Exhibit 10.8

IRIDEX CORPORATION

CHANGE OF CONTROL SEVERANCE AGREEMENT

This Change of Control Severance Agreement (the “Agreement”) is made and entered
into by and between James H. Mackaness (“Executive”) and IRIDEX Corporation (the
“Company”), effective as of January 22, 2008 (the “Effective Date”).

RECITALS

WHEREAS, it is expected that the Company from time to time will consider the
possibility of a merger with another company, an acquisition by another company
or other Change of Control (as defined herein). The Board of Directors of the
Company (the “Board”) recognizes that such consideration can be a distraction to
Executive and can cause Executive to consider alternative employment
opportunities.

WHEREAS, the Board believes that it is in the best interests of the Company and
its stockholders to provide Executive with an incentive to continue his or her
employment to motivate Executive to maximize the value of the Company upon a
Change of Control for the benefit of its stockholders.

WHEREAS, the Board believes that it is in the best interests of the Company and
its stockholders to provide Executive with certain severance benefits upon
Executive’s termination of employment without cause or upon a constructive
termination following a Change of Control of the Company and to provide
Executive with certain severance benefits upon Executive’s termination of
employment without cause outside of the change of control context, in order to
provide Executive with enhanced financial security and incentive to remain with
the Company.

WHEREAS, certain capitalized terms used in the Agreement are defined in
Section 5 below.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto agree as follows:

1. Term of Agreement. This Agreement will terminate upon the date that all of
the obligations of the parties hereto with respect to this Agreement have been
satisfied.

2. At-Will Employment. The Company and Executive acknowledge that Executive’s
employment is and will continue to be at-will, as defined under applicable law,
except as may otherwise be specifically provided under the terms of a written
formal employment agreement, if any, between the Company and Executive (an
“Employment Agreement”). If Executive’s employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control,
Executive will not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement.

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3. Severance Benefits.

(a) Constructive Termination or Termination without Cause Following a Change of
Control. If, in the event that (a) within twelve (12) months following a Change
of Control, or (b) at any time prior to a Change of Control if such termination
is effected at the request of an Acquiror, (x) Executive terminates his or her
employment with the Company (or any parent or subsidiary or successor of the
Company) for Good Reason, or (y) the Company (or any parent or subsidiary or
successor of the Company) terminates Executive’s employment without Cause, and,
in each case, Executive signs and does not revoke a standard release of claims
with the Company in a form acceptable to the Company, then Executive will
receive, in addition to Executive’s salary payable through the date of
termination of employment and any other employee benefits earned and owed
through the date of termination, the following severance from the Company:

(i) Severance Payment. As provided in Section 3(b) below, six (6) months
severance pay (less applicable withholding taxes) equal to the pro-rata portion
of Executive’s base salary (as in effect immediately prior to (A) the Change of
Control, or (B) Executive’s termination, whichever is greater, the “Severance
Amount”).

(ii) Accelerated Vesting of Options; Restricted Stock. Then-outstanding and
unvested stock options in Company common stock held by Executive (“Options”)
will immediately vest and become exercisable as to fifty percent (50%) of the
unvested shares underlying such Options (the “Option Acceleration Amount”). The
Options will remain exercisable following the termination for the period
prescribed in the respective option agreement, which will not extend past the
term of each Option. Additionally, fifty percent (50%) of any shares of
restricted stock (“Restricted Stock”) then-held by Executive will immediately
vest and the applicable Company right of repurchase or reacquisition with
respect to such shares of Restricted Stock will lapse (the “Restricted Stock
Acceleration Amount”).

(iii) Continued Employee Benefits. Reimbursement for a period of up to six
(6) months (less applicable withholding taxes, if any) for the costs and
expenses incurred by Executive and/or Executive’s eligible dependents for
coverage under the Company’s Benefit Plans, provided that such coverage is
timely elected under COBRA.

(b) Timing of Severance Payments. The Company will pay the severance payments to
which Executive is entitled under Section 3(a)(i) in a lump sum. If Executive
should die before all amounts have been paid, such unpaid amounts will be paid
in a lump sum payment (less any withholding taxes) to Executive’s spouse,
designated beneficiary, or otherwise to the personal representative of
Executive’s estate.

(c) Severance Benefits Eligibility. Notwithstanding any other provision in this
Agreement to the contrary, during the period commencing on the Effective Date
and continuing until the date three (3) months after the Effective Date (the
“Trial Period”), the Executive shall be eligible to receive only one-half
(1/2) of the Severance Amount provided for in Section 3(a)(i).

 

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(d) Voluntary Resignation; Termination For Cause or without Cause Outside of the
Context of a Change of Control. If Executive’s employment with the Company
terminates (i) voluntarily by Executive (except upon a termination for Good
Reason (a) within twelve (12) months following a Change of Control, or (b) at
any time prior to a Change of Control if such termination is at the request of
an Acquiror), (ii) for Cause by the Company (or any parent or subsidiary or
successor of the Company), or (iii) without Cause by the Company (or any parent
or subsidiary or successor of the Company) if not (a) within twelve (12) months
following a Change of Control, or (b) at any time prior to a Change of Control
if such termination is at the request of an Acquiror, then Executive will not be
entitled to receive any severance benefits and the sole obligation of the
Company shall be to pay to Executive, an amount equal to Executive’s base salary
payable through the date of termination of employment and any other employee
benefits earned and owed through the date of termination.

(e) Disability; Death. If the Company terminates Executive’s employment as a
result of Executive’s Disability, or Executive’s employment terminates due to
his or her death, then Executive will not be entitled to receive severance
benefits and the sole obligation of the Company shall be to pay to Executive an
amount equal to Executive’s base salary payable to the date of termination of
employment and any other employee benefits earned and owed through the date of
termination to Executive, Executive’s spouse, designated beneficiary, or
otherwise to the personal representative of Executive’s estate, as the case may
be.

(f) Exclusive Remedy. In the event of a termination of Executive’s employment
with the Company (or any parent or subsidiary or successor 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 Executive or the Company may otherwise be
entitled, whether at law, tort or contract, in equity, or under this Agreement.
Executive 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.

(g) Section 409A. Notwithstanding anything to the contrary in this Agreement, if
Executive is a “specified employee” within the meaning of Section 409A of the
Code and any final regulations and guidance promulgated thereunder
(“Section 409A”) at the time of Executive’s termination, then only that portion
of the severance and benefits payable to Executive pursuant to this Agreement
(other than due to death), if any, and any other severance payments or
separation benefits which may be considered deferred compensation under
Section 409A (together, the “Deferred Compensation Separation Benefits”), which
(when considered together) do not exceed the Section 409A Limit (as defined
below) may be made within the first six (6) months following Executive’s
termination of employment in accordance with the payment schedule applicable to
each payment or benefit. Any portion of the Deferred Compensation Separation
Benefits in excess of the Section 409A Limit otherwise due to Executive on or
within the six (6) month period following Executive’s termination will accrue
during such six (6) month period and will become payable in a lump sum payment
on the date six (6) months and one (1) day following the date of Executive’s
termination of employment or the date of Executive’s death if earlier. All
subsequent Deferred Compensation Separation Benefits, if any, will be payable in
accordance with the payment schedule applicable to each payment or benefit. The
foregoing provisions are intended to comply with the requirements of
Section 409A so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to so comply. The Company and
Executive agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Executive under Section 409A.

 

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For purposes of this Agreement, “Section 409A Limit” will mean the lesser of two
(2) times: (i) Executive’s annualized compensation based upon the annual rate of
pay paid to Executive during the Company’s taxable year preceding the Company’s
taxable year of Executive’s termination of employment as determined under
Treasury Regulation 1.409A-l(b)(9)(iii)(A)(1) and any Internal Revenue Service
guidance issued with respect thereto; or (ii) the maximum amount that may be
taken into account under a qualified plan pursuant to Section 401(a)(17) of the
Code for the year in which Executive’s employment is terminated.

4. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to Executive (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 Executive’s severance benefits under Section 3 will be either:

(a) delivered in full, or

(b) delivered as to such lesser extent which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,

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 Executive 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 and
Executive otherwise agree in writing, any determination required under this
Section 4 will be made in writing by the Company’s independent public
accountants immediately prior to Change of Control (the “Accountants”), whose
determination will be conclusive and binding upon Executive 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 Executive will furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section 4. 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) Acquiror. For purposes of this Agreement an “Acquiror” is either a person or
a member of a group of related persons representing such group that in either
case obtains effective control of the Company in the transaction or a group of
related transactions constituting the Change of Control.

 

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(b) Benefit Plans. For purposes of this Agreement, “Benefit Plans” means the
group health plans, policies or arrangements that the Company sponsors (or
participates in) and that immediately prior to Executive’s termination of
employment provide Executive and/or Executive’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
Executive and Executive’s eligible dependents with coverage under the Benefit
Plans will not be satisfied unless the coverage is no less favorable than that
provided to senior executives of the Company at any applicable time during the
period Executive is entitled to receive severance pursuant to Section 3. The
Company may, at its option, satisfy any requirement that the Company provide
coverage under any Benefit Plan by providing coverage under a separate plan or
plans providing coverage that is no less favorable or by paying Executive a lump
sum payment which is, on an after-tax basis, sufficient to provide Executive and
Executive’s eligible dependents with equivalent coverage under a third-party
plan that is reasonably available to Executive and Executive’s eligible
dependents.

(c) Cause. “Cause” is defined as (i) an act of dishonesty made by Executive in
connection with Executive’s responsibilities as an employee, (ii) Executive’s
conviction of, or plea of nolo contendere to, a felony or any crime involving
fraud, embezzlement or any other act of moral turpitude, or a material violation
of federal or state law by Executive that the Board reasonably believes has had
or will have a detrimental effect on the Company’s reputation or business;
(iii) Executive’s gross misconduct, (iv) Executive’s unauthorized use or
disclosure of any proprietary information or trade secrets of the Company or any
other party to whom Executive owes an obligation of nondisclosure as a result of
Executive’s relationship with the Company; (v) Executive’s willful breach of any
obligations under any written agreement or covenant with the Company; or
(vi) Executive’s continued failure to perform his employment duties after
Executive has received a written demand of performance from the Company with
specifically sets forth the factual basis for the Company’s belief that
Executive has not substantially performed his duties and has failed to cure such
non-performance to the Company’s satisfaction within 10 business days after
receiving such notice.

(d) Change of Control. “Change of Control” of the Company is defined as:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or becomes 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

(ii) a change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors” will mean directors who either
(A) are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or

 

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(iii) the date of the consummation of a merger or consolidation of the Company
with any other corporation that has been approved by the stockholders of the
Company, other than a 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, or
the stockholders of the Company approve a plan of complete liquidation of the
Company; or

(iv) the date of the consummation of the sale or disposition by the Company of
all or substantially all the Company’s assets.

(e) Disability. “Disability” will mean that Executive has been unable to perform
his Company duties as the result of his incapacity due to physical or mental
illness, and such inability, at least twenty-six (26) weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to Executive or Executive’s legal
representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at
least 30 days’ written notice by the Company of its intention to terminate
Executive’s employment. In the event that Executive resumes the performance of
substantially all of his duties hereunder before the termination of his
employment becomes effective, the notice of intent to terminate will
automatically be deemed to have been revoked.

(f) Good Reason. “Good Reason” means the occurrence of one or more of the
following events effected without Executive’s prior consent, provided Executive
terminates Executive’s employment with the Company within ninety (90) days
following the initial existence of the “Good Reason” condition (discussed
below): (i) the assignment to Executive of any duties or the reduction of
Executive’s duties, either of which results in a material diminution in
Executive’s position or responsibilities with the Company; provided that, it
being understood that the continuance of Executive’s duties and responsibilities
at the subsidiary or divisional level following a Change of Control, rather than
at the parent, combined or surviving company level following such Change of
Control shall not be deemed Good Reason within the meaning of this clause (i);
(ii) a reduction by the Company in the base salary of Executive by fifteen
percent (15%) or more, unless similar such reductions occur concurrently with
and apply to the Company’s senior management, including the Company’s Chief
Executive Officer and Vice Presidents; (iii) a material change in the geographic
location at which Executive must perform services (for purposes of this
Agreement, the relocation of Executive to a facility or a location less than
twenty-five (25) miles from Executive’s then-present location shall not be
considered a material change in geographic location); (iv) a material reduction
of facilities, perquisites or in the kind or level of employee benefits to which
the Employee is entitled, unless similar such reductions occur concurrently and
apply to the Company’s senior management, including the Company’s Chief
Executive Officer and other Vice Presidents; or (v) any material breach by the
Company of any material provision of this Agreement. Executive will not resign
for Good Reason without first providing the Company with written notice of the
acts or omissions constituting the grounds for “Good Reason” within ninety
(90) days of the initial existence of the grounds for “Good Reason” and a
reasonable cure period of not less than thirty (30) days following the date of
such notice.

 

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6. Successors.

(a) The Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
will assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term “Company” will
include any successor to the Company’s business and/or assets which executes and
delivers the assumption agreement described in this Section 6(a) or which
becomes bound by the terms of this Agreement by operation of law.

(b) Executive’s Successors. The terms of this Agreement and all rights of
Executive hereunder will inure to the benefit of, and be enforceable by,
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

(c) Assumption. It shall be considered a material breach of the Agreement if the
Company fails to obtain the assumption of this Agreement by any successor to the
Company.

7. Notice.

(a) General. Notices and all other communications contemplated by this Agreement
will be in writing and will be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. In the case of Executive, mailed notices will be
addressed to him or her at the home address which he or she most recently
communicated to the Company in writing. In the case of the Company, mailed
notices will be addressed to its corporate headquarters, and all notices will be
directed to the attention of its President.

(b) Notice of Termination. Any termination by the Company for Cause or by
Executive for Good Reason or as a result of a voluntary resignation will be
communicated by a notice of termination to the other party hereto given in
accordance with Section 7(a) of this Agreement. Such notice will indicate the
specific termination provision in this Agreement relied upon, will set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and will specify the termination
date (which will be not more than thirty (30) days after the giving of such
notice). The failure by Executive to include in the notice any fact or
circumstance which contributes to a showing of Good Reason will not waive any
right of Executive hereunder or preclude Executive from asserting such fact or
circumstance in enforcing his or her rights hereunder.

8. Miscellaneous Provisions.

(a) No Duty to Mitigate. Executive will not be required to mitigate the amount
of any payment contemplated by this Agreement, nor will any such payment be
reduced by any earnings that Executive may receive from any other source.

 

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(b) Waiver. No provision of this Agreement will be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by Executive and by an authorized officer of the Company (other than
Executive). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party will be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

(c) Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

(d) Entire Agreement. This Agreement, together with any Employment Agreement,
constitutes the entire agreement of the parties hereto and supersedes in their
entirety all prior representations, understandings, undertakings or agreements
(whether oral or written and whether expressed or implied) of the parties with
respect to the subject matter hereof.

(e) Choice of Law. The validity, interpretation, construction and performance of
this Agreement will be governed by the laws of the State of California (with the
exception of its conflict of laws provisions).

(f) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement will not affect the validity or enforceability of
any other provision hereof, which will remain in full force and effect.

(g) Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable income and employment taxes.

(h) Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year set forth
below.

 

COMPANY     IRIDEX CORPORATION       By:   /s/ Theodore A. Boutacoff      
Title:    President and CEO EXECUTIVE     By:   /s/ James Mackaness      
Title:    CFO

 

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