IRIDEX CORP
EXHIBIT 10.1
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<P align="right" style="font-size: 10pt"><B>Exhibit&nbsp;10.1</B>



<P align="center" style="font-size: 10pt"><U><B>2005 Bonus Plan</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;16, 2005, the Compensation and Nominating Committee of the Registrant&#146;s Board of
Directors adopted fiscal 2005 bonus and profit sharing arrangements for the Registrant&#146;s employees,
including its executive officers. These arrangements are not contained in a formal written plan,
but a summary of the manner in which bonus and profit sharing benefits will be determined for
fiscal 2005 is set forth below and in Exhibit&nbsp;10.1 attached hereto (the &#147;2005 Bonus Plan&#148;). The
2005 Bonus Plan consists of a profit sharing component (the &#147;Profit Sharing Component&#148;) in which
substantially all of the Registrant&#146;s employees, with certain exceptions, are eligible to
participate and a management bonus program component (the &#147;Management Bonus Component&#148;), in which
only executive officers, director level employees and other managers are eligible to participate.


<P align="left" style="font-size: 10pt"><U>Funding of the 2005 Bonus Plan</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funding for the 2005 Bonus Plan is dependent upon the Registrant&#146;s achievement of a targeted
operating income amount, excluding funds to be set aside for inclusion in the 2005 Bonus Pool (the
&#147;Targeted Operating Income&#148;). If the Registrant achieves the Targeted Operating Income, between
thirteen percent (13%) and fifteen percent (15%) of the Targeted Operating Income will be set aside
to fund the 2005 Bonus Plan. In the event that the Registrant&#146;s operating income, excluding funds
set aside for inclusion in the 2005 Bonus Plan exceeds the Targeted Operating Income by
approximately 110% or more, an additional twenty percent (20%) of all incremental operating income
above approximately 110% of the Targeted Operating Income amount will be set aside for inclusion in
the 2005 Bonus Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon achievement of Targeted Operating Income, 100% of the 2005 Bonus Pool would be allocated
to the Profit Sharing Component and 0% to the Management Bonus Component. At 110% over the Targeted
Operating Income, approximately 85% of the 2005 Bonus Pool would be allocated to the Profit Sharing
Component and about 15% to the Management Bonus Component. At 120% over the Targeted Operating
Income, about seventy-seven percent (77%) of the 2005 Bonus Pool would be allocated to the Profit
Sharing Component and twenty-three percent (23%) to the Management Bonus Component.


<P align="left" style="font-size: 10pt"><U>Profit Sharing Component</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Profit Sharing Component of the 2005 Bonus Plan provides for the payment of profit sharing
benefits twice during the fiscal year, once based upon meeting or exceeding the Registrant&#146;s six
month Targeted Operating Income and a second time based upon meeting or exceeding the Registrant&#146;s
full fiscal year Targeted Operating Income. All employees, other than the Registrant&#146;s
commission-based sales representatives and certain managers of the Registrant&#146;s sales force are
eligible to participate in the Profit Sharing Component of the 2005 Bonus Plan. Ninety percent
(90%) of all payments made pursuant to the Profit Sharing Component of the 2005 Bonus Plan, if any,
will be determined by multiplying eligible employee&#146;s base salary by a fixed percentage, which will
be determined by the Registrant&#146;s Compensation and Nominating Committee and which will be the same
for all eligible employees. The remaining ten percent (10%) of the funds set aside for inclusion
in the Profit Sharing Component of the 2005 Bonus Plan may be paid-out at the discretion of the
Registrant&#146;s Compensation and Nominating Committee, if at all, to all employees. Notwithstanding
the foregoing, commission-based sales representatives and certain managers of the Registrant&#146;s
sales force are eligible to participate in the Profit Sharing Component of the 2005 Bonus Plan only
if the Registrant&#146;s revenues exceed the budgeted revenue projections by ten percent (10%) or more.


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<P align="left" style="font-size: 10pt"><U>Management Bonus Component</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Management Bonus Component of the 2005 Bonus Plan provides for the payment of cash bonuses
to the Registrant&#146;s management team in the event that the Registrant exceeds the Targeted Operating
Income by approximately 10% and is available to approximately forty (40)&nbsp;individuals including the
Registrant&#146;s executive officers, director level employees and other managers, other than
commission-based sales representatives and certain managers of the Registrant&#146;s sales force.
Management bonus payout will be based on meeting or exceeding established milestones and/or based
on demonstrating exceptional performance.



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