**Exhibit 10.9****IRIDEX CORPORATION****SEPARATION AGREEMENT AND RELEASE**     This Separation Agreement and Release (“Agreement”) is made by and between Barry Caldwell(“Employee”) and IRIDEX Corporation (the “Company”) (collectively referred to as the “Parties” orindividually referred to as a “Party”).     WHEREAS, Employee was employed by the Company;     WHEREAS, Employee signed an At-Will Employment, Confidential Information, InventionAssignment, and Arbitration Agreement with the Company on July 5, 2005 (the “ConfidentialityAgreement”);     WHEREAS, the Company and Employee have entered into (i) a stock option agreement (the “StockOption Agreement”) dated July 5, 2005 issued pursuant to the Company’s 1998 Stock Plan, pursuant towhich Employee was granted the option to purchase up to 65,896 shares of the Company’s Common Stocksubject to the terms and conditions of the Company’s 1998 Stock Plan and the Stock OptionAgreement, (ii) the Caldwell Inducement Grant Stock Option Agreement dated July 5, 2005, pursuantto which Employee was granted the option to purchase up to 234,104 shares of the Company’s CommonStock granting Employee the option to purchase shares of the Company’s common stock (the“Inducement Option” and, collectively with the Stock Option Agreement, the “Stock Agreements”),and (iii) a Change of Control and Severance Agreement dated July 5, 2005 (the “Change of Controland Severance Agreement”);     WHEREAS, Employee resigned all positions as an officer, director and employee with the Companyeffective as of October 16, 2007 (the “Termination Date”); and     WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances,charges, actions, petitions, and demands that the Employee may have against the Company and any ofthe Releasees (as defined below), including, but not limited to, any and all claims arising out ofor in any way related to Employee’s employment with or separation from the Company.     NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employeehereby agree as follows:     1. Consideration.          a. Amendments to Stock Agreements. The Company and Employee hereby agree that theStock Agreements shall be amended as described below, effective as of the Effective Date (asdefined below):               i. Extension of Exercise Period. The provision titled “Termination Period” in each ofthe Stock Option Agreement and the Inducement Option Agreement is hereby amended to provide thatthe option governed by each such agreement may be exercised for a period of 18 months following theTermination Date, rather than 90 days following termination.               ii. Definition of Service Provider. The definition of “Service Provider” contained inthe Inducement Option Agreement and as used in the Stock Option Agreement (by
 

 
reference to the Company’s 1998 Stock Plan, which shall not be effected by this Agreement)is hereby amended to read as follows: “ “Service Provider” means an Employee or Director.”               iii. Vested Options. The Parties agree that for purposes of determining the number ofshares of the Company’s common stock that Employee is entitled to purchase from the Company,pursuant to the exercise of outstanding options, Employee will be considered to have vested up toand through November 5, 2007. Employee acknowledges that as of the November 5, 2007, Employee willhave vested in 175,002 options and no more.          b. Consulting Agreement. The Company and Employee hereby agree to enter into aconsulting agreement in substantially the form attached hereto as Exhibit A (the“Consulting Agreement”), pursuant to which Employee will provide the consulting services describedtherein for a period of three (3) months in exchange for the Company’s payment of a monthlyconsulting fee equal to $20,000, on the terms and subject to the conditions set forth in theConsulting Agreement.          c. COBRA Payments. If Employee properly elects continuation coverage under theCompany’s group health plan pursuant to Sections 601 through 607 of the Employee Retirement IncomeSecurity Act of 1974, as amended (“COBRA”), the Company will pay the full COBRA premium on behalfof Employee and his enrolled family members for the period beginning on the Effective Date, andending on the earlier of (a) the three (3) month anniversary of the Effective Date, (b) thetermination of the Consulting Agreement, (c) the date Employee first becomes eligible for coverageunder any group health plan maintained by another employer of Employee or his spouse, or (d) thedate such COBRA continuation coverage otherwise terminates as to Employee under the provisions ofthe Company’s group health plan. Nothing herein shall be deemed to extend the otherwise applicablemaximum period in which COBRA continuation coverage is provided or supersede the plan provisionsrelating to early termination of such COBRA continuation coverage.          d. Personal Computer. Employee may retain his current personal computer environmentthat was provided to him by the Company for his use during his employment with the Company;*provided*, *however*, that Employee shall return the personal computer to the Company on or before thetermination of the Consulting Agreement, so that the Company may remove any confidential orproprietary information belonging to the Company and any computer programs that are licensed to theCompany. Employee covenants and agrees that he will not make or retain copies of any suchinformation. To ensure that all of its confidential and proprietary information and/or computerprograms have been removed from the Employee’s personal computer, the Company may, at its soleoption, exchange the hard drive contained in the laptop computer for a new hard drive provided thatthe new hard drive has at least the same processing speed, memory capacity, and other similarcharacteristics.     2. Benefits. Employee’s health insurance benefits shall cease on the last day ofOctober 2007, subject to Employee’s right to continue his/her health insurance under COBRA.Employee’s participation in all benefits and incidents of employment, including, but not limited tothe accrual of bonuses, vacation, and paid time off, ceased as of the Termination Date; *provided*,*however*, that pursuant to Section 1.a.iii. above, Employee will be considered to have vested in theshares covered by the Stock Agreements up to and through November 5, 2007.     3. Payment of Salary and Receipt of All Benefits. Employee acknowledges andrepresents that (a) other than the consideration set forth in this Agreement, the Company has paidor provided all
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salary, wages, bonuses, accrued vacation/paid time off, housing allowances,relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses for whichreimbursement documentation has been submitted to the Company, commissions, stock, stock options,vesting, and any and all other benefits and compensation due to Employee and (b) Employee is notentitled to and will not receive any benefits pursuant to the Change of Control and SeveranceAgreement. Notwithstanding the foregoing, the Parties hereby agree that in the event that Employeehas any validly reimbursable expenses outstanding as of the date hereof for which reimbursementdocumentation has not previously been submitted to the Company, Employee shall submit suchreimbursement documentation as soon as reasonably practicable following the date hereof and theCompany shall reimburse such amounts pursuant to its standard expense reimbursement policies.     4. Release of Claims. Employee agrees that the foregoing consideration representssettlement in full of all outstanding obligations owed to Employee by the Company and its currentand former officers, directors, employees, agents, investors, attorneys, shareholders,administrators, affiliates, benefit plans, plan administrators, insurers, divisions, andsubsidiaries, and predecessor and successor corporations and assigns (collectively, the“Releasees”). Employee, on his own behalf and on behalf of his respective heirs, family members,executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not tosue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge,duty, obligation, or cause of action relating to any matters of any kind, whether presently knownor unknown, suspected or unsuspected, that Employee may possess against any of the Releaseesarising from any omissions, acts, facts, or damages that have occurred up until and including theEffective Date of this Agreement, including, without limitation:          a. any and all claims relating to or arising from Employee’s employment relationship with theCompany and the termination of that relationship;          b. any and all claims relating to, or arising from, Employee’s right to purchase, or actualpurchase of shares of stock of the Company, including, without limitation, any claims for fraud,misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law,and securities fraud under any state or federal law;          c. any and all claims for wrongful discharge of employment; termination in violation of publicpolicy; discrimination; harassment; retaliation; breach of contract, both express and implied;breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel;negligent or intentional infliction of emotional distress; fraud; negligent or intentionalmisrepresentation; negligent or intentional interference with contract or prospective economicadvantage; unfair business practices; defamation; libel; slander; negligence; personal injury;assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;          d. any and all claims for violation of any federal, state, or municipal statute, including,but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; theRehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; theFair Labor Standards Act, except as prohibited by law; the Fair Credit Reporting Act; the AgeDiscrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the EmployeeRetirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act;the Family and Medical Leave Act, except as prohibited by law; the Sarbanes-Oxley Act of 2002; theUniformed Services Employment and Reemployment Rights Act; the California Family Rights Act; the
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California Labor Code, except as prohibited by law; the California Workers’ Compensation Act,except as prohibited by law; and the California Fair Employment and Housing Act;          e. any and all claims for violation of the federal or any state constitution;          f. any and all claims arising out of any other laws and regulations relating to employment oremployment discrimination;          g. any claim for any loss, cost, damage, or expense arising out of any dispute over thenon-withholding or other tax treatment of any of the proceeds received by Employee as a result ofthis Agreement; and          h. any and all claims for attorneys’ fees and costs.Employee agrees that the release set forth in this section shall be and remain in effect in allrespects as a complete general release as to the matters released. This release does not extend toany obligations incurred under this Agreement. This release does not release claims that cannot bereleased as a matter of law, including, but not limited to: (1) Employee’s right to file a chargewith or participate in a charge by the Equal Employment Opportunity Commission, or any other local,state, or federal administrative body or government agency that is authorized to enforce oradminister laws related to employment, against the Company (with the understanding that any suchfiling or participation does not give Employee the right to recover any monetary damages againstthe Company; Employee’s release of claims herein bars Employee from recovering such monetary relieffrom the Company); (2) claims under Division 3, Article 2 of the California Labor Code (whichincludes California Labor Code section 2802 regarding indemnity for necessary expenditures orlosses by employee); and (3) claims prohibited from release as set forth in California Labor Codesection 206.5 (specifically “any claim or right on account of wages due, or to become due, or madeas an advance on wages to be earned, unless payment of such wages has been made”).     5. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that he iswaiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967(“ADEA”), and that this waiver and release is knowing and voluntary. Employee agrees that thiswaiver and release does not apply to any rights or claims that may arise under the ADEA after theEffective Date of this Agreement. Employee acknowledges that the consideration given for thiswaiver and release is in addition to anything of value to which Employee was already entitled.Employee further acknowledges that he has been advised by this writing that: (a) he should consultwith an attorney prior to executing this Agreement; (b) he has twenty-one (21) days withinwhich to consider this Agreement; (c) he has seven (7) days following his execution of thisAgreement to revoke this Agreement; (d) this Agreement shall not be effective until after therevocation period has expired; and (e) nothing in this Agreement prevents or precludes Employeefrom challenging or seeking a determination in good faith of the validity of this waiver under theADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unlessspecifically authorized by federal law. In the event Employee signs this Agreement and returns itto the Company in less than the 21-day period identified above, Employeehereby acknowledges that he has freely and voluntarily chosen to waive the time periodallotted for considering this Agreement.
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     6. California Civil Code Section 1542. Employee acknowledges that he has been advisedto consult with legal counsel and is familiar with the provisions of California Civil Code Section1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR