This Settlement Agreement may be executed by facsimile signatures and such
signatures shall be deemed to bind each Party as if they were original signatures.6.10
    
    Assignability. This Settlement Agreement shall not be assignable by either Party to any
Person without the prior written consent of the other Party. Consent may be withheld for any
reason.
  Synergetics, Inc.
    
    
    
    IRIDEX CorporationBy: /s/ Gregg Scheller
    
    
    
    By:
    
    /s/ Barry CaldwellName: Gregg Scheller
    
    
    
    Name: Barry CaldwellTitle: President & CEO
    
    
    
    Title: President & CEODate: 4/6/07
    
    
    
    Date: 4/6/07Synergetics USA, Inc.By: /s/ Gregg SchellerName: Gregg SchellerTitle: President & CEODate: 4/6/07
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Exhibit A
 Synergetics New Connector
 
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Exhibit B
 Supply Agreement
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