**Exhibit 10.5****SUBORDINATION AGREEMENT**     **This Subordination Agreement**(this “Agreement”) dated August 14, 2007, for reference purposes,is made by and between Mid-Peninsula Bank — part of Greater Bay Bank N.A. (“Senior Lender”), andAmerican Medical Systems, Inc. (“AMS”), a Delaware corporation, and Laserscope (“Laserscope”), aCalifornia corporation and wholly-owned subsidiary of AMS (AMS and Laserscope are herebycollectively called “Subordinate Lender”), and Iridex Corporation, a Delaware corporation(“Borrower”), with reference to the following facts.Recitals     Senior Lender has made, and in the future may make, further credit accommodations available toBorrower pursuant to the terms and provisions of that Business Loan and Security Agreement (the“Domestic Agreement”) dated as of January 16, 2007, and Export-Import Bank Loan and SecurityAgreement (the “Exim Agreement”) dated as of January 16, 2007.     Subordinate Lender has made, or in the future may make, credit accommodations available toBorrower arising out of or relating to that Asset Purchase Agreement dated November 30, 2006 (the“Asset Purchase Agreement”), and that certain Product Supply Agreement dated January 16, 2007 asamended by a letter agreement dated June 27, 2007, as further amended by that letter agreementdated July 31, 2007 and the letter agreement dated August 6, 2007 (the “Product Supply Agreement”),both as amended by a Settlement Agreement dated August 14, 2007 (the “Settlement Agreement”), byand between Subordinate Lender and Borrower (the “Subordinate Credit Agreement”).     **NOW, THEREFORE**, in consideration of the above recitals and the provisions set forth herein,and other good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties hereto agree as follows:     **1. Definitions**. For purposes of this Agreement, the following terms used herein shall havethe following meanings:          “*Collateral*” means any and all property which now constitutes or hereafter will constitutecollateral or other security for payment of the Senior Debt pursuant to the Senior Loan Documents.          “*Loan Party*” means Borrower and any affiliates of Borrower who now or hereafter executes anddelivers any guaranties or security documents in favor of Senior Creditor with respect to SeniorDebt or in favor of Subordinate Lender with respect to Subordinate Debt.          “Proceeding” means any (a) insolvency, bankruptcy, receivership, custodianship, liquidation,reorganization, readjustment, composition or other similar proceeding relating to anyLoan Party or any of their respective properties, whether under any bankruptcy, reorganizationor insolvency law or laws, federal or state, or any law, federal or state, relating to relief ofdebtors, readjustment of indebtedness, reorganization, composition or extension, (b) proceeding forany
 

 
liquidation, liquidating distribution, dissolution or other winding up of any Loan Party,voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings, (c)assignment for the benefit of creditors of any Loan Party or (d) other marshaling of the assets ofany Loan Party.          “*Proceeds*” have the meaning assigned to it under the UCC, shall also include “products” (asdefined in the UCC), and, in any event, shall include, but not be limited to (a) any and allproceeds of any insurance, indemnity, warranty, letter of credit or guaranty or collateral securitypayable to any grantor from time to time with respect to any of the Collateral, (b) any and allpayments (in any form whatsoever) made or due and payable to the owner of the Collateral from timeto time in connection with any requisition, confiscation, condemnation, seizure or forfeiture ofall or any part of the Collateral by any governmental body, authority, bureau or agency (or anyperson acting under color of governmental authority) and (c) any and all other amounts from time totime paid or payable under or in connection with any of the Collateral.          “*Senior Creditor*” means, individually and collectively, Senior Lender and all other present orfuture holders of all or part of the Senior Debt or any other indebtedness of Borrower that isincurred for the purpose of paying in full the Senior Debt, and their respective successors andassigns.          “*Senior Debt*” means and include all indebtedness, obligations and liabilities of any LoanParty under the Senior Loan Documents, including without limitation all principal and interest(including interest accrued subsequent to, and interest that would have accrued but for, the filingof any petition under any bankruptcy, insolvency or similar law) and other amounts payablethereunder, in either case whether now or hereafter arising, direct or indirect, primary orsecondary, joint, several or joint and several, final or contingent and whether incurred as maker,endorser, guarantor or otherwise.          “*Senior Loan Documents*” means the Senior Notes, the Domestic Agreement and the Exim Agreementand all agreements, documents and instruments executed and delivered in connection therewith.          “*Senior Notes*” mean that certain (a) Promissory Note (Term Loan) executed by Borrower payableto the order of Senior Creditor dated January 16, 2007, in the original principal amount of$6,000,000.00, and (b) Promissory Note (Line of Credit) executed by Borrower payable to the orderof Senior Creditor dated January 16, 2007, in the original principal amount of $6,000,000.00,including all renewals, extensions or modifications thereof;          “*Stop Payment Notice*” shall have the meaning set forth in Section 3(a) hereof.          “*Subordinate Creditor*” means, individually and collectively, Subordinate Lender and all otherpresent or future holders of all or part of the Subordinate Debt, and their respective successorsand assigns.          “*Subordinate Debt*” means and include all indebtedness, obligations and liabilities of any LoanParty under the Subordinate Loan Documents, including, without limitation, all principal andinterest (including post-petition interest accrued subsequent to the filing of any petition under
 

 
any bankruptcy, insolvency or similar law) and other amounts payable thereunder, in either casewhether now or hereafter arising, direct or indirect, primary or secondary, joint, several or jointand several, final or contingent and whether incurred as maker, endorser, grantor or otherwise.          “*Subordinate Loan Documents*” means the Asset Purchase Agreement, the Product Supply Agreement,the Settlement Agreement, and all agreements, documents and instruments executed and delivered inconnection therewith, including a Security Agreement of even date herewith by and betweenSubordinate Lender and Borrower.          “*UCC*” means the Uniform Commercial Code as in effect from time to time in the State ofCalifornia.     **2. General**. Notwithstanding any provisions of the Subordinate Loan Documents to the contrary,the Subordinate Debt shall be subordinate and junior in right of payment to all Senior Debt, to theextent and in the manner provided for in this Agreement, and each Subordinate Creditor, byacceptance thereof, whether upon original issuance, transfer, assignment or exchange, agrees to bebound by the provisions of this Agreement.     **3. Subordination in the Event of Certain Defaults.**          (a) If (i) any default in the payment on account of any principal of or interest on, or anyother amounts owing in respect of, any Senior Debt (whether at maturity or at a date fixed forprepayment or by declaration, acceleration or otherwise) occurs or exists, or (ii) any event ofdefault under any provision of any of the Senior Loan Documents occurs or exists, then the rightsof Subordinate Creditor to demand, sue for, take, receive or accept from Borrower by set-off or inany other manner, any payment, distribution or Collateral on account of the Subordinate Debt, shallbe suspended during any Payment Blockage Period. For purposes of this Agreement, “Payment BlockagePeriod” shall mean a period commencing from and after the date that Subordinate Creditor receives anotice to suspend payments under the Subordinate Debt which is accompanied by a copy of the noticeof default that the Senior Creditor sent to Borrower (a “Payment Blockage Notice”), and ending uponthe earliest to occur of the following: (1) each event of default which is the subject of suchPayment Blockage Notice shall have been waived in writing by Senior Creditor or cured to SeniorCreditor’s satisfaction (whether by amendment of the Senior Loan Documents or otherwise), (2) theSenior Debt has been paid in full and all commitments of the Senior Creditor to Borrower under theSenior Loan Documents shall have expired or been terminated, (3) 120 consecutive days have elapsedsince the receipt by Subordinate Creditor of the Payment Blockage Notice, or (iv) the benefits ofthis Section 3(a) have been waived in writing by Senior Creditor. One or more Payment BlockageNotices may be issued pursuant to this Section 3(a) provided that the aggregate number of daysduring which payment to the Subordinated Creditor may be blocked does not exceed an aggregate of180 days in any period of 365 consecutive days. At the end of any Payment Blockage Period,Borrower may resume making any and all required payments pursuant to the terms of the SubordinateLoan Documents, including any payments missed during such Payment Blockage Period or at any othertime, except to the extent that by making any such payments Borrower willcause any event of default to occur under any provision of any of the Senior Loan Documents inwhich case Borrower shall limit payments to Subordinate Creditor only to that amount which willnot cause such an event of default to occur.
 

 
          (b) Unless or until Senior Creditor exercises its rights under Section 3(a), Borrower isauthorized to pay all amounts as scheduled in the Subordinate Loan Documents except that Borroweragrees not to make any payment to Subordinate Creditor if any such payments will cause any event ofdefault to occur under any provision of any of the Senior Loan Documents. Notwithstanding anythingelse contained herein to the contrary, Subordinate Creditor shall be entitled to receive cashpayments against delivery of finished goods products, hand pieces and spare parts sold to Borrowerunder Sections 2(a) and 2(b) of the Settlement Agreement, whether such finished goods, hand piecesand spare parts are delivered before or after termination or expiration of the Product SupplyAgreement , including during any Payment Blockage Period, provided that such payments are made byBorrower in full compliance with the payment terms of the Product Supply Agreement requiringBorrower to pay cash in advance or via a confirmed letter of credit (“Advance Product Payments”).For the avoidance of doubt, Subordinate Creditor and Borrower acknowledge and agree that in noevent will the foregoing exception for Advance Product Payments during any Payment Blockage Periodbe applicable to any payments by Borrower of (i) the Adjustment Amount (as defined in theSettlement Agreement) or any accrued interest thereon, or (ii) the Final Product Inventory Payment(as defined in the Settlement Agreement) or any accrued interest thereon.     **4. Subordination in the Event of Insolvency, Etc.**In the event and during the continuance ofany Proceeding, all Senior Debt shall first be finally and irrevocably paid in full in cash beforeany payment or distribution of any character, whether in cash, securities or other property (exceptfor securities which are subordinate and junior in right of payment to the payment of Senior Debtat least to the extent provided in this Agreement), shall be made, received or accepted for or onaccount of any Subordinate Debt other than Advance Product Payments. In the event of anyProceeding, any payment or distribution in any such Proceeding of any kind or character, whether incash, securities or other property which would otherwise (but for this Agreement) be payable ordeliverable in respect of any Subordinate Debt shall be paid or delivered by the person making suchdistribution or payment, whether a trustee in bankruptcy, receiver, assignee for the benefit ofcreditors, liquidating trustee or agent, or otherwise, directly to Senior Creditor, for applicationin payment of the Senior Debt in accordance with the priorities then existing among such holders,to the extent necessary to pay in full all Senior Debt then remaining unpaid, after giving effectto any concurrent payment or distribution to the holders of Senior Creditor.     **5. Standstill**. Subordinate Creditor agrees to send to Senior Creditor, at the same time it issent to any Loan Party, a copy of any notice of default under the Subordinate Debt sent to any LoanParty and further agrees that for at least 10 days thereafter, and if Senior Creditor sends toBorrower with copy to Subordinate Creditor a Payment Blockage Notice, then after receipt of aPayment Blockage Notice, Subordinate Creditor shall not, during the Payment Blockage Periodcommenced upon receipt of such Payment Blockage Notice, exercise any rights or remedies or take anyenforcement action available upon the occurrence of a default or an event of default or otherwiseunder the Subordinate Loan Documents or take any action toward the collection of any SubordinateDebt until the end of such Payment Blockage Period, provided, however, if a Proceeding occurs theSubordinate Creditor may, during the Payment Blockage Period, file a proof of claim and otherwiseparticipate to the fullest extent under applicable law in any Proceeding and, unless otherwiseagreed by the Senior Creditor, all amounts and other property received by Subordinate Creditor as aresult of any such actions shall be paid over and delivered to the Senior Creditor in accordancewith the provisions of Section 8. The failure to make a payment of principal of, interest on, orfees, costs or
 

 
expenses relative to, any of the Subordinate Debt by reason of any provision of thisAgreement shall not be construed as preventing the occurrence of a default or event of default withrespect to such Subordinate Debt, nor shall any provision of this Agreement prevent acceleration ofthe Subordinate Debt in accordance with the terms of the Subordinate Loan Documents.     **6. Payments Notwithstanding**. No payment or distribution of any character, whether in cash,securities or other property (except for securities that are subordinate and junior in right ofpayment to the payment of Senior Debt at least to the extent provided in this Agreement), to whichSubordinate Creditor would have been entitled except for the provisions of this Agreement and thatshall have been made to or for the account of Senior Creditor shall, as between each Loan Party andits creditors (other than Senior Creditor), be deemed to be a payment or distribution by such LoanParty to or for the account of Senior Creditor, and from and after the payment in full in cash ofall Senior Debt, Subordinate Creditor shall be subrogated to all rights of Senior Creditor toreceive any further payments or distribution applicable to the Senior Debt until the SubordinateDebt shall be paid in full, and no such payment or distribution made pursuant to such rights ofsubrogation to Subordinate Creditor that otherwise would be payable or distributable to or for theaccount of Senior Creditor shall, as between each Loan Party and its creditors (other thanSubordinate Creditor), be deemed to be a payment or distribution by such Loan Party to SubordinateCreditor or on account of the Subordinate Debt.     **7. No Prejudice or Impairment**. The provisions of this Agreement are solely for the purposesof defining the relative rights of Senior Creditor, on the one hand, and Subordinate Creditor, onthe other hand. Senior Creditor shall not be prejudiced in the right to enforce subordination ofthe Subordinate Debt by any act or failure to act by any Loan Party or anyone in custody of theCollateral. Nothing herein shall impair, as between each Loan Party and Subordinate Creditor, theobligation of such Loan Party, which is unconditional and absolute, to pay to Subordinate Creditorthe principal of and interest on the Subordinate Debt as and when the same shall become due inaccordance with their terms, nor shall anything herein prevent Subordinate Creditor from exercisingall remedies otherwise permitted by applicable law upon default under the Subordinate LoanDocuments, subject, however, to the provisions of this Agreement and the rights of Senior Creditorto the extent provided herein.     **8. Turnover of Payments**. If any payment, distribution or security (except for securities ofBorrower that are subordinated and junior in right of payment to the payment of Senior Debt atleast to the extent provided in this Agreement), or the proceeds of any thereof, shall be collectedor received by Subordinate Creditor in contravention of any of the terms of this Agreement andprior to the irrevocable payment in full of Senior Debt at the time outstanding, the holder thereofwill forthwith deliver such payment, distribution, security or proceeds to Senior Creditor and,until so delivered, the same shall be held in trust by such holder as the property of SeniorCreditor.     **9. Priorities Regarding Collateral**. Any and every lien and security interest in theCollateral in favor of or held for the benefit of Senior Creditor, to the extent perfected andenforceable, has and shall have priority over any lien or security interest that SubordinateCreditor now has or may hereafter acquire in the Collateral, to the extent perfected andenforceable by Subordinate Creditor, notwithstanding any statement or provision contained in theSubordinate Loan Documents or otherwise to the contrary and irrespective of the time or order offiling or recording of
 

 
financing statements, deeds of trust, mortgages or other notices of securityinterests, liens or assignments granted pursuant thereto, and irrespective of anything contained inany filing or agreement to which any party hereto or its respective successors and assigns may nowor hereafter be a party, and irrespective of the ordinary rules for determining priorities underthe UCC or under any other law governing the relative priorities of secured creditors. At any timeduring which all or any part of the Senior Debt remains outstanding, and whether or not the same isthen due and payable, the Proceeds of any sale, disposition or other realization by Senior Creditoror other party hereto (or any agent therefor) upon all or any part of the Collateral shall beapplied in the following order of priorities irrespective of the application of any rule of law orthe defect or impairment of any Senior Loan Document, Subordinate Loan Document or securityinterest, lien or assignment thereunder:       **first**, to the payment of all costs and expenses of Senior Creditor (including, withoutlimitation, the reasonable fees and expenses of legal counsel and other agents)incurred in connection with the collection of such Proceeds or the protection of therights and interests of Senior Creditor therein;       **second**, to the payment in lull of all Senior Debt, to be applied first to late charges,penalty fees and the like, if any, and next to accrued and unpaid interest, and then tothe payment of outstanding principal in such order as Senior Creditor shall determinein its sole discretion;       **third**, to the payment of all costs and expenses of Subordinate Creditor (including, withoutlimitation, the reasonable fees and expenses of legal counsel and other agents)incurred in connection with the collection of such Proceeds or the protection of therights and interests of Subordinate Creditor;       **fourth**, to the payment in full of all Subordinate Debt in such order as Subordinate Creditorshall determine in its sole discretion; and       **finally**, to pay any surplus then remaining to the owner of the Collateral or its successorsor assigns or as a court of competent jurisdiction may direct.In the event any party to this Agreement receives Proceeds of the Collateral to which it is notentitled under this Section 9, such party shall be deemed to hold all of such Proceeds in trust forthe benefit party entitled thereto under this Section 9. Subordinate Creditor shall be entitled torely upon any order or decree made by any court of competent jurisdiction in which proceedings arepending, or a certificate of the liquidating trustee or other person making any distribution toSubordinate Creditor, for the purpose of ascertaining the persons entitled to participate in suchdistribution, the Senior Creditor and the holders of other debt of Borrower, the amount thereof orpayable thereon, the amount or amounts paid or distributed thereon and all other facts pertinentthereto or to this Agreement.     **10. Benefit of Agreement; Amendments of Certain Documents; Etc.**This Agreement shallconstitute a continuing offer to all persons who, in reliance upon such provisions, become a SeniorCreditor, and such provisions are made for the benefit of each Senior Creditor and each of
 

 
them may enforce such provisions. The provisions of the Subordinate Loan Documents may not be amended ormodified in any respect which may adversely affect a Senior Creditor or violate the terms of theSenior Loan Documents as such documents are in effect on the date hereof, including, withoutlimitation, no change in the scheduled payments or in the maturity date shall be made by Borrowerand allowed by Subordinate Creditor without Senior Creditor’s prior written consent, andnotwithstanding anything to the contrary contained in the Subordinate Loan Documents, noprepayments of the Subordinated Debt in whole or in part shall be made by Borrower and allowed bySubordinate Creditor for so long as this Agreement is in force and effect without Senior Creditor’sprior written consent. Neither Senior Creditor nor, except as herein provided, SubordinateCreditor shall have any obligation to preserve rights in the Collateral against any prior partiesor to marshal any of the Collateral for the benefit of any person. No failure to exercise, and nodelay in exercising on the part of any party hereto, any right, power or privilege under thisAgreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right,power or privilege under this Agreement preclude any other or further exercise thereof or theexercise of any other right, power or privilege. The rights and remedies provided in thisAgreement are cumulative and shall not be exclusive of any rights or remedies provided by law. Anyagreements, documents or instruments which at anytime evidence the Subordinate Debt or any partthereof shall be marked with a legend stating that payment hereunder is subject to the terms andprovisions of this Agreement. Subordinate Creditor hereby grants to Senior Creditor the right tofile proofs of claim on account of the Subordinate Debt in any Proceeding in the event thatSubordinate Creditor fails to do so within 15 days of the bar date pertaining thereto; provided,however, that Senior Creditor shall not be permitted to vote such claim, all voting rights withrespect thereto being hereby retained by Subordinate Creditor.     **11. Representations and Warranties**. Each of the parties hereto hereby represents and warrantsthat (a) it has full power, authority and legal right to make and perform this Agreement, and (b)this Agreement is its legal, valid and binding obligation, enforceable against it in accordancewith its terms.     **12. Amendment**. Neither this Agreement nor any of the terms hereof may be amended, waived,discharged or terminated unless such amendment, waiver, discharge or termination is in writingsigned by Senior Creditor and Subordinate Creditor.     **13. Successors and Assigns**. This Agreement, and the terms, covenants and conditions hereof,shall be binding upon and inure to the benefit of the parties hereto, and their respectivesuccessors and assigns. Subordinate Creditor and Senior Creditor further agree between themselvesand solely for their own collective benefit, that if Borrower is in the process of refinancing aportion of the Senior Debt or Subordinate Debt with a new lender (such refinancing to be inaccordance with the provisions of the Senior Loan Documents) and if the party who wishes to berefinanced makes a request of the other parties hereto, Subordinate Creditor or Senior Creditor, asthe case may be, may agree (but shall not be obligated to agree) to enter into a new, substituteagreement with the new lender; provided, however, that any such new, substitute agreement shall bein a form, and contain such terms and conditions, as may be acceptable to the party whose financialaccommodations to Borrower are not being refinanced; and provided further, however, that in no circumstancesshall the party hereto whose financial accommodations to Borrower are not being refinanced beobligated to
 

 
enter into such an agreement if the substitute agreement deprives it of any materialright, privilege or benefit accorded to it hereunder.     **14. Governing Law**. This Agreement will be governed by federal law applicable to Senior Lenderand, to the extent not preempted by federal law, the laws of the State of California without regardto its conflicts of law provisions. This Agreement has been signed and delivered by SubordinateLender and Borrower and accepted by Senior Lender in the State of California.     **15. Notices**. Whenever it is provided herein that any notice, demand, request, consent,approval, declaration or other communication shall or may be given to or served upon any of theparties by another, or whenever any of the parties desires to give or serve upon another any suchcommunication with respect to this Agreement, each such notice, demand, request, consent, approval,declaration, or other communication shall be in writing (including by facsimile transmission) andshall be deemed to have been duly given and received, for purposes hereof, when delivered by handor three days after being deposited in the mail, postage prepaid, certified mail, return receiptrequired, or in the case of facsimile notice, when sent to the number set forth below, addressed asfollows:       If to Senior Creditor: Mid-Peninsula Bank — part of Greater Bank NA.    420 Cowper Street    Palo Alto, CA 94301    Attention: Sara Lewis, Senior VP    Facsimile: (650) 322-7421       with a courtesy copy to: Thoits, Love, Hershberger & McLean    Two Palo Alto Square, Suite 500    Palo Alto, CA 94306    Attention: Terrence P. Conner, Esq.    Facsimile: (650) 325-5572       If to Subordinate Creditor: American Medical Systems, Inc.    10700 Bren Road West    Minnetonka, MN 55343    Attention: _John Armbruster    Facsimile: (952) 930-6461       with a courtesy copy to: Oppenheimer Wolf & Donnelly LLP    45 South 7th Street, Suite 3300    Minneapolis, MN 55402    Attention: Thomas A. Letscher, Esq.    Facsimile: (6l2) 607-7l00       If to a Loan Party: Iridex Corporation    1212 Terra Bella Avenue    Mountain View, CA 94043    Attention: Barry G. Caldwell, President & CEO    Facsimile: (650) 940-4710
 

 
       with a courtesy copy to: Wilson Sonsini Goodrich & Rosati    650 Page Mill Road    Palo Alto, CA 94304    Attention: Andrew J. Hirsch, Esq.    Facsimile: (650) 493-6811, or at such address as may be substituted by notice given as herein provided. The giving of anynotice required hereunder may be waived in writing by the party entitled to receive such notice.Every notice, demand, request, consent, approval, declaration or other communication hereundershall be deemed to have been duly given or served on the date on which personally delivered, withreceipt acknowledged, or five business days after the same shall have been deposited in the UnitedStates mail, certified, return receipt requested. Failure or delay in delivering copies of anynotice, demand, request, consent, approval, declaration or other communication to the personsdesignated above to receive copies shall in no way adversely affect the effectiveness of suchnotice, demand, request, consent, approval, declaration or other communication.     **16. Counterparts**. This Agreement may be executed in one or more counterparts, each of whichshall be deemed an original, but all of which together shall constitute one and the sameinstrument. The parties agree that delivery by facsimile or in a PDF file via the Internet ofexecuted signature pages shall be deemed execution of this Agreement. All facsimile or PDFsignatures of this Agreement shall be deemed originals for all purposes.[*Remainder of page intentionally left blank.*]
 

 
     **In Witness Whereof**, the parties hereto have caused this Agreement to be duly executed by theirproper and duly authorized officers as of the day and year first above written.         **SUBORDINATE LENDER:**           AMERICAN MEDICALSYSTEMS INC.           By: /s/ John F. Nealon            Name: John F. Nealon           Title: Senior Vice President, BusinessDevelopment           **LASERCOPE**           By: /s/ John F. Nealon            Name: John F. Nealon           Title: Senior Vice President, BusinessDevelopment           **SENIOR LENDER:**           MW-PENINSULA BANK — A PART OF    GREATER BAY BANK N.A.           By: /s/ Patrick Pierre            Name: Patrick Pierre           Title: Senior Vice President           **BORROWER:**           IRIDEX CORPORATION           By: /s/ Barry G. Caldwell            Name: Barry G. Caldwell           Title: Pres & CEO  
 

 
     In Witness Whereof, the parties hereto have caused this Agreement to be duly executed by theirproper and duly authorized officers as of the day and year first above written.         **SUBORDINATE LENDER:**           AMERICAN MEDICALSYSTEMS, INC.           By: /s/ John F. Nealon            Name: John F. Nealon           Title: Senior Vice President, Business Development           **LASERSCOPE**           By: /s/ John F. Nealon            Name: John F. Nealon           Title: Senior Vice President, Business Development           **SENIOR LENDER:**           MID-PENINSULA BANK — A PART OF    GREATER BAY BANK NA.           By: /s/ Patrick Pierre            Name: Patrick Pierre           Title: Senior Vice President           **BORROWER:**           IRIDEX CORPORATION           By: /s/ Barry G. Caldwell            Name: Barry G. Caldwell           Title: Pres & CEO  
 

 
     **In Witness Whereof**, the parties hereto have caused this Agreement to be duly executed by theirproper and duly authorized officers as of the day and year first above written.         **SUBORDINATE LENDER:**           AMERICAN MEDICALSYSTEMS, INC.           By: /s/ John F. Nealon            Name: John F. Nealon           Title: Senior Vice President, BusinessDevelopment           **LASERSCOPE**           By: /s/ John F. Nealon            Name: John F. Nealon           Title: Senior Vice President, BusinessDevelopment           **SENIOR LENDER:**           MID-PENINSULA BANK — A PART OF    GREATER BAY BANK NA.           By: /s/ Patrick Pierre            Name: Patrick Pierre           Title: Senior Vice President           **BORROWER**           IRIDEX CORPORATION           By: /s/ Barry G. Caldwell            Name: Barry G. Caldwell           Title: Pres & CEO