FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENTS AND WAIVER OF DEFAULT

Exhibit 10.1

FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENTS

AND WAIVER OF DEFAULT

THIS FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENTS AND WAIVER OF DEFAULT (this “ Amendment ”), dated November 3, 2008, is entered into by and between IRIDEX CORPORATION, a Delaware corporation (“ Company ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“ Wells Fargo ”), acting through its Wells Fargo Business Credit operating division.

RECITALS

Company and Wells Fargo are parties to (i) a Credit and Security Agreement dated March 27, 2008 (as amended from time to time, the “ Domestic Credit Agreement ”), and (ii) a Credit and Security Agreement (Ex-Im Subfacility) (as amended from time to time, “ Ex-Im Credit Agreement ”; and together with the Domestic Credit Agreement, the “ Credit Agreements ”). Capitalized terms used in these recitals have the meanings given to them in the Credit Agreements unless otherwise specified.

Company is in default of Section 5.2(b) of the Credit Agreements, as Company’s Debt Service Coverage Ratio on August 31, 2008, was 0.66 to 1.0, versus a minimum requirement of 1.10 to 1.0 (the “ Existing Default ”). The Existing Default constitutes an Event of Default under the Credit Agreements.

The Company has requested that certain amendments be made to the Credit Agreements and the Existing Default be waived. Wells Fargo is willing to undertake the amendments and waive the Existing Default, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:

1. Section 1.6(a) of the Credit Agreements . The third full paragraph of Section 1.6(a) of the Credit Agreements (that begins “[t]he Margins through and including the adjustment occurring as specified below shall be . . .”) is amended to read in its entirety as follows:

“The Margins through and including the adjustment occurring as specified below shall be 2.0% per annum for Floating Rate Advances, and 3.50% per annum for LIBOR Advances. The Margins shall be reduced by 0.25% per annum on a one-time basis if the Company’s Earnings Before Taxes, Depreciation, and Amortization for any fiscal year ending on or after December 31, 2008, is greater than $1,500,000.”

2. Exhibit A to the Credit Agreements . The following defined term that appears in Exhibit A to the Credit Agreements is amended to read in its entirety as follows:

““Prime Rate” means at any time the greater of (i) five percent (5%) per annum, or (ii) the rate of interest most recently announced by Wells Fargo at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Wells Fargo’s base rates, and serves as the basis upon which effective rates of interest are calculated for those loans making reference to it, and is evidenced by its recording in such internal publication or publications as Wells Fargo may designate. Each change in the rate of interest shall become effective on the date each Prime Rate change is announced by Wells Fargo.”

3. Effective Date of Certain Changes; No Other Changes . The changes in the interest rates set forth in Sections 1 and 2 of this Amendment shall be deemed effective as of October 1, 2008, notwithstanding the date of this Amendment or the date that this Amendment becomes effective under Section 6 of this Amendment. Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreements shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.

4. Waiver of Defaults . Upon the terms and subject to the conditions set forth in this Amendment, Wells Fargo hereby waives the Existing Default. This waiver shall be effective only in this specific instance and for the specific purpose for which it is given, and this waiver shall not entitle the Company to any other or further waiver in any similar or other circumstances.

5. Amendment Fee . The Company shall pay Wells Fargo as of the date of this Amendment a fully earned, non-refundable fee in the amount of $15,000 in consideration of Wells Fargo’s execution and delivery of this Amendment.

6. Conditions Precedent . This Amendment , and the waiver set forth in Section 4 hereof, shall be effective when Wells Fargo shall have received an executed original of this Amendment, together with each of the following, each in substance and form acceptable to Wells Fargo in its sole discretion:

6.1 A Certificate of the Secretary of the Company certifying as to (i) the resolutions of the board of directors of the Company approving the execution and delivery of this Amendment, (ii) the fact that the certificate of incorporation and bylaws of the Company, which were certified and delivered to Wells Fargo pursuant to the Certificate of Authority of the Company’s secretary or assistant secretary dated March 27, 2008, continue in full force and effect and have not been amended or otherw