EXECUTIVE TRANSITION AGREEMENT

Exhibit 10.1

EXECUTIVE TRANSITION AGREEMENT

     This Executive Transition Agreement (the “ Agreement ”) is made and entered into by and between Theodore A. Boutacoff (“ Employee ”) and Iridex Corporation (the “ Company ”), effective as of April 28, 2005 (the “ Effective Date ”).

RECITALS

      Whereas, Employee and the Board of Directors of the Company (the “ Board ”) have determined that it is in the best interests of the Company and its stockholders to hire a new Chief Executive Officer and for Employee to continue his employment with the Company in his current capacity until the new Chief Executive Officer has been hired, to assume the role of a senior principal advisor to the new Chief Executive Officer upon the hiring of such new Chief Executive Officer and to assist the Company with and ensure a smooth transition in connection with and following the hiring of the new Chief Executive Officer.

      Whereas, the Board believes that it is in the best interests of the Company and its stockholders to provide Employee with an incentive to continue his employment with the Company as Chairman of the Board and to motivate Employee to maximize the value of the Company for the benefit of its stockholders.

      Whereas , the Board believes that in order to ensure that the Company will have the continued dedication and objectivity of Employee, it is in the best interests of the Company and its stockholders to provide Employee with certain benefits described herein.

      Now, Therefore, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:

AGREEMENT

     1.  Transition to Senior Principal Advisor; Resignation as Chief Executive Officer . Effective on the date a new Chief Executive Officer commences employment with the Company (the “ Transition Commencement Date ”), Employee hereby resigns as Chief Executive Officer and accepts employment as a senior principal advisor to the new Chief Executive Officer. In addition, it is the Company’s understanding that it is the current intent of the Company’s Board of Directors to appoint the Employee as Chairman of the Board of Directors on or about the Transition Commencement Date, it being understood by both parties hereto that Employee’s continuing tenure as a member of the Board of Directors is subject to Employee’s re-election by the Company’s shareholders and his appointment as Chairman of the Board is subject to the future approval of the Board of Directors.

          (a)  Transition Duties, Salary and Benefits . Following the Transition Commencement Date, Employee shall be a senior principal advisor to the new Chief Executive Officer and shall advise the new Chief Executive Officer, as mutually agreed by the new Chief Executive Officer and the Employee, in one or more of the following areas: product strategy; product applications; strategic planning; and/or strategic business development. Employee will

continue to receive a salary and benefits equal to the salary and benefits received by Employee as of the Effective Date of this Agreement, subject to annual adjustments at the discretion of the Board. Employee will continue to be eligible to receive bonus compensation equal to that for which he is currently eligible, on an annualized basis, through the Transition Commencement Date. Following the Transition Commencement Date, Employee shall be eligible to receive bonus compensation in such amounts, on an annualized basis, as are determined by the Company’s Board of Directors and which reflect his role and responsibilities following the Transition Commencement Date as a senior principal advisor to the Chief Executive Officer.

          (b)  Equity Compensation . As of the Effective Date, Employee shall be granted an option to purchase Seventy-Five Thousand (75,000) shares of the Company’s Common Stock at an exercise price equal to the fair market value as of the date of the grant, pursuant to the Company’s 1998 Stock Plan. Such options shall vest in equal monthly installments from the date of this Agreement over a three (3) year period (including the Severance Payment Period), except as otherwise provided in this Agreement. Employee shall have ninety (90) days from termination to exercise said option.

     2.  At-Will Employment . The Company and Employee acknowledge that Employee’s employment is and will continue to be at-will, as defined under applicable law. If Employee’s employment terminates for any reason, Employee will not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement. The Company and Employee acknowledge that the duties, responsibilities and obligations of Employee hereunder and the obligations of the Company hereunder, relate only to Employee’s employment relationship with the Company. Nothing in this Agreement is intended to affect, in any way, Employee’s service as a member of the Board. Subject to Section 5(f)(vii) hereof, Employee agrees to devote his full business time and attention (although Employee shall not be obligated to work more than 40 hours per week) to his role and responsibilities as a senior principal advisor to the CEO, unless otherwise mutually agreed by the Company and Employee.

     3.  Severance Benefits .

          (a)  Involuntary Termination other than for Cause . In the event that (a) the Company (or any parent or subsidiary of the Company employing Employee) terminates Employee’s employment with the Company (or any parent or subsidiary of the Company) without Employee’s consent and for a reason other than for Cause or (b) Employee terminates his employment with the Company for Good Reason and, in either such case, subject to the Employee’s (or Employee’s estate, as applicable) execution and delivery of a general release of claims in substantially the form attached hereto as Exhibit A (the “ Release Agreement ”) and such Release Agreement becomes legally binding on the Employee, then promptly following such termination of employment, or, if later, the effective date of the Release Agreement, Employee (or Employee’s estate, as applicable) will receive the following benefits from the Company:

               (i)  Accrued Compensation . Employee will be entitled to receive all accrued vacation, expense reimbursements and any other benefits due to Employee through the date of termination of employment in accordance with the Company’s then existing employee benefit plans, policies and arrangements.

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               (ii)  Severance Payment . Employee will be paid continuing payments of severance pay (the “ Cash Severance Payment ”) in an aggregate amount equal to the amount of base salary Employee would have been paid at Employee’s base salary rate, as then in effect, had Employee continued his employment with the Company through the Severance Payment Period (as defined below) and such aggregate amount will be paid ratably on a periodic basis through March 15 of the calendar year following the year of employment termination in accordance with the Company’s normal payroll policies; provided , however , that if during the Severance Payment Period Employee engages in Competition, breaches the terms of the Release Agreement or breaches the covenants in Section 6, all severance payments being made to Employee by the Company pursuant to this subsection will immediately cease and Employee shall not be entitled to any additional severance payments hereunder; and provided , further , that in the event that there is a Change of Control during the Severance Payment Period and the Company has not ceased making severance payments to Employee pursuant to the preceding clause, Employee will be paid a lump sum one time cash payment immediately prior to such Change of Control equal to any amount of the Cash Severance Payment not yet paid to Employee in accordance with the Company’s normal payroll policies, but that would otherwise be due through the end of the Severance Payment Period.

               (iii)  Continued Employee Benefits . Employee will receive Company-paid coverage during the Severance Payment Period for Employee and Employee’s eligible dependents under the Company’s Benefit Plans; provided , however , that if during the Severance Payment Period Employee engages in Competition, breaches the terms of the Release Agreement or breaches the covenants in Section 6, all Company-paid coverage pursuant to this subsection will immediately cease. In the event of a Change of Control, Employee will receive a lump sum payment equivalent to the cost of COBRA coverage for Employee and Employee’s eligible dependents for the remainder of the Severance Payment Period.

               (iv)  Acceleration of Options . 100% of the unvested shares subject to all of Employee’s options to purchase shares of Company common stock (the “ Options ”) outstanding on the date of such termination, whether granted on, before or after the date of this Agreement, and 100% of any of Employee’s shares of Company common stock subject to a Company repurchase right upon Employee’s termination of employment for any reason (the “ Restricted Stock ”) whether acquired by Employee on, before or after the date of this Agreement, will immediately vest upon such termination. To the extent not expressly amended hereby, the terms and the terms and provisions otherwise applicable to such Options and Restricted Stock shall remain in full force and effect.

               (v)  Payments or Benefits Required by Law . Employee will receive such other compensation or benefits from the Company as may be required by law (for example, “COBRA” coverage under Section 4980B of the Internal Revenue Code of 1986, as amended (the “ Code ”)).

               (vi)  Consulting Agreement . In the event that Employee’s employment with the Company is terminated such that Employee is eligible to receive the benefits set forth in Sections 3(a)(i), 3(a)(ii), 3(a)(iii) and 3(a)(iv) above, the Company will have the option of retaining Employee as a consultant to the Company to provide consulting services to the Company during the Severance Payment Period or such shorter period as the parties may mutually agree, subject to the Company and Employee mutually agreeing on the terms of any such consulting relationship.

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Nothing in this Section 3(a)(vi) shall require Employee to perform consulting services or in any way affect Employee’s rights under this Agreement.

          (b)  Other Terminations . If at any time Employee voluntarily terminates Employee’s employment with the Company or any parent or subsidiary of the Company (other than for Good Reason) or if the Company (or any parent or subsidiary of the Company employing Employee) terminates Employee’s employment with the Company (or any parent or subsidiary of the Company) for Cause, then Employee will (i) receive his earned but unpaid base salary through the date of termination of employment, (ii) receive all accrued vacation, expense reimbursements and any other benefits due to Employee through the date of termination of employment in accordance with established Company plans, policies and arrangements, and (iii) not be entitled to any other compensation or benefits (including, without limitation, accelerated vesting of Options or Restricted Stock) from the Company except to the extent provided under the applicable stock option agreement(s) or as may be required by law (for example, “COBRA” coverage under Section 4980B of the Code).

          (c)  Termination due to Death or Disability . For the avoidance of doubt, if Employee’s employment with the Company (or any parent or subsidiary of the Company) is terminated due to Employee’s death or Employee’s becoming Disabled, then Employee or Employee’s estate (as the case may be) will receive the severance benefits provided for in Section 3(a) above, and will not be entitled to any other compensation or benefits from the Company except to the extent required by law.

          (d)  Exclusive Remedy . In the event of a termination of Employee’s employment with the Company (or any parent or subsidiary of the Company), the provisions of this Section 3 are intended to be and are exclusive and in lieu of any other rights or remedies to which Employee or the Company may otherwise be entitled (including any contrary provisions in any written formal employment agreement or offer letter between the Company and Employee (any such agreements, an “ Employment Agreement ”)), whether at law, tort or contract, in equity, or under this Agreement. Employee will be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in this Section 3.

     4.  Limitation on Payments . In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this Section 4, would be subject to the excise tax imposed by Section 4999 of the Code, then the severance and other benefits provided for in this Agreement or otherwise payable to Employee will be either:

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Unless the Company

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and Employee otherwise agree in writing, any determination required under this Section 4 will be made in writing by the Company’s independent public accountants (the “ Accountants ”), whose determination will be conclusive and binding upon Employee and the Company for all purposes. For purposes of making the calculations required by this Section 4, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Employee will furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 4.

     5.  Definition of Terms . The following terms referred to in this Agreement will have the following meanings:

          (a)  Benefit Plans . “ Benefit Plans ” means plans, policies or arrangements that the Company sponsors (or participates in) and that immediately prior to Employee’s termination of employment provide Employee and/or Employee’s eligible dependents with medical, dental, and/or vision benefits. Benefit Plans do not include any other type of benefit (including, but not by way of limitation, disability, life insurance or retirement benefits). A requirement that the Company provide Employee and Employee’s eligible dependents with coverage under the Benefit Plans will not be satisfied unless the coverage is no less favorable than that provided to Employee and Employee’s eligible dependents immediately prior to Employee’s termination of employment. Notwithstanding any contrary provision of this Section 5(a), but subject to the immediately preceding sentence, the Company may, at its option, satisfy any requirement that the Company provide coverage under any Benefit Plan by (i) reimbursing Employee’s premiums under COBRA after Employee has properly elected continuation coverage under COBRA (in which case Employee will be solely responsible for electing such coverage for Employee and Employee’s eligible dependents), or (ii) instead providing coverage under a separate plan or plans providing coverage that is no less favorable or by paying Employee a lump sum payment sufficient to provide Employee and Employee’s eligible dependents with equivalent coverage under a third party plan that is reasonably available to Employee and Employee’s eligible dependents.

          (b)  Cause . “ Cause ” shall mean (i) any act of personal dishonesty taken by Employee against the Company, which is intended to result in substantial personal enrichment of Employee; (ii) Employee’s conviction of or plea of nolo contendere to a felony or a material violation of federal or state law by Employee that the Board reasonably believes has had or will have a detrimental effect on the Company’s reputation or business, (iii) an intentional and reckless act by Employee that constitutes misconduct and is injurious to the Company, or (iv) willful misconduct or gross neglect of Employee’s duties. The Company must provide Employee with at least thirty (30) days advance written notice of Employee’s misconduct or neglect under subsections (i), (iii) or (iv) (the “ Cure Period ”) if such conduct is reasonably capable of being cured. If Employee does not cure the misconduct or neglect to the reasonable satisfaction of the Company by the expiration of the Cure Period and/or if the misconduct or neglect is not capable of being cured, Employee’s employment may then be terminated by the Board at its sole discretion. Notice of termination shall be given in accordance with Section 7(b).

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          (c)  Change of Control . “ Change of Control ” shall mean the occurrence of any of the following events:

               (i) the approval by the stockholders of the Company of a merger or consolidation of the Company with any other corporation or entity; provided , however , any merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation shall not be deemed a Change of Control;

               (ii) the approval by the stockholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets;

               (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities; or

               (iv) a change in the composition of the Board occurring within a 12-month period, as a result of which fewer than a majority of the directors are Incumbent Directors. “ Incumbent Directors ” shall mean directors who either (A) are directors of the Company as of the