Exhibit 10.35
AMENDMENT NO. 1
TO
SUBORDINATION AGREEMENT
     This Amendment No. 1 (the “Amendment”) to Subordination Agreement, a copy
of which is attached as Exhibit A hereto (the “Subordination Agreement”) entered
into effective as of November 7, 2006 by and among Oculus Innovative Sciences,
Inc., (“Debtor”), R. C. Burlingame (the “Creditor”) and Venture Lending &
Leasing IV, Inc. (“VLL IV”) and Venture Lending & Leasing III, LLC, as successor
in interest to Venture Lending & Leasing III, Inc. (“Lenders”, and together with
Creditor and Debtor, the “Parties”) is made and entered into as of March 29,
2007, by and among the Parties.
RECITALS
     A. The Parties previously entered into the Subordination Agreement.
     B. The Parties each wishes to modify certain terms of the Subordination
Agreement on the terms and subject to the conditions set forth in this
Amendment.
     C. Concurrently herewith, Debtor, along with its affiliates, and VLL IV are
entering into an amendment to that certain Supplement to Loan and Security
Agreements entered into by and between VLL and Debtor on June 14, 2006 (the “VLL
Agreements”).
     D. Concurrently herewith, Debtor, VLL IV and Creditor are entering into an
amendment of the Non-Negotiable Secured Promissory Note made by Debtor to
Creditor, dated November 7, 2006.
          NOW, THEREFORE, in consideration of the mutual covenants, agreements
and representations contained in this Amendment, and the Subordination
Agreement, the Parties agree as follows:
     1. Definitions. Except as may be expressly provided in this Amendment, all
capitalized terms used in this Amendment which are defined in the Agreement
shall have meanings in this Amendment as in the Agreement.
     2. Deletion in Section 6. The words “in gross proceeds of at least
$30,000,000” are hereby deleted from the last sentence of Section 6 of the
Agreement.
     3. Addition to Section 7. The words “Except as expressly permitted under
this Agreement, “ are hereby added at the beginning of the second sentence of
Section 7 of the Agreement, which begins ”All of the Lender’s Obligations ...”,
and the first letter of the word “All” in the same sentence is hereby changed to
the lower case letter “a”.
     4. Conflict. In the event of any conflict between the provisions of this
Amendment and the unamended provisions of the Agreement, the provisions of this
Amendment shall prevail

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and the provisions of the Agreement shall be deemed modified by this Amendment
as necessary to resolve such conflict.
     5. Effect of Amendment. Except as expressly amended by this Amendment
and/or by the preceding sentence, the terms and provisions of the Agreement
shall continue in full force and effect.
     IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as
of the day and year first above written.

              DEBTOR:   CREDITOR:
 
            Oculus Innovative Sciences, Inc.   R. C. Burlingame
 
           
By:
  /s/ Jim Schutz   By:   R.C. Burlingame
 
           
Name:
  Jim Schutz        
Title:
  VP & General Counsel        
 
            LENDOR:   LENDOR:
 
            Venture Lending & Leasing IV, Inc.   Venture Lending & Leasing III,
LLC
 
           
By:
  /s/ Maurice Werdegar   By:   /s/ Maurice Werdegar
 
           
Name:
  Maurice Werdegar   Name:   Maurice Werdegar
Title:
  Vice President   Title:   Vice President

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Exhibit A
Subordination Agreement

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