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<SEC-DOCUMENT>0000950134-07-009296.txt : 20070427
<SEC-HEADER>0000950134-07-009296.hdr.sgml : 20070427
<ACCEPTANCE-DATETIME>20070427145902
ACCESSION NUMBER:		0000950134-07-009296
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		10
CONFORMED PERIOD OF REPORT:	20070607
FILED AS OF DATE:		20070427
DATE AS OF CHANGE:		20070427
EFFECTIVENESS DATE:		20070427

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			IRIDEX CORP
		CENTRAL INDEX KEY:			0001006045
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				770210467
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0102

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27598
		FILM NUMBER:		07795292

	BUSINESS ADDRESS:	
		STREET 1:		1212 TERRA BELLA AVE
		CITY:			MOUNTAIN VIEW
		STATE:			CA
		ZIP:			94043
		BUSINESS PHONE:		6509404700

	MAIL ADDRESS:	
		STREET 1:		1212 TERRA BELLA AVENUE
		CITY:			MOUNTAIN VIEW
		STATE:			CA
		ZIP:			94043
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>f29454dedef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>SCHEDULE 14A INFORMATION</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 0pt"><B>Proxy Statement Pursuant to Section&nbsp;14(a) of the Securities<BR>
Exchange Act of 1934</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Filed by the Registrant <FONT face="Wingdings">&#254;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed by a Party other than the
Registrant <FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box:

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Preliminary Proxy Statement<BR>
<FONT face="Wingdings">&#111;</FONT> <B>Confidential, for Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2))</B><BR>
<FONT face="Wingdings">&#254;</FONT> Definitive Proxy Statement<BR>
<FONT face="Wingdings">&#111;</FONT> Definitive Additional Materials<BR>
<FONT face="Wingdings">&#111;</FONT> Soliciting Material Pursuant to Rule&nbsp;14a-12

</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 18pt">IRIDEX CORPORATION
</DIV>

<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Name of Registrant as Specified In Its Charter)</DIV>


<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payment of Filing Fee (Check the appropriate box):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#254;</FONT> No fee required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Title of each class of securities to which transaction applies:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Aggregate number of securities to which transaction applies:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Proposed maximum aggregate value of transaction:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Total fee paid:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fee paid previously with preliminary materials.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amount Previously Paid:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form, Schedule or Registration Statement No.:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Filing Party:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Date Filed:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>IRIDEX CORPORATION</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS<BR>
To Be Held on June&nbsp;7, 2007</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">TO THE STOCKHOLDERS:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of IRIDEX Corporation, a
Delaware corporation (the &#147;Company&#148;), will be held on June&nbsp;7, 2007 at 10:00&nbsp;a.m., Pacific Daylight
Savings Time, at the Company&#146;s principal executive offices located at 1212 Terra Bella Avenue,
Mountain View, California 94043 for the following purposes:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To elect seven (7)&nbsp;directors to serve for the ensuing year or until their
successors are elected and qualified (Proposal 1);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To approve an amendment to the amended and restated 1998 Stock Plan to increase
the number of shares of common stock of the Company reserved for issuance thereunder
(Proposal 2);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To ratify the appointment of PricewaterhouseCoopers LLP as independent
registered public accountants of the Company for the fiscal year ending December&nbsp;29,
2007 (Proposal 3); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To transact such other business as may properly be brought before the meeting
and any adjournment(s) thereof.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders of record at the close of business on April&nbsp;9, 2007 shall be entitled to notice
of and to vote at the Annual Meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All stockholders are cordially invited to attend the meeting. However, to ensure your
representation at the Annual Meeting, please vote as soon as possible using one of the following
methods: (1)&nbsp;by using the Internet as instructed on the enclosed proxy card, (2)&nbsp;by telephone by
calling the toll-free number as instructed on the enclosed proxy card or (3)&nbsp;by mail by completing,
signing, dating and returning the enclosed paper proxy card in the postage-prepaid envelope
enclosed for that purpose. Any stockholder attending the meeting may vote in person even if he or
she has previously voted using the Internet, telephone or proxy card.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By Order of the Board of Directors of IRIDEX
Corporation,</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mountain View, California
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Barry G. Caldwell</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">April&nbsp;27, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>President and Chief Executive Officer</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P>
<DIV style="width: 100%; border: 1px solid black; padding: 1px;">


<DIV align="center" style="font-size: 10pt; margin-top: 1pt"><B>YOUR VOTE IS IMPORTANT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE BY (1)&nbsp;USING THE INTERNET,
(2)&nbsp;TELEPHONE OR (3)&nbsp;COMPLETING AND RETURNING THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.</B>
</DIV>

</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PROXY STATEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">PROPOSAL ONE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS<BR> VOTE &#147;FOR&#148; THE NOMINEES LISTED ABOVE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">PROPOSAL TWO</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">PROPOSAL THREE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">EXECUTIVE OFFICERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">EXECUTIVE COMPENSATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE<BR> OF THE BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">REPORT OF THE AUDIT AND CORPORATE GOVERNANCE COMMITTEE<BR> OF THE BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">OTHER MATTERS</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>





<DIV align="center" style="font-size: 10pt; margin-top: 18pt">IRIDEX CORPORATION<BR>
<B>1212 Terra Bella Avenue<BR>
Mountain View, CA 94043</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 12pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>
<!-- link1 "PROXY STATEMENT" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>PROXY STATEMENT</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>FOR THE 2007 ANNUAL MEETING OF STOCKHOLDERS</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INFORMATION CONCERNING SOLICITATION AND VOTING</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>General</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying Proxy is solicited on behalf of the Board of Directors (the &#147;Board&#148;) of
IRIDEX Corporation, a Delaware corporation (the &#147;Company&#148; or &#147;IRIDEX&#148;), for use at the Annual
Meeting of Stockholders (the &#147;Annual Meeting&#148;) to be held at the principal executive offices of the
Company located at 1212 Terra Bella Avenue, Mountain View, California 94043 on Thursday, June&nbsp;7,
2007, at 10:00&nbsp;a.m., Pacific Daylight Savings Time, and at any adjournment(s) thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Company&#146;s telephone number is (650)&nbsp;940-4700.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These proxy solicitation materials and the Annual Report on Form 10-K for the fiscal year
ended December&nbsp;30, 2006, including financial statements, were mailed on or about April&nbsp;27, 2007 to
all stockholders entitled to vote at the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Record Date and Share Ownership</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders of record at the close of business on April&nbsp;9, 2007 (the &#147;Record Date&#148;) are
entitled to notice of and to vote at the meeting and at any adjournment(s) thereof. At the Record
Date, 8,192,787 shares of the Company&#146;s Common Stock, par value $0.01 per share, were issued and
outstanding and held of record by approximately sixty-six (66)&nbsp;stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Revocability of Proxies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any proxy given pursuant to this solicitation may be revoked by the person giving it at any
time before its use by (a)&nbsp;delivering to the Company at its principal offices to the attention of
the Company&#146;s Chief Financial Officer a written notice of revocation or a duly executed proxy
bearing a later date or (b)&nbsp;attending the meeting and voting in person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Voting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each stockholder is entitled to one vote for each share of Common Stock held by such
stockholder. Holders of the Company&#146;s Common Stock are the only security holders of the Company
entitled to vote at the Annual Meeting. The stockholders may not cumulate votes in the election of
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Solicitation of Proxies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cost of this solicitation will be borne by the Company. The Company has retained the
services of The Proxy Advisory Group, LLC (the &#147;Agent&#148;) to perform a search of brokers, bank
nominees and other institutional owners and to solicit proxies. The Company estimates that it will
pay the Agent a fee of $10,000
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-1-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">for its services and out-of-pocket expenses. In addition, the Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited by certain of the
Company&#146;s directors, officers and regular employees, without additional compensation, personally or
by telephone or other electronic means.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Quorum; Abstentions; Broker Non-Votes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Votes cast by a properly submitted proxy card, or voted by telephone or by using the Internet
or in person at the Annual Meeting will be tabulated by the Inspector of Elections (the
&#147;Inspector&#148;). Holders of a majority of shares entitled to vote must be present at the meeting or
represented by a properly submitted proxy card, or voted by telephone or by using the Internet in
order for a quorum to exist. The Inspector will also determine whether or not a quorum is present.
Except with respect to the Election of Directors under Proposal One, which will be decided by a
plurality vote of the votes duly cast at a duly held meeting at which a quorum is present, the
affirmative vote of a majority of the votes duly cast at a duly held meeting at which a quorum is
present is required under Delaware law and the Company&#146;s Bylaws for approval of all proposals
presented to stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares that are timely voted by telephone, the Internet or a properly dated, executed and
returned proxy card will be voted at the Annual Meeting in accordance with the instructions of the
stockholder. If no specific instructions are given, the shares will be voted (i)&nbsp;FOR the election
of the nominees for directors set forth herein; (ii)&nbsp;FOR the approval of the amended and restated
1998 Stock Plan; (iii)&nbsp;FOR the ratification of PricewaterhouseCoopers LLP as the independent
registered public accounting firm of the Company for the fiscal year ending December&nbsp;29, 2007; and
(iv)&nbsp;in the proxy holder&#146;s discretion, upon such other business as may properly come before the
Annual Meeting or any adjournment thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to Delaware law, the Inspector will treat shares that are voted &#147;FOR,&#148; &#147;AGAINST,&#148;
&#147;WITHHELD&#148; or &#147;ABSTAIN&#148; as being present and entitled to vote for purposes of determining the
presence of a quorum and as shares entitled to vote (the &#147;Votes Cast&#148;) on the subject matter at the
Annual Meeting with respect to such matter. With respect to broker non-votes, although broker
non-votes will be counted for purposes of determining the presence or absence of a quorum for the
transaction of business, broker non-votes will not be counted for purposes of determining the
number of Votes Cast with respect to the particular proposal on which the broker has expressly not
voted and, accordingly, will not affect the determination as to whether the requisite majority of
Votes Cast has been obtained with respect to a particular matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you hold your shares through a broker, bank or other nominee and you do not instruct them
how to vote, your broker, bank or other nominee may have authority to vote your shares on your
behalf.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Deadline for Receipt of Stockholder Proposals to be Presented at the Next Annual Meeting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders of the Company may submit proposals on matters appropriate for stockholder action
at meetings of the Company&#146;s stockholders, including nominations for the election of directors, in
accordance with Rule&nbsp;14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the
&#147;Exchange Act&#148;). The deadline for submitting all proposals by any stockholder to be presented at
the 2008 Annual Meeting of Stockholders must be received by the Company at its principal executive
offices, attention: Secretary, no later than December&nbsp;29, 2007 and must otherwise be in compliance
with applicable laws and regulations in order to be considered for inclusion in the proxy statement
and form of proxy relating to that meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Company&#146;s Bylaws establish an advance notice procedure with regard to certain
matters, including stockholder proposals not included in the Company&#146;s proxy statement, to be
brought before an annual meeting of stockholders. To be properly brought before an annual meeting
of stockholders outside the processes of Rule&nbsp;14a-8, notice of nominations for the election of
directors or other business proposals
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">must be delivered in writing to the Secretary of the Company at the principal executive
offices of the Company no later than December&nbsp;29, 2007. However, in the event the date of the 2008
Annual Meeting of Stockholders is more than 30&nbsp;days before or after (other than as a result of
adjournment) the one year anniversary of the 2007 Annual Meeting of Stockholders, notice by the
stockholder to be timely must be delivered in writing not later than (i)&nbsp;60&nbsp;days before the 2008
Annual Meeting of Stockholders, or (ii)&nbsp;10&nbsp;days after the day on which a public announcement of the
date of such meeting is first made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a stockholder intends to submit a proposal at the Company&#146;s 2008 Annual Meeting of
Stockholders which is not eligible for inclusion in the proxy statement relating to the meeting,
and the stockholder fails to give the Company notice of the proposal on or prior to December&nbsp;29,
2007 and in accordance with the requirements set forth in the Exchange Act, then the proxy holders
will be allowed to use their discretionary authority with regard to proxies delivered in connection
with the 2008 Annual Meeting of Stockholders when and if the proposal is raised at the Company&#146;s
Annual Meeting in 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Stockholder Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>A copy of the Company&#146;s Annual Report on </B><B>Form 10-K</B><B> for the year ended December&nbsp;30, 2006,
including financial statements and schedules, is enclosed with these proxy solicitation materials.
In compliance with Rule&nbsp;14a-3 promulgated under the Exchange Act, the Company hereby undertakes to
provide without charge to each person upon written request, a copy of the Company&#146;s Annual Report
on </B><B>Form 10-K</B><B> for the year ended December&nbsp;30, 2006, including the financial statements and financial
schedules thereto. Requests for such copies should be directed to IRIDEX Corporation, 1212 Terra
Bella Avenue, Mountain View, California 94043, Attention: Investor Relations.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>If you share an address with another stockholder, you may receive only one set of proxy
materials (including our Annual Report on </B><B>Form 10-K</B><B> and proxy statement) unless you have previously
provided contrary instructions. If you wish to receive a separate set of proxy materials, please
request the additional copies by contacting us as instructed in the previous sentence, or by
contacting our Investor Relations Department at (650)&nbsp;940-4700. Similarly, if you share an address
with another stockholder and have received multiple copies of our proxy materials, you may contact
us at the address or telephone number specified above to request that only a single copy of these
materials be delivered to your address in the future.</B>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-3-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "PROPOSAL ONE" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROPOSAL ONE</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>ELECTION OF DIRECTORS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Nominees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A board of seven (7)&nbsp;directors is to be elected at the Annual Meeting. Drs.&nbsp;Hammond and
Garrettson and Messrs.&nbsp;Boutacoff, Caldwell, Donovan, Anderson and Fitch are all currently elected
members of the Board and are standing for re-election. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the election of the seven (7)&nbsp;nominees named
below, all of whom are presently directors of the Company. Each nominee has consented to be named
a nominee in this Proxy Statement and to continue to serve as a director if elected. Should any
nominee become unable or decline to serve as a director or should additional persons be nominated
at the Annual Meeting, the proxy holders intend to vote all proxies received by them in such a
manner as will assure the election of as many nominees listed below as possible (or, if new
nominees have been designated by the Board, in such a manner as to elect such nominees) and the
specific nominees to be voted for will be determined by the proxy holders. The Company is not
aware of any reason that any nominee will be unable or will decline to serve as a director. Each
director elected at the Annual Meeting will serve until the next Annual Meeting of Stockholders or
until such director&#146;s successor has been elected and qualified. There are no arrangements or
understandings between any director or executive officer and any other person pursuant to which he
is or was to be selected as a director or officer of the Company. There is no family relationship
between any director or executive officer of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The names of, and certain information regarding, the nominees, as of April&nbsp;9, 2007 are set
forth below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Director</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name of Nominee</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Principal Occupation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Since</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Barry G. Caldwell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">56</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President, Chief Executive Officer
and Director of the Company
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2005</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Theodore A. Boutacoff
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">59</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of the Company, Chairman
of the Board and senior
principal advisor to the Company&#146;s
Chief Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1989</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">James L. Donovan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">69</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Corporate Business
Development and Director of the
Company
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1989</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Donald L. Hammond, D.Sc. (1)(2)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">79</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of the Company
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1990</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Robert K. Anderson (1)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">71</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of the Company
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1999</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sanford Fitch (1)(2)(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">66</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of the Company
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Garrett A. Garrettson, Ph.D. (1)(2)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director of the Company, Consultant
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Board has made affirmative determination that member is independent as defined under the
listing standards of the Nasdaq Stock Market.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Audit and Corporate Governance Committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Audit committee financial expert as defined in the rules of the Securities and Exchange
Commission.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of the Compensation and Nominating Committee.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Barry G. Caldwell </I>joined the Company in July&nbsp;2005 as its President, Chief Executive
Officer and a member of its Board of Directors. From 1979 to 2002, Mr.&nbsp;Caldwell served in various
capacities with Alcon Laboratories, Inc., a leading developer, manufacturer and marketer of
ophthalmology products. His executive positions included Vice President and General Manager of
Alcon&#146;s US Surgical Division and Vice President of Alcon Canada. Mr.&nbsp;Caldwell previously served on
the Board of Directors for Laser Diagnostic
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-4-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Technologies and Tekia, Inc. In addition, he has served on the Board of Directors for three
ophthalmic industry groups, AdvaMed, NAEVR and EyeRx Coalition. He is also a former member of the
Kentucky State Legislature where he served three consecutive terms in the State&#146;s House of
Representatives. Mr.&nbsp;Caldwell has a Bachelor of Arts in Political Science and English from
Georgetown College and a Juris Doctorate from the Northern Kentucky University Chase College of
Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Theodore A. Boutacoff </I>currently serves as the Chairman of the Company&#146;s Board of Directors and
senior principal advisor to the Company&#146;s Chief Executive Officer. Mr.&nbsp;Boutacoff co-founded the
Company and served as its President and Chief Executive Officer from February&nbsp;1989 to July&nbsp;2005 and
has been a member of its Board of Directors since February&nbsp;1989. Mr.&nbsp;Boutacoff received a B.S. in
Civil Engineering from Stanford University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>James L. Donovan </I>co-founded the Company, has been a director of the Company since 1989 and has
served as the Company&#146;s Vice President, Corporate Business Development since October&nbsp;1997. Mr.
Donovan also served as Chief Financial Officer of the Company from February&nbsp;1989 to October&nbsp;1997,
except during the period from June&nbsp;1996 to November&nbsp;1996. Mr.&nbsp;Donovan received a B.S. in Business
Administration from Southern Oregon University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Donald L. Hammond, D.Sc.</I>, has served as a director of the Company since 1990. Dr.&nbsp;Hammond has
been retired since 1989. From 1966 to 1989, Dr.&nbsp;Hammond was the Director of Hewlett-Packard
Laboratories, a computer and instrument company. Dr.&nbsp;Hammond received a B.S., an M.S. and a D.Sc.
in Physics from Colorado State University. Dr.&nbsp;Hammond also received a degree in Elasticity from
Columbia University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Robert K. Anderson </I>has served as a director of the Company since 1999. Mr.&nbsp;Anderson
co-founded Valleylab, Inc., a manufacturer of surgical equipment, in 1969 and served as its
Chairman and Chief Executive Officer until 1986. In 1983, Valleylab, Inc. was acquired by Pfizer,
Inc. and Mr.&nbsp;Anderson remained as Chairman until 1996. Mr.&nbsp;Anderson has been retired since 1996.
Mr.&nbsp;Anderson received a B.E.E. in Electrical Engineering from University of Minnesota.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sanford Fitch </I>has served as a director of the Company since 2004. Mr.&nbsp;Fitch has served as a
director of Foxhollow Technologies, Inc., a public company, that designs, develops, manufactures
and sells medical devices, since June&nbsp;2004. Mr.&nbsp;Fitch also currently serves as a director of Ozone
International, Inc. a privately held technology company. Mr.&nbsp;Fitch served as a director and Audit
Committee Chairman of Conceptus Inc., a medical device company, from December&nbsp;1994 until April
2004. Mr.&nbsp;Fitch served as Chief Financial Officer of several start-up technology companies from
1998 until 2002. Mr.&nbsp;Fitch was Chief Financial Officer and Senior Vice President of Operations of
Conceptus from December&nbsp;1994 through October&nbsp;1998 and took the company public in 1996. From
December&nbsp;1990 to January&nbsp;1994, Mr.&nbsp;Fitch served as Chief Financial Officer of SanDisk Corp., a
manufacturer of flash memory devices. From 1983 through 1989, Mr.&nbsp;Fitch was the Chief Financial
Officer of Komag Inc., a manufacturer of rigid thin film media for the disk drive industry and took
the company public in 1987. Mr.&nbsp;Fitch holds a B.S. in Chemistry and an M.B.A. from Stanford
University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Garrett A. Garrettson, Ph.D. </I>has served as a director of the Company since 2004. Dr.
Garrettson is currently CEO of Fresco Technologies, a privately held digital imaging company, as
well as a consultant. From 2001 until 2004, he was the President and Chief Executive Officer of
ClairVoyante Laboratories, a privately held company that develops and licenses proprietary
intellectual property to flat panel display manufacturers. Prior to this, Dr.&nbsp;Garrettson was
affiliated with Spectrian Corporation, a manufacturer of high power radio frequency transistors and
amplifiers for wireless network equipment. He served as President and Chief Executive Officer from
1996 to 2000 and as Chairman of the Board from 2000 to 2002. Before joining Spectrian, Dr.
Garrettson served as the President and Chief Executive Officer of Censtor Corporation from
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-5-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1993 to 1996, a developer of contact magnetic recording head disc technology for the data
storage industry. From 1989 to 1993, Dr.&nbsp;Garrettson was the Vice President of Strategic Marketing,
Corporate Development and Technology at Seagate Technology, a maker of hard disc drives and storage
systems. Dr.&nbsp;Garrettson has also served as the Vice President of the Minneapolis Data Storage
Operations at Imprimis Technology, and as a Laboratory Director at Hewlett Packard. Dr.&nbsp;Garrettson
has served on boards of seven public companies and numerous private companies, and is currently a
director of Catalyst Semiconductor, GSI Group, and Giga-tronics. Dr.&nbsp;Garrettson is also on the
board of private companies Fresco Technologies and Purdy Electronics, and the advisory boards of
Diamond Head Ventures and ClairVoyante Laboratories. Dr.&nbsp;Garrettson has an M.S. in Engineering
Physics as well as a Ph.D. in Mechanical Engineering from Stanford University.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Required Vote</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors will be elected by a plurality vote of the shares of the Company&#146;s Common Stock
present or represented and entitled to vote on this matter at the meeting. Accordingly, the seven
(7)&nbsp;candidates receiving the highest number of affirmative votes of shares represented and voted on
this proposal at the meeting will be elected directors of the Company. Votes withheld from a
nominee will be counted for purposes of determining the presence or absence of a quorum but because
directors are elected by a plurality vote, will have no impact once a quorum is established. See
&#147;Information Concerning Solicitation and Voting &#151; Quorum; Abstentions; Broker Non-Votes.&#148;
</DIV>
<!-- link1 "THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS<BR> VOTE &#147;FOR&#148; THE NOMINEES LISTED ABOVE" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS<BR>
VOTE &#147;FOR&#148; THE NOMINEES LISTED ABOVE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board Meetings and Committees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board held a total of ten (10)&nbsp;meetings during the fiscal year ended December&nbsp;30, 2006.
No director serving during the fiscal year attended fewer than 75% of the aggregate of all meetings
of the Board and the committees of the Board upon which such director served, except Donald
Hammond, who attended 62% of such meetings. The Board has two standing committees, the Audit and
Corporate Governance Committee and the Compensation and Nominating Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Audit and Corporate Governance Committee</I>. The Audit and Corporate Governance Committee of the
Board consisted of Mr.&nbsp;Fitch and Drs.&nbsp;Hammond and Garrettson during the fiscal year ended December
30, 2006. The Audit and Corporate Governance Committee held eleven (11)&nbsp;meetings during the last
fiscal year. Mr.&nbsp;Fitch is chairman of the Audit and Corporate Governance Committee. From time to
time, Messrs.&nbsp;Caldwell and Tannenbaum also attend and participate in meetings of the Audit and
Corporate Governance Committee. The Board has determined that each member of the Audit and
Corporate Governance Committee is independent as defined under the listing standards of The Nasdaq
Stock Market and that Mr.&nbsp;Fitch is an &#147;audit committee financial expert&#148; as defined in rules of the
Securities and Exchange Commission (the &#147;SEC&#148;). Among other things, the Audit and Corporate
Governance Committee reviews and advises the Board regarding the Company&#146;s accounting matters and
is responsible for appointing and overseeing the work of the independent public accountants,
pre-approving audit and non-audit services to be provided by the independent public accountants,
reviewing and evaluating the accounting principles being applied to the Company&#146;s financial
reports, reviewing and making recommendations regarding the composition and mandate of Board
committees, developing overall governance guidelines, and overseeing the performance and
compensation of the Board. The Audit and Corporate Governance Committee adopted a written charter
in April&nbsp;2004, a copy of which is available on our website at www.iridex.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compensation and Nominating Committee</I>. The Compensation and Nominating Committee of the Board,
which consisted of Mr.&nbsp;Anderson and Drs.&nbsp;Hammond and Garrettson, during the fiscal year ended
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">December&nbsp;30, 2006, held four (4)&nbsp;meetings during the last fiscal year. Dr.&nbsp;Hammond is
chairman of the Compensation and Nominating Committee. Dr.&nbsp;Garrettson became a member of the
Compensation and Nominating Committee in February&nbsp;2005, and Mr.&nbsp;Anderson became a member of the
Compensation and Nominating Committee in December&nbsp;2005. The Board has determined that each member
of the Compensation and Nominating Committee is independent as defined under the listing standards
of The Nasdaq Stock Market. Among other things, the Compensation and Nominating Committee reviews
and advises the Board regarding all forms of compensation to be provided to the officers,
employees, directors and consultants of the Company, develops general criteria regarding the
qualifications and selection of Board members, and recommends candidates for election to the Board.
It is the policy of the Compensation and Nominating Committee to consider nominees for the Board
submitted by the stockholders of the Company. For more information regarding the submission of
nominees for the Board, see the discussion in &#147;Corporate Governance Matters.&#148; The Compensation and
Nominating Committee adopted a written charter in April&nbsp;2004, a copy of which is available on our
website at www.iridex.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation Committee Interlocks and Insider Participation in Compensation Decisions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The monetary compensation described herein applies to each of the Company&#146;s non-employee
directors. The Compensation and Nominating Committee consisted of Mr.&nbsp;Anderson and Drs.&nbsp;Hammond
and Garrettson, during the fiscal year ended December&nbsp;30, 2006. Mr.&nbsp;Caldwell is asked to
participate in discussions regarding salaries and incentive compensation for all employees
(including officers) and consultants to the Company, except that Mr.&nbsp;Caldwell is excluded from
discussions regarding his own salary and incentive compensation. Except as set forth above, none
of the members of the Compensation and Nominating Committee is currently or has been, at any time
since the formation of the Company, an officer or employee of the Company. No member of the
Compensation and Nominating Committee had any relationship requiring disclosure by the Company
under any paragraph of Item&nbsp;404 (&#167;229.404). No member of the Compensation and Nominating Committee
or executive officer of the Company serves as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving as a member of the
Company&#146;s Board or its Compensation and Nominating Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Director Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Members of the Board of Directors (if non-employees) receive $1,500 per Board meeting
attended. The Chairman of the Board (if non-employees) receives $2,000 per Board meeting attended.
Members of the Audit and Corporate Governance Committee and the Compensation and Nominating
Committee receive $1,000 per committee meeting attended, and the Chairman of each of these
committees receives $1,500 per committee meeting attended. In addition, directors are also
reimbursed for reasonable out-of-pocket expenses incurred by them in attending such meetings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s 1995 Director Option Plan (the &#147;Director Plan&#148;) was adopted by the Board in
October&nbsp;1995, approved by the stockholders in January&nbsp;1996 and expired in October&nbsp;2005. As of
April&nbsp;9, 2007, options issued under the Director Plan to purchase 97,500 shares remained
outstanding and subject to the terms and conditions of such plan. The Director Plan provided for
the automatic and nondiscretionary grant of a nonstatutory stock option to purchase 11,250 shares
of the Company&#146;s Common Stock to each non-employee director on the date on which such person first
becomes a director (the &#147;First Option&#148;). The First Option becomes exercisable as to one-twelfth
(1/12) of the shares subject to the option each quarter and vests over a three-year period.
Thereafter, each non-employee director was automatically granted an option to purchase 3,750 shares
of Common Stock on July 1<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> of each year, if on such date he or she had served on the
Board for at least six months (the &#147;Subsequent Option&#148;). The Subsequent Option becomes exercisable
as to one-fourth (1/4) of the shares subject to the option each quarter, commencing one quarter
after the First Option and any previously granted Subsequent Option have become fully exercisable.
The Director Plan
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">provided that the exercise price of options granted thereunder be equal to the fair market
value of the Company&#146;s Common Stock as of the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 1998 Stock Plan was adopted by the Board in February&nbsp;1998 and was approved by the
stockholders in June&nbsp;1998. The 1998 Plan, as amended provides for the grant of the following types
of incentive awards: (i)&nbsp;stock options; (ii)&nbsp;stock appreciation rights; (iii)&nbsp;restricted stock,
(iv)&nbsp;restricted stock units, and (v)&nbsp;performance units and performance shares to employees,
directors and consultants of the Company. With the recent expiration of the Company&#146;s Director
Option Plan, the Company anticipates that future equity compensation granted to the Company&#146;s
non-employee directors will be granted under the 1998 Stock Plan. The Company plans to grant
nonstatutory stock options to purchase 15,000 shares of the Company&#146;s Common Stock to each
non-employee director upon such person first becoming a director, and grant an additional
nonstatutory stock option to purchase 5,000 shares of the Company&#146;s Common Stock to each
non-employee director each year thereafter. Such options will have an exercise price equal to the
fair market value of the Company&#146;s Common Stock as of the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2006, Drs.&nbsp;Garrettson and Hammond and Messrs.&nbsp;Anderson and Fitch each received
automatic and non-discretionary grants of nonstatutory stock options to purchase 5,000 shares of
the Company&#146;s Common Stock under the 1998 Stock Plan as compensation for their services as
directors. These stock options were granted with an exercise price of $9.79 per share, are subject
to vesting as described in the previous paragraph and have a term of 7&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Compensation for Fiscal 2006</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information concerning the compensation paid by us to each of our
non-employee directors for fiscal 2006. Mr.&nbsp;Caldwell, Mr.&nbsp;Boutacoff and Mr.&nbsp;Donovan, who are our
employees, do not receive additional compensation for their services as a director.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Non-Employee
Directors &#151; Summary Compensation Table, 2006</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fees Earned or Paid</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>in Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (1) (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert K. Anderson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">47,918</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sanford Fitch</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">28,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">61,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Garrett Garretson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">28,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">61,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald L. Hammond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">56,418</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the dollar amount recognized for financial statement
reporting purposes for fiscal 2006, in accordance with FAS 123(R), and
this may include amounts for awards granted in and prior to 2006. The
assumptions used in the valuation of these awards are set forth in the
notes of our Annual Report on Form 10-K for the year ended December
30, 2006 and filed with the SEC on March&nbsp;30, 2007. These amounts
reflect the Company&#146;s accounting expense for these awards and do not
correspond to the actual value that will be recognized by the
directors.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>As of December&nbsp;31, 2006, the aggregate number of underlying options
outstanding for each of our non-employee directors is outlined below:</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-8-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Non-Employee Directors &#151; Shares Underlying Outstanding Options -2006</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Aggregate Number of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Underlying</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Outstanding Options</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert K. Anderson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,520</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sanford Fitch</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Garrett A. Garrettson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,520</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald L. Hammond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,520</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Corporate Governance Matters</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Independence of the Board of Directors</I>. The Board has determined that, with the exception of
Mr.&nbsp;Caldwell, who is the President and Chief Executive Officer of the Company, Mr.&nbsp;Boutacoff, who
previously served as the Company&#146;s Chief Executive Officer and currently serves as senior principle
advisor to the Company&#146;s Chief Executive Officer, and Mr.&nbsp;Donovan, who is the Vice President,
Corporate Business Development of the Company, all of its members are &#147;independent directors&#148; as
defined in the listing standards of The Nasdaq Stock Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Contacting the Board of Directors</I>. Any stockholder who desires to contact our Chairman of the
Board or the other members of our Board may do so electronically by sending an email to the
following address: BOD@iridex.com. Alternatively, a stockholder can contact our Chairman of the
Board or the other members of the Board by writing to: Board of Directors, c/o Chairman of the
Board, IRIDEX Corporation, 1212 Terra Bella Avenue, Mountain View, CA 94043. Communications
received electronically or in writing will be distributed to the Chairman of the Board or the other
members of the Board as appropriate depending on the facts and circumstances outlined in the
communication received.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Attendance at Annual Stockholder Meetings by the Board of Directors</I>. The Company has adopted
a formal policy regarding attendance by members of the Board at the Company&#146;s annual meeting of
stockholders. The Company&#146;s policy is that it encourages, but does not require, directors to
attend. Messrs.&nbsp;Anderson, Boutacoff, Caldwell, Donovan, Fitch and Garrettson attended the
Company&#146;s 2006 Annual Meeting of Stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Process for Recommending Candidates for Election to the Board of Directors</I>. The Compensation
and Nominating Committee is responsible for, among other things, determining the criteria for
membership to the Board and recommending candidates for election to the Board. It is the policy of
the Committee to consider recommendations for candidates to the Board from stockholders.
Stockholder recommendations for candidates to the Board must be directed in writing to IRIDEX
Corporation, Corporate Secretary, 1212 Terra Bella Avenue, Mountain View, CA 94043 and must include
the candidate&#146;s name, home and business contact information, detailed biographical data and
qualifications, information regarding any relationships between the candidate and the Company
within the last three years, and evidence of the nominating person&#146;s ownership of the Company&#146;s
Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation and Nominating Committee&#146;s general criteria and process for evaluating and
identifying the candidates that it recommends to the full Board for selection as director nominees,
are as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Compensation and Nominating Committee regularly reviews the current
composition and size of the Board.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->-9-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In its evaluation of director candidates, including the members of the Board
eligible for re-election, the Compensation and Nominating Committee seeks to
achieve a balance of knowledge, experience and capability on the Board and
considers (1)&nbsp;the current size and composition of the Board and the needs of the
Board and the respective committees of the Board, (2)&nbsp;such factors as issues of
character, judgment, diversity, age, expertise, business experience, length of
service, independence, other commitments, and (3)&nbsp;such other factors as the
Compensation and Nominating Committee may consider appropriate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>While the Compensation and Nominating Committee has not established specific
minimum qualifications for director candidates, the Compensation and Nominating
Committee believes that candidates and nominees must reflect a Board of Directors
that is comprised of directors who (1)&nbsp;are predominantly independent, (2)&nbsp;are of
high integrity, (3)&nbsp;have qualifications that will increase overall Board of
Directors effectiveness and (4)&nbsp;meet other requirements as may be required by
applicable rules, such as financial literacy or financial expertise with respect to
audit and corporate governance committee members.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In evaluating and identifying candidates, the Compensation and Nominating
Committee has the authority to retain and terminate any third-party search firm
that is used to identify director candidates, and has the authority to approve the
fees and retention terms of any such firm.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With regard to candidates who are properly recommended by stockholders or by
other means, the Compensation and Nominating Committee will review the
qualifications of any such candidate, which review may, in the Compensation and
Nominating Committee&#146;s discretion, include interviewing references for the
candidate, direct interviews with the candidate, or other actions that the
Compensation and Nominating Committee deems necessary or proper.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Compensation and Nominating Committee will apply these same principles when
evaluating Board of Directors candidates who may be elected initially by the full
Board of Directors to fill vacancies or add additional directors prior to the
annual meeting of stockholders at which directors are elected.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>After such review and consideration, the Compensation and Nominating Committee
selects, or recommends that the Board of Directors selects the slate of director
nominees, either at a meeting of the Compensation and Nominating Committee at which
a quorum is present or by unanimous written consent of the Compensation and
Nominating Committee.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Code of Business Conduct and Ethics</I>. The Company&#146;s policy is to conduct its operations in
compliance with all applicable laws and regulations and to operate its business under the
fundamental principles of honesty, integrity and ethical behavior. This policy can be found in the
Company&#146;s Code of Business Conduct and Ethics, which is applicable to all of our directors,
officers and employees. Such Code of Business Conduct and Ethics incorporates the Code of Ethics
required by Section&nbsp;406 of the Sarbanes-Oxley Act of 2002 and Item&nbsp;406 of Regulation&nbsp;S-K. The Code
of Business Conduct and Ethics also complies with the listing standards of The Nasdaq Stock Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code of Business Conduct and Ethics is designed to promote honest and ethical conduct, the
compliance with all applicable laws, rules and regulations and to deter wrongdoing. The Code of
Business Conduct and Ethics is also aimed at ensuring that information we provide to the public
(including our filings with and submissions to the SEC) is accurate, complete, fair, relevant,
timely and understandable. A copy of the formally adopted Code of Business Conduct and Ethics is
available on our website at www.iridex.com. We intend to disclose future amendments to certain
provisions of the Code of Business Conduct and Ethics,
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-10-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or waivers of such provisions granted to directors and executive officers, on our web site at
www.iridex.com pursuant to applicable requirements of the SEC and The Nasdaq Stock Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Securities Authorized for Issuance Under Equity Compensation Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;30, 2006, we had three equity compensation plans under which securities are
authorized for issuance. These plans are the 2005 Employee Stock Purchase Plan, 1995 Director
Option Plan and 1998 Stock Option Plan, all of which have been approved by our stockholders. The
following table summarizes our equity compensation plans as of December&nbsp;30, 2006:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Securities Authorized for Issuance Under Equity Compensation Plans, 2006</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(c)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of securities</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">remaining available</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">for future issuance</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">under equity</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">to be issued upon</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted-average</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">compensation plans</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">exercise of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">exercise price of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(excluding securities</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">outstanding options,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">outstanding options,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">reflected in column</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Plan category</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">warrants and rights</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">warrants and rights</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(a))</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation plans
approved by security holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,822,466</TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">471,621</TD>
    <TD nowrap>(2)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation plans not
approved by security holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">309,104</TD>
    <TD nowrap>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">471,621</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 1,462,791 options to purchase shares outstanding under the 1998 Stock Plan, 97,500 options
to purchase shares outstanding under the 1995 Director Option Plan and 262,175, options to purchase
shares outstanding under the Amended and Restated 1989 Incentive Stock Plan. The 1995 Director
Option Plan expired in October&nbsp;2005 and no further options to purchase shares shall be issued
thereunder, although outstanding options under this plan remain subject to the terms and conditions
of such plan.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 458,673 options available for future issuance under the 1998 Stock Plan and 12,948 shares
issuable under the 2005 Employee Stock Purchase Plan.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of three items. The first is a Stand-Alone Option granted to Barry G. Caldwell on July&nbsp;5,
2005, entitling Mr.&nbsp;Caldwell to purchase up to 234,104 shares of the Company&#146;s common stock at an
exercise price of $6.07 per share, issued as a stand-alone option, outside of the Company&#146;s existing
stock plans and as a material inducement to Mr.&nbsp;Caldwell accepting employment with the Company. The
shares covered by the Stand-Alone Option vest over a four (4)&nbsp;year period, with
1/4<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of the total number of shares subject to the Stand-Alone Option vesting
on July&nbsp;5, 2006 and 1/48<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of the total number of shares subject to the
Stand-Alone Option vesting each full month thereafter, provided that Mr.&nbsp;Caldwell continues to be a
service provider to the Company on each such date.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>The second item is a warrant issued on July&nbsp;5, 2005, in conjunction with the employment of the
Company&#146;s Chief Executive Officer, in consideration of services performed under a recruiting
contract with Paul Gomory, to purchase 25,000 shares of the Company&#146;s common stock at an exercise
price of $6.07 per share. The warrant is exercisable at any time and expires on July&nbsp;5, 2008.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-11-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>The third item is a stand-alone option granted outside of the Company&#146;s existing stock plans to
Deborah Tomasco, the Company&#146;s Vice President of Product Innovation. The option entitles Ms.
Tomasco to purchase up to 50,000 shares of the Company&#146;s common stock at an exercise price of $8.26
per share, issued as a stand-alone option, outside of the Company&#146;s
existing stock plans and as a material inducement to Ms. Tomasco
accepting employment with the Company. The shares covered by the Stand-Alone
Option vest over a four (4) year period, with 1/4<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of the
total number of shares subject to the Stand-Alone Option vesting on
March 15, 2007 and
1/48<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>
of the total number of shares subject to the Stand-Alone Option
vesting each full month thereafter, provided that Ms. Tomasco
continues to be a service provider to the Company on each such date. </TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Each of the stand-alone options granted to Barry Caldwell and Deborah Tomasco and the warrant issued
to Paul Gomory remain outstanding as of April&nbsp;9, 2007. The weighted average price of the
stand-alone options granted to Mr.&nbsp;Caldwell and Ms.&nbsp;Tomasco was $6.46. The term of the stand-alone
options was ten years, so Mr.&nbsp;Caldwell&#146;s stand-alone options will terminate on July&nbsp;5, 2015 and Ms.
Tomasco&#146;s options will terminate on March&nbsp;15, 2013.</TD>
</TR>

</TABLE>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<!-- link1 "PROPOSAL TWO" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROPOSAL TWO</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED 1998 STOCK PLAN</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stockholders are being asked to approve an amendment to the Company&#146;s amended and restated
1998 Stock Plan (the &#147;Plan&#148;) to add 150,000 shares to the total number of shares reserved for
issuance under the Plan. The Company&#146;s Board of Directors (the &#147;Board&#148;) believes that approval of
the amendment is essential to the Company&#146;s continued success as the additional shares will enable
the Company to continue to use the Plan to achieve its employee performance, recruiting, retention
and incentive goals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board and management believe that equity awards motivate high levels of performance, align
the interests of employees and stockholders by giving employees the perspective of an owner with an
equity stake in the Company, and provide an effective means of recognizing employee contributions
to the success of the Company. The Board and management believe that equity awards are a
competitive necessity in our high-technology industry, and are essential to recruiting and
retaining the highly qualified technical and other key personnel who help the Company meet its
goals, as well as rewarding and encouraging current employees. The Board and management believe
that the ability to continue to grant equity awards will be important to the future success of the
Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan does not have an &#147;evergreen&#148; provision that provides for an automatic increase in the
number of the shares available for issuance each year. If stockholders approve the amendment to the
Plan, we currently anticipate that we will not ask stockholders for additional shares for issuance
under the Plan until at least the 2008 Annual Meeting, depending on business conditions and needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval of the Plan amendment requires the affirmative vote of the holders of a majority of
the shares of the Company&#146;s common stock that are present in person or by proxy and entitled to
vote at the Annual Meeting. If stockholders do not approve the amendment to the Plan, no shares
will be added to the total number of shares reserved for issuance under the Plan. Our named
executive officers and directors have an interest in this proposal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Summary
of the Amended and Restated 1998 Stock Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following paragraphs provide a summary of the principal features of the Plan and its
operation. The following summary is qualified in its entirety by reference to the Plan, a copy of
which is available in its entirety in the proxy materials located at the &#147;SEC Filings&#148; link on the
&#147;Investor Relations&#148; page of our website at www.iridex.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan provides for the grant of the following types of incentive awards: (i)&nbsp;stock options;
(ii)&nbsp;stock appreciation rights; (iii)&nbsp;restricted stock, (iv)&nbsp;restricted stock units, and (v)
performance units and performance shares, which are referred to individually as an &#147;Award.&#148; Those
who will be eligible for Awards under the plan include employees, directors and consultants who
provide services to the Company and its parent and subsidiary companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of April&nbsp;9, 2007, approximately 183 employees, directors and consultants were eligible to
participate in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Number of Shares of Common Stock Available Under the Plan</I>. If stockholders approve Proposal
2, a total of 2,200,000 shares of the Company&#146;s Common Stock will be reserved for issuance under
the Plan. As of April&nbsp;9, 2007, 1,382,701 shares were subject to outstanding Awards granted under
the Plan, with a weighted average exercise price of $5.96 per share and weighted average term of
6.02&nbsp;years, and 234,358
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-13-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shares remained available for any new Awards to be granted in the future. In addition, any
shares subject to awards of restricted stock, restricted stock units, performance shares or
performance units granted with an exercise price less than the fair market value on the date of
grant will be counted against the share reserve as 1<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT> shares for every one share subject to such
award. Further, to the extent that a share that was subject to an award that counted as 1<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT> shares
against the Plan reserve pursuant to the preceding sentence is recycled back into the Plan, the
Plan will be credited with 1<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT> shares that will thereafter be available for issuance under the Plan.
On the Record Date, the closing price in The Nasdaq National Market for the Company&#146;s Common Stock
was $6.62 per share. The Company&#146;s non-employee directors and its executive officers named in the
Summary Compensation Table have an interest in this proposal because they are eligible to
participate in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we experience a stock split, reverse stock split, stock dividend, spin-off, combination or
reclassification of our shares, or any other change or increase or decrease in the number of issued
shares effected without our receipt of consideration (except for certain conversions of convertible
securities) appropriate adjustments will be made, subject to any required action by the Company&#146;s
stockholders, to the number of shares available for issuance under the Plan, the number of shares
covered by each outstanding Award, the price per share covered by each outstanding Award, and the
numerical per-person share limits for each type of Award, as appropriate to reflect the stock
dividend or other change.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Administration of the Plan</I>. A committee of at least two non-employee members of the Company&#146;s
Board of Directors (the &#147;Committee&#148;) administers the Plan. To make grants to certain of our
officers and key employees, the members of the Committee must qualify as &#147;non-employee directors&#148;
under Rule&nbsp;16b-3 of the Securities Exchange Act of 1934, and as &#147;outside directors&#148; under Section
162(m) of the Internal Revenue Code (so that the Company can receive a federal tax deduction for
certain compensation paid under the Plan). Subject to the terms of the Plan, the Committee has the
sole discretion to select the employees, consultants, and directors who will receive Awards,
determine the terms and conditions of Awards, and interpret the provisions of the Plan and
outstanding Awards. The Committee may delegate any part of its authority and powers under the Plan
to one or more directors and/or officers of the Company, but only the Committee itself can make
Awards to participants who are executive officers of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Options</I>. The Committee is able to grant nonqualified stock options and incentive stock
options under the Plan. The Committee will determine the number of shares subject to each option,
but no participant will be able to be granted options covering more than 200,000 shares during any
of the Company&#146;s fiscal years, except that a participant may be granted an option covering up to an
additional 400,000 shares in connection with his or her initial service with the Company. The
Committee will determine the exercise price of options granted under the Plan, provided the
exercise price must at least be equal to the fair market value of the Company&#146;s common stock on the
date of grant. In addition, the exercise price of an incentive stock option granted to any
participant who owns more than 10% of the total voting power of all classes of the Company&#146;s
outstanding stock must be at least 110% of the fair market value of the common stock on the grant
date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term of an option may not exceed seven (7)&nbsp;years, except that with respect to any
participant who owns 10% of the voting power of all classes of the Company&#146;s outstanding capital
stock, the term of an incentive stock option may not exceed five (5)&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After termination of service with the Company, a participant will be able to exercise the
vested portion of his or her option for the period of time stated in the Award agreement. If no
such period of time is stated in a participant&#146;s option agreement, a participant will generally be
able to exercise his or her option for (i)&nbsp;three months following his or her termination for
reasons other than death or disability, and (ii)&nbsp;one year following his or her termination due to
death or disability. In no event will an option be able to be exercised later than the expiration
of its term.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Appreciation Rights</I>. The Committee may grant stock appreciation rights either alone or
in tandem with stock options. A stock appreciation right is the right to receive the appreciation
in fair market value of common stock between the exercise date and the date of grant. The Company
can pay the appreciation in either cash or shares of common stock. Stock appreciation rights will
become exercisable at the times and on the terms established by the Committee, subject to the terms
of the Plan. No participant will be granted stock appreciation rights covering more than 200,000
shares during any fiscal year, except that a participant may be granted stock appreciation rights
covering up to an additional 400,000 shares in connection with his or her initial service with the
Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After termination of service with the Company, a participant will be able to exercise the
vested portion of his or her stock appreciation right for the period of time stated in the Award
agreement. If no such period of time is stated in a participant&#146;s award agreement, a participant
will generally be able to exercise his or her stock appreciation right for (i)&nbsp;three months
following his or her termination for reasons other than death or disability, and (ii)&nbsp;one year
following his or her termination due to death or disability. In no event will a stock appreciation
right be exercised later than the expiration of its term.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock</I>. Awards of restricted stock are rights to acquire or purchase shares of
Company common stock. Restricted stock vests in accordance with the terms and conditions
established by the Committee in its sole discretion. For example, the Committee may set
restrictions based on the achievement of specific performance goals. Awards of restricted stock
may be issued either alone, in addition to, or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan. The Award agreement will generally grant the Company
a right to repurchase or reacquire the shares upon the termination of the participant&#146;s service
with the Company for any reason (including death or disability). The Committee will determine the
number of shares granted pursuant to an Award of restricted stock, but no participant will be
granted a right to purchase or acquire more than 150,000 shares of common stock during any fiscal
year, except that a participant may be granted up to an additional 150,000 shares of restricted
stock in connection with his or her initial employment with the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock Units</I>. The Committee may also grant Awards of restricted stock units.
Awards of restricted stock units are rights to acquire or purchase shares of Company common stock.
Restricted stock units vest in accordance with the terms and conditions established by the
Committee in its sole discretion. For example, the Committee may set restrictions based on the
achievement of specific performance goals. Awards of restricted stock units may be issued either
alone, in addition to, or in tandem with other Awards granted under the Plan and/or cash awards
made outside of the Plan. The Committee will determine the number of units granted pursuant to an
Award of restricted stock units, but no participant will be granted more than 150,000 units during
any fiscal year, except that a participant may be granted up to an additional 150,000 units in
connection with his or her initial employment with the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Performance Units and Performance Shares</I>. The Committee may grant performance units and
performance shares, which are Awards that will result in a payment to a participant only if the
performance goals or other vesting criteria the Committee may establish are achieved or the Awards
otherwise vest. The Committee will establish organizational, individual performance goals or other
vesting criteria in its discretion, which, depending on the extent to which they are met, will
determine the number and/or the value of performance units and performance shares to be paid out to
participants. No participant will receive performance units with an initial value greater than
$1,000,000 and no participant will receive more than 150,000 performance shares during any fiscal
year, except that a participant may be granted performance shares covering up to an additional
150,000 shares in connection with his or her initial service with the Company. Performance units
will have an initial dollar value established by the Committee prior to the grant date.
Performance shares will have an initial value equal to the fair market value of a share of the
Company&#146;s common stock on the grant date.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-15-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Performance Goals</I>. As determined by the Committee, the performance goals applicable to an
Award may provide for a targeted level or levels of achievement using one or more of the following
measures: (i)&nbsp;cash position; (ii)&nbsp;earnings per share; (iii)&nbsp;individual objectives; (iv)&nbsp;net income;
(v)&nbsp;operating income; (vi)&nbsp;return on assets; (vii)&nbsp;return on equity; (viii)&nbsp;return on sales; (ix)
revenue; and (x)&nbsp;total stockholder return. The performance goals may differ from participant to
participant and from Award to Award and may be stated in absolute terms or relative to comparison
companies or indices to be achieved during a period of time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Transferability of Awards. </I>The Plan generally will not allow for the transfer of Awards, and
all rights with respect to an Award granted to a participant generally will be available during a
participant&#146;s lifetime only to the participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Merger or Sale of Assets</I>. In the event of our merger with or into another corporation, or the
sale of all or substantially all of our assets, each outstanding Award will be assumed or
substituted for by the successor corporation (or a parent or subsidiary or such successor
corporation). If there is no assumption or substitution of outstanding Awards, the Committee will
provide notice to the recipient that he or she has the right to exercise the option and stock
appreciation right as to all of the shares subject to the Award, all restrictions on restricted
stock will lapse, and all performance goals or other vesting requirements for performance shares
and units will be deemed achieved, and all other terms and conditions met. In such event, the
Committee shall notify the participant that the Award is fully exercisable for a period of time as
the Committee may determine from the date of such notice and that the Award will terminate upon
expiration of such period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendment and Termination of the Plan</I>. The Committee will have the authority to amend,
suspend or terminate the Plan, except that stockholder approval will be required for any amendment
to the plan to the extent required by any applicable law, regulation or stock exchange rule. Any
amendment, suspension or termination will not, without the consent of the participant, materially
adversely affect any rights or obligations under any Award previously granted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Number of Awards Granted to Employees, Consultants, and Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of awards that an employee, director or consultant may receive under the Plan is in
the discretion of the Committee and therefore cannot be determined in advance. To date, only stock
options have been granted under the Plan. The following table sets forth (a)&nbsp;the aggregate number
of shares subject to options granted under the Plan during the fiscal year ended December&nbsp;30, 2006
and (b)&nbsp;the average per share exercise price of such options.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Number of Awards Under the 1998 Stock Plan Granted to Employees, Consultants, and<BR>
Directors in 2006</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Per</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Share Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name of Individual or Group</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Granted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eduardo Arias</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Tannenbaum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James Donovan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Timothy S. Powers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald Todd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert Anderson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sanford Fitch</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Garrett Garretson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.79</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-16-<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Per</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Share Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name of Individual or Group</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Granted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald Hammond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All executive officers, as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors who are not executive
officers, as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9.79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All employees who are not executive
officers, as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.48</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Federal Tax Aspects</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following paragraphs are a summary of the general federal income tax consequences to U.S.
taxpayers and the Company of Awards granted under the Plan. Tax consequences for any particular
individual may be different.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nonqualified Stock Options</I>. No taxable income is reportable when a nonqualified stock option
with an exercise price equal to the fair market value of the Company&#146;s stock is granted to a
participant. Upon exercise, the participant will recognize ordinary income in an amount equal to
the excess of the fair market value (on the exercise date) of the shares purchased over the
exercise price of the option. Any additional gain or loss recognized upon any later disposition of
the shares would be capital gain or loss.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Incentive Stock Options</I>. No taxable income is reportable when an incentive stock option is
granted or exercised (except for purposes of the alternative minimum tax, in which case taxation is
the same as for nonqualified stock options). If the participant exercises the option and then
later sells or otherwise disposes of the shares more than two years after the grant date and more
than one year after the exercise date, the difference between the sale price and the exercise price
will be taxed as capital gain or loss. If the participant exercises the option and then later
sells or otherwise disposes of the shares before the end of the two- or one-year holding periods
described above, he or she generally will have ordinary income at the time of the sale equal to the
fair market value of the shares on the exercise date (or the sale price, if less) minus the
exercise price of the option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Appreciation Rights</I>. No taxable income is reportable when a stock appreciation right is
granted to a participant. Upon exercise, the participant will recognize ordinary income in an
amount equal to the amount of cash received and the fair market value of any shares received. Any
additional gain or loss recognized upon any later disposition of the shares would be capital gain
or loss.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restricted Stock, Restricted Stock Units, Performance Units and Performance Shares</I>. A
participant generally will not have taxable income at the time an Award of restricted stock,
restricted stock units, performance shares or performance units are granted. Instead, he or she
will recognize ordinary income in the first taxable year in which his or her interest in the shares
underlying the Award becomes either (i)&nbsp;freely transferable or (ii)&nbsp;no longer subject to
substantial risk of forfeiture. However, the recipient of a restricted stock Award may elect to
recognize income at the time he or she receives the Award in an amount equal to the fair market
value of the shares underlying the Award (less any cash paid for the shares) on the date the Award
is granted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tax Effect for the Company</I>. The Company generally will be entitled to a tax deduction in
connection with an Award under the Plan in an amount equal to the ordinary income realized by a
participant and at the time the participant recognizes such income (for example, the exercise of a
nonqualified stock option). Special rules limit the deductibility of compensation paid to the
Company&#146;s Chief Executive Officer and to each of its four most highly compensated executive
officers. Under Section 162(m) of the Internal Revenue Code, the annual compensation paid to any
of these specified executives will be deductible only to the extent
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-17-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">that it does not exceed $1,000,000. However, The Company can preserve the deductibility of
certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These
conditions include stockholder approval of the Plan, setting limits on the number of Awards that
any individual may receive and for Awards other than certain stock options, establishing
performance criteria that must be met before the Award actually will vest or be paid. The Plan has
been designed to permit the Committee to grant Awards that qualify as performance-based for
purposes of satisfying the conditions of Section&nbsp;162(m), thereby permitting the Company to continue
to receive a federal income tax deduction in connection with such Awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND
THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN. IT DOES NOT PURPORT
TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A SERVICE PROVIDER&#146;S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
SERVICE PROVIDER MAY RESIDE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Required Vote</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a quorum is present, the affirmative vote of a majority of the Votes Cast will be required
to approve the amendment of the Plan. Votes withheld and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum, but will not be counted as Votes Cast
on this subject. Brokers are prohibited from voting in favor of this proposal under NYSE
regulations unless the beneficial holder of such shares specifically instructs the broker or other
nominee to vote in favor of the amended and restated 1998 Stock Plan. See &#147;Information Concerning
Solicitation and Voting &#151; Quorum; Abstentions; Broker Non-Votes.&#148;
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE &#147;FOR&#148; THE<BR>
APPROVAL OF THE AMENDMENT OF THE AMENDED AND RESTATED 1998 STOCK PLAN<BR>
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE<BR>
THEREUNDER BY 150,000 SHARES.</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-18-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<!-- link1 "PROPOSAL THREE" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROPOSAL THREE</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Introduction</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit and Corporate Governance Committee has appointed PricewaterhouseCoopers LLP,
independent registered public accountants, to audit the financial statements of the Company for the
fiscal year ending December&nbsp;29, 2007, and recommends that stockholders vote for ratification of
such appointment. PricewaterhouseCoopers LLP also served as the Company&#146;s independent registered
public accountants for the fiscal year ending December&nbsp;30, 2006. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the meeting with the opportunity to make a
statement if they desire to do so and are expected to be available to respond to appropriate
questions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although action by stockholders is not required by law, the Board has determined that it is
desirable to request approval of this selection by the stockholders. Notwithstanding the approval
of this selection by the stockholders, the Audit and Corporate Governance Committee, in its
discretion, may direct the appointment of a new independent registered public accounting firm at
any time during the year, if the Audit and Corporate Governance Committee feels that such a change
would be in the best interest of the Company and its stockholders. In the event of a negative vote
on ratification, the Audit and Corporate Governance Committee will reconsider its selection.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Fees Billed To Company By PricewaterhouseCoopers LLP During Fiscal 2006</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents fees (in thousands) billed for professional audit services and
other services rendered to the Company by PricewaterhouseCoopers LLP for the fiscal years ended
December&nbsp;30, 2006 and December&nbsp;31, 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Fiscal 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Fiscal 2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Fees (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">249</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px">Audit-Related Fees (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax Fees (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All Other Fees (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">256</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Audit Fees consisted of fees for professional services rendered for the audit of the
Company&#146;s annual financial statements included in the Company&#146;s Annual Reports on Form 10-K
and for the review of the financial statements included in the Company&#146;s Quarterly Reports on
Form 10-Q, as well as reviews of regulatory and statutory filings, adoption of FAS 123(R) and
assistance with audit committee investigation.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>This category consists of assurance and related services by the Company&#146;s independent auditor
that are reasonably related to the performance of the audit or review of the Company&#146;s
financial statements and are not reported above under &#147;Audit Fees.&#148; PricewaterhouseCoopers
LLP did not perform any such services for the Company in fiscal years 2006 or 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Tax Fees consisted of fees billed for tax compliance and sales tax consultation services.
PricewaterhouseCoopers LLP did not perform any such services for the Company in fiscal years
2006 or 2005.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-19-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>All Other Fees consisted of fees attributable to PricewaterhouseCoopers LLP&#146;s review of the
Company&#146;s previous filings under the Exchange Act, unrelated to its audit of the Company&#146;s
financial statements, and fees related to acquisition of the Laserscope Aesthetics business
including assistance with the SEC waiver letter.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Pre-Approval of Audit and Non-Audit Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit and Corporate Governance Committee has established a policy governing the Company&#146;s
use of PricewaterhouseCoopers LLP for non-audit services. Under the policy, management may use
PricewaterhouseCoopers LLP for non-audit services that are permitted under SEC rules and
regulations, provided that management obtains the Audit and Corporate Governance Committee&#146;s
approval before such services are rendered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit and Corporate Governance Committee has determined that the provision of all fees
identified above under the captions &#147;Audit-Related Fees,&#148; &#147;Tax Fees&#148; and &#147;All Other Fees&#148; that were
billed by PricewaterhouseCoopers LLP is compatible with maintaining PricewaterhouseCoopers LLP&#146;s
independence and has approved these non-audit services in accordance with its charter and
applicable laws, rules and regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Required Vote</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a quorum is present, the affirmative vote of a majority of the Votes Cast will be required
to approve the ratification of the appointment of PricewaterhouseCoopers LLP. See &#147;Information
Concerning Solicitation and Voting &#151; Quorum; Abstentions; Broker Non-Votes.&#148;
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS<BR>
VOTE &#147;FOR&#148; RATIFICATION OF THE APPOINTMENT OF<BR>
PRICEWATERHOUSECOOPERS LLP</B>

</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-20-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information known to the Company regarding the
beneficial ownership of the Company&#146;s Common Stock as of March&nbsp;1, 2007 by (i)&nbsp;each person (or group
of affiliated persons) who is the beneficial owner of more than 5% of the Company&#146;s Common Stock,
(ii)&nbsp;each director and nominee for director, (iii)&nbsp;each of the Company&#146;s executive officers named
in the Summary Compensation Table appearing herein, and (iv)&nbsp;all of the Company&#146;s directors and
executive officers as a group.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Beneficial Ownership - as of March 1, 2007</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>5% Stockholders, Directors and Officers (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number of Shares (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Percent of Total (2)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Black River Asset Management LLC (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">757,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.31</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Black River Long/Short Fund Ltd. (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">594,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.32</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">033 Asset Management LLC (5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.98</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BlueLine Partners, L.L.C. (6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">631,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.77</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Directors (7)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert K. Anderson (8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.21</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Theodore A. Boutacoff (9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.88</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James L. Donovan (10)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.45</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sanford Fitch (11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Garrett A. Garretson (12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald L. Hammond (13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Named Executive Officers (14)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Barry G. Caldwell (15)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.68</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Tannenbaum (16)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,601</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eduardo Arias (17)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.70</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Timothy S. Powers (18)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.55</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald J. Todd (19)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors and executive
officers as a group (11 persons)
(20)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,201,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.74</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Represents less than 1% of the total.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Unless otherwise indicated in the table, the address for each listed person is c/o IRIDEX
Corporation, 1212 Terra Bella, Mountain View, California 94043.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The number and percentage of shares beneficially owned is determined under rules of the SEC,
and the information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares which the individual
has the right to acquire within 60&nbsp;days of March&nbsp;1, 2007, through the exercise of any stock
option or other right. Unless otherwise indicated in the footnotes, each person has sole
voting and investment power (or shares such powers with his or her spouse) with respect to the
shares shown as beneficially owned. Percentage beneficially owned is based on 8,131,425 shares
of common stock outstanding on March&nbsp;1, 2007.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-21-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Black River Asset Management LLC is located 12700 Whitewater Drive, Minnetonka, MN 553443.
This information was obtained from a filing made with the SEC pursuant to Rule&nbsp;13d-1 of the
Exchange Act on February&nbsp;14, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Black River Long/Short Fund Ltd. is located at P.O. Box 309GT Ugland House South Church Street,
George Town, Grand Cayman, Cayman Islands. This information was obtained from a filing made
with the SEC pursuant to Rule&nbsp;13d-1 of the Exchange Act on February&nbsp;14, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>033 Asset Management LLC is located at 125 High Street, Suite&nbsp;1405, Boston, MA, 02110. This
information was obtained from a filing made with the SEC pursuant to Rule&nbsp;13d-1 of the Exchange
Act on February&nbsp;13, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes (i)&nbsp;454,746 shares beneficially owned by BlueLine Capital Partners, L.P., (ii)&nbsp;24,827
shares beneficially owned by BlueLine Capital Partners II, L.P., (iii)&nbsp;151,860 shares
beneficially owned by BlueLine Capital Partners VIII, LP. BlueLine Partners is located at 4115
Blackhawk Plaza Circle, Suite&nbsp;100, Danville, California 94506. This information was obtained
from a filing made with the SEC on Schedule&nbsp;13D on January&nbsp;8, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes all directors except those listed below as Named Executive Officers, see footnote 14.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 29,063 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 90,000 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 36,112 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 15,000 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(12)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 13,125 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(13)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 29,063 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(14)</TD>
    <TD>&nbsp;</TD>
    <TD>Individuals included below in the &#147;Executive Officer Summary Compensation Table &#151; 2006&#148;
including the Company&#146;s Chief Executive Officer and Principal Financial Officer and each of
its other three most highly compensated executive officers.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(15)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 131,251 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(16)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 67,862 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(17)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 55,091 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(18)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 128,091 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(19)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 19,838 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(20)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 488,384 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2007.</TD>
</TR>

</TABLE>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<!-- link1 "EXECUTIVE OFFICERS" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXECUTIVE OFFICERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to the Company&#146;s Chief
Executive Officer and Principal Financial Officer and each of its other three most highly
compensated executive officers earning more than $100,000 in salary and bonus (the &#147;Named Executive
Officers&#148;) during fiscal year 2006, including their ages as of April&nbsp;9, 2007.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Barry G. Caldwell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">56</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Larry Tannenbaum
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">55</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Business Officer and Senior
Vice President, Finance and
Administration</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eduardo Arias
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">62</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, International
Sales and Business Development</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Timothy S. Powers
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">46</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Operations</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Donald J. Todd
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">54</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President, Marketing and
Customer Support</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Barry G. Caldwell </I>joined the Company in July&nbsp;2005 as its President, Chief Executive Officer
and a member of its Board of Directors. From 1979-2002, Mr.&nbsp;Caldwell served in various capacities
with Alcon Laboratories, Inc., a leading developer, manufacturer and marketer of ophthalmology
products. His executive positions included Vice President and General Manager of Alcon&#146;s US
Surgical Division and Vice President of Alcon Canada. Mr.&nbsp;Caldwell previously served on the Boards
of Directors for Laser Diagnostic Technologies and Tekia, Inc. In addition, he has served on the
Boards of Directors for three ophthalmic industry groups, AdvaMed, NAEVR and EyeRx Coalition. He
is also a former member of the Kentucky State Legislature where he served three consecutive terms
in the State&#146;s House of Representatives. Mr.&nbsp;Caldwell has a Bachelor of Arts in Political Science
and English from Georgetown College and a Juris Doctorate from the Northern Kentucky University
Chase College of Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Larry Tannenbaum </I>joined the Company in May&nbsp;2003 as our Chief Financial Officer and Senior Vice
President, Finance and Administration. In February&nbsp;2007 Mr.&nbsp;Tannenbaum became Chief Business
Officer and Senior Vice President of Finance and Administration. From April&nbsp;2001 to April&nbsp;2003,
Mr.&nbsp;Tannenbaum served as the Senior Vice President and Chief Financial Office of Metrika, a
manufacturer of diabetes monitoring products. From 1998 to 2000, Mr.&nbsp;Tannenbaum served as the
Senior Vice President and Chief Financial Officer of LJL Biosystems, which was acquired by
Molecular Devices Corporation, a supplier of devices for drug and life sciences research. Mr.
Tannenbaum has also served as Chief Financial Officer at SinoGen, ArthroCare and Target
Therapeutics. Mr.&nbsp;Tannenbaum received an M.B.A. from the University of Utah and a B.S. in
Political Science from Arizona State University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Eduardo Arias </I>co-founded the Company and, from April&nbsp;1989 to September&nbsp;1991, Mr.&nbsp;Arias served
as a Vice President, Sales &#038; Marketing and, since September&nbsp;1991, served as Senior Vice President,
International Worldwide Sales. He was promoted to his current position, Senior Vice President,
International Sales and Business Development in January&nbsp;2002. Mr.&nbsp;Arias completed programs in
Industrial and Military Electronics at the National Radio Institute and Strategic Marketing at
Stanford University, as well as management seminars through the American Management Association and
scientific seminars sponsored by Varian, Inc. and Coherent, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Timothy S. Powers </I>joined the Company in July&nbsp;1997 as our Vice President of Operations and has
continued to serve in that capacity to the present. Mr.&nbsp;Powers received a B.S. in Industrial
Technology and an M.M.S. in Manufacturing Engineering, both from the University of Lowell.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Donald J. Todd </I>joined the Company in October&nbsp;2005 as Vice President of Marketing and in 2007
was promoted to Senior Vice President of Marketing and Customer Support. Prior to joining the
Company, from 2004-2005, Mr.&nbsp;Todd served as Vice President, Sales and Marketing for Sorin Group
North America, a worldwide leader in the open heart surgical product market. From 2001-2003, Mr.
Todd served as Executive Vice President for Venetec International, a world leader in catheter
securement technology. Prior to Venetec, Mr.&nbsp;Todd spent 12&nbsp;years at Terumo Medical Corporation, a
Japanese-owned company that manufacturers a wide variety of medical devices. From 1989-1993, Mr.
Todd was the Director of Marketing and Equipment Development at Iolab Corporation, a division of
Johnson &#038; Johnson. Mr.&nbsp;Todd began his medical medical technology sales and marketing career at
CooperVision/Alcon, a leader in the ophthalmic surgical product market. Mr.&nbsp;Todd holds a BA in
Business Administration from Colorado State University and is a member of the Medical Marketing
Association.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "EXECUTIVE COMPENSATION" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXECUTIVE COMPENSATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation Discussion and Analysis</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Overview of Compensation Program and Philosophy</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex&#146;s compensation philosophy is to provide a comprehensive compensation package for each
executive officer that is competitive with those offered by companies of similar type and size, in
the same geographical area and whose executives perform similar skills to those performed by the
executives of the Company. Our overall goal in compensating executive officers is to attract,
retain and motivate key executives of superior ability who are critical to our future success. We
believe that both short-term and long-term incentive compensation paid to executive officers should
be directly aligned with our performance, and that compensation should be structured to ensure that
a significant portion of executives&#146; compensation opportunities is directly related to achievement
of financial and operational goals and other factors that impact shareholder value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation decisions with respect to executive officer salaries, annual incentives, and
long-term incentive compensation opportunities are influenced by (a)&nbsp;the executive&#146;s level of
responsibility and function within the Company, (b)&nbsp;the overall performance and profitability of
the Company, and (c)&nbsp;our assessment of the competitive marketplace, including other peer companies.
Our philosophy is to focus on total direct compensation opportunities through a mix of base salary,
annual cash bonus, and long-term incentives, including stock-based awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As Iridex&#146;s Compensation and Nominating Committee (the &#147;Committee&#148;) applies this compensation
philosophy in determining appropriate executive compensation levels and other compensation factors,
the Committee reaches its decisions with a view towards the Company&#146;s overall financial
performance. The Committee strives to structure each officer&#146;s overall compensation package to
enable the Company to attract, retain and reward personnel who contribute to the success of the
Company. The Committee evaluates both performance and compensation to ensure that the Company
maintains its ability to attract and retain superior employees in key positions and that
compensation provided to key employees remains competitive relative to the compensation paid to
similarly situated executives of our peer companies. To that end, the Committee believes executive
compensation packages provided by the Company to its executives, including the named executive
officers, should include both cash and stock-based compensation that reward performance as measured
against established goals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To meet these objectives, Iridex has adopted a policy of providing a competitive base salary
and the opportunity to receive additional cash and stock-based compensation that reward performance
as measured against established goals, with a target performance based cash and equity compensation
equal to approximately 40-50% of base cash compensation. This policy guides the Committee in
assessing the proper allocation between long-term compensation, current cash compensation, and
short-term bonus compensation. Other considerations include Iridex&#146;s business objectives, its
fiduciary and corporate responsibilities, competitive practices and trends, and regulatory
requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In determining the particular elements of compensation that will be used to implement Iridex&#146;s
overall compensation policies, the Committee takes into consideration a number of factors related
to Iridex&#146;s performance, such as Iridex&#146;s operating income, profitability, revenue growth, and
business-unit-specific operational and financial performance, as well as competitive practices
among our peer group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex&#146;s executive compensation program is overseen and administered by the Committee, which
is comprised entirely of independent directors as determined in accordance with various Nasdaq,
Securities and
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Exchange Commission and Internal Revenue Code rules. The Committee operates under a written charter
adopted by our Board. A copy of the charter is available at
http://media.corporate-ir.net/media&#095;files/irol/11/112360/reports/compensation%20&#095;nominating&#095;charter.
pdf. The Committee has the authority to engage its own independent advisors to assist in carrying
out its responsibility and has done so. The Committee also retains compensation consultants to
assist in creating and administering Iridex&#146;s compensation policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, the Committee engaged an independent compensation consultant to the Committee. The
independent compensation consultant advises the Committee on certain of aspects of executive
compensation related to equity compensation. The consultant attended certain meetings of the
Committee at the Committee&#146;s request and also communicated with the Committee outside of these
meetings. The independent compensation consultant reports to the Committee rather than to
management, although the consultant may meet with management from time to time for purposes of
gathering information on proposals that management may make to the Committee. The Committee is
free to replace the independent compensation consultant or hire additional consultants at any time.
The independent compensation consultant does not provide any other services to Iridex and receives
compensation only with respect to the services provided to the Committee. The Committee also
utilizes information contained in the Radford Executive Survey prepared by Radford Surveys &#043;
Consulting (the &#147;Radford Survey&#148;) to assist with making compensation decisions
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Committee on occasion meets with Barry Caldwell, Iridex&#146;s
President and Chief Executive Officer and/or other executives to obtain recommendations with respect to Company compensation programs,
practices and packages for executives, other employees and directors. Management makes
recommendations to the Committee on the base salary, bonus targets and equity compensation for the
executive team and other employees. The Committee considers, but is not bound to and does not
always accept, management&#146;s recommendations with respect to executive compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Caldwell attends some of the Committee&#146;s meetings and participates in discussions
regarding salaries and incentive compensation for all employees (including officers) and
consultants to the Company. Mr.&nbsp;Caldwell is excluded from discussions regarding his own salary and
incentive compensation. The Committee also regularly holds executive sessions not attended by any
members of management or non-independent directors. The Committee has delegated to Mr.&nbsp;Caldwell
the authority to grant long-term incentive awards to employees who do not directly report to Mr.
Caldwell under guidelines established by the Company&#146;s Board of Directors. The Committee also has
authorized Mr.&nbsp;Caldwell to make salary adjustments and short-term incentive (bonus)&nbsp;decisions for
all employees other than certain officers under guidelines approved by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Elements of Compensation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are five major elements that comprise Iridex&#146;s compensation program: (i)&nbsp;base salary;
(ii)&nbsp;annual incentive opportunities, including bonuses; (iii)&nbsp;long-term incentives, such as equity
awards; (iv)&nbsp;retirement benefits provided under a 401(k) plan; and (v)&nbsp;executive perquisites and
generally available benefit programs. Iridex has selected these elements because each is
considered useful and/or necessary to meet one or more of the principal objectives of our
compensation policy. For instance, base salary and bonus target percentage are set with the goal of
attracting employees and adequately compensating and rewarding them on a day-to-day basis for the
time spent and the services they perform, while equity incentive compensation is geared toward
providing an incentive and reward for the achievement of long-term business objectives and
retaining key talent. Iridex believes that these elements of compensation, when combined, are
effective, and will continue to be effective, in achieving the objectives of our compensation
program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee reviews the compensation program on an annual basis, including each of the above
elements, other than retirement benefits, which are reviewed from time to time to ensure that
benefit levels
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">remain competitive but are not included in the annual determination of an executive&#146;s
compensation package. In setting compensation levels for a particular executive, the Committee
takes into consideration the proposed compensation package as a whole and each element
individually, as well as the executive&#146;s past and expected future contributions to our business. In
2006, the Committee approved increases in the salaries paid to each of the named executive
officers, other than Barry Caldwell, who joined the Company in July&nbsp;2005, in order to maintain
competitiveness with respect to peer group companies and in recognition of the performance of such
executive officers in fiscal 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With the exception of Messrs.&nbsp;Caldwell and Tannenbaum, Iridex does not have an employment or
severance agreement with any of its named executive officers. The agreements that were entered into
with Messrs.&nbsp;Caldwell and Tannenbaum are discussed below under the section entitled &#147;Employment
Agreements.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, the Board established the 2006 Incentive Program (the &#147;Bonus Plan&#148;), which is
designed to reward those eligible employees whose performance throughout the year was helpful in
achieving the Company&#146;s financial goals and the management team based upon company and personal
performance against key objectives. The Bonus Plan consists of three parts: (1)&nbsp;a management bonus
program covering executive officers, directors, and managers to award performance and completion of
individual and Company goals; (2)&nbsp;a profit sharing program covering all eligible employees not
included in the management bonus program or on a commission plan; and (3)&nbsp;a special bonus program
for any employee who makes extraordinary contributions above and beyond their job description
resulting in enhanced revenues, profits or future positioning for the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Base Salary and Annual Incentive Opportunities</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex makes base salaries and bonuses a significant portion of the executive compensation
package in order to remain competitive in attracting and retaining executive talent. Bonuses also
are paid in order to motivate the achievement of the Company&#146;s business goals. The Committee
determines each officer&#146;s target total annual cash compensation (salary and bonuses) after
reviewing similar compensation information from a group of peer companies included in the US
Companies with Revenues Below 50 Million that is included in the Radford Survey. This review
usually occurs in at the first meeting of the Board following the Company&#146;s Annual Meeting of
Stockholders. The peer group typically includes a broad range of companies in the high technology
industry with whom Iridex competes for executive talent. For fiscal 2006, the Committee considered
major high technology competitors for executive talent and companies of at least a similar size and
scope as Iridex, as measured by market capitalization, revenue, net income and total shareholder
return. The Committee currently intends to continue using this same survey information for
purposes of making compensation decisions in fiscal 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex&#146;s goal is to target base pay at the 50<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> percentile level among its peer
group and total cash compensation at the 50<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> percentile level. However, in determining
base salary, the Committee also considers other factors such as job performance, skill set, prior
experience, the executive&#146;s time in his or her position and/or with Iridex, internal consistency
regarding pay levels for similar positions or skill levels within the Company, external pressures
to attract and retain talent, and market conditions generally. Positioning base pay at the
50<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> percentile of peer companies aids Iridex in controlling fixed costs. Targeting
total compensation at the 50<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> percentile, and therefore providing higher incentive
compensation opportunity, rewards exceptional goal achievement and allows total compensation to be
more competitive as a whole, while taking into account business cyclicality. Base pay and target
cash compensation are analyzed by management to determine variances to our compensation targets
using the combination of publicly available information and survey data as described above. Mr.
Caldwell uses the market data in making his recommendations to the Committee for his direct
reports.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For fiscal 2006, after taking into consideration the above compensation targets and Mr.
Caldwell&#146;s recommendations, the Committee decided to maintain Mr.&nbsp;Caldwell&#146;s compensation at the
levels paid during the portion of fiscal 2005 during which Mr.&nbsp;Caldwell served as the Company&#146;s
Chief Executive Officer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of bonus amounts, and therefore total cash compensation, depends on the achievement of
specified performance goals, which are primarily focused on the Company&#146;s operating performance and
income metrics. Achievement of the targeted goals would result in total cash compensation for
fiscal 2006 at approximately the targeted 50th percentile of Iridex&#146;s peer group, which the
Committee believes is an appropriate range to enable Iridex to attract and retain key personnel and
to motivate our executives to meet Iridex&#146;s business goals. As a result, the bonuses are targeted
at a level that if achieved, and when combined with base salary, would typically result in total
cash compensation to the executive in approximately the 50th percentile of Iridex&#146;s peer companies.
For fiscal 2006, Mr.&nbsp;Caldwell made recommendations to the Committee with respect to target bonus
amounts, expressed as a percentage of base salary, for each of the named executive officers, other
than himself. These recommended bonus amounts were consistent with our intention to target total
cash compensation at the 50th percentile level and were approved by the Committee as proposed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The potential bonus for which Mr.&nbsp;Caldwell was eligible under the Bonus Plan for fiscal 2006
ranged from 0% to a maximum of 40% of his annual base salary. The potential bonus for each of the
other named executive officers under the Bonus Plan also ranged from 0% to a maximum of 40% of his
annual base salary. As noted above, we target total compensation to the 50th percentile of our peer
group companies. As a result, the target bonuses are determined such that the combination of the
bonus and base salary meet this targeted percentile.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Long-Term Incentive Compensation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex provides long-term incentive compensation through awards of stock options or stock
grants (also referred to as &#147;stock awards&#148;) that generally vest over multiple years, with a primary
focus on stock options. Iridex&#146;s equity compensation program is intended to align the interests of
our officers with those of our stockholders by creating an incentive for our officers to maximize
stockholder value. The equity compensation program also is designed to encourage our officers to
remain employed with Iridex despite a very competitive labor market. Iridex targets the value of
its equity awards to be in the 50th percentile of the peer group mentioned above, based on the
information gathered from publicly available sources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity-based incentives are granted to our officers under Iridex&#146;s stockholder-approved the
Company&#146;s amended and restated 1998 Stock Plan (the &#147;Plan&#148;). The Committee granted equity awards at
its regularly scheduled meetings. All stock option grants have a per share exercise price equal to
the fair market value of Iridex&#146;s common stock on the grant date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Committee regularly monitors the environment in which Iridex operates and makes changes to
our equity compensation program to help us meet our goals, including achieving long-term
stockholder value. In order to continue to attract and retain highly skilled employees, the
Committee approved changes to Iridex&#146;s equity compensation program for fiscal 2006 that were
designed to reward Iridex&#146;s employees for their hard work and commitment to the long-term success
and growth of Iridex. Beginning in fiscal 2006, both stock options and stock awards were granted.
Iridex granted stock options because they can be an effective tool for meeting Iridex&#146;s
compensation goal of increasing long-term stockholder value by tying the value of the stock options
to Iridex&#146;s performance in the future. Employees are able to profit from stock options only if
Iridex&#146;s stock price increases in value over the stock option&#146;s exercise price. Iridex believes the
options that were granted provide effective incentives to option holders to achieve increases in
the value of Iridex&#146;s stock. Iridex began granting stock awards because they provide a more
predictable value to employees than stock options, and therefore are efficient tools in retaining
and motivating employees, while also serving as an incentive to increase the value of Iridex&#146;s
stock. Stock awards also may be efficient with respect to the use of
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-28-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">our equity plan share reserves because fewer performance shares are needed to provide a
retention and incentive value similar to stock options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares underlying equity awards our Committee grants to each officer and the
vesting schedule for each grant is determined based on a variety of factors, including market data
collected regarding the equity grant ranges for the peer companies listed above and Iridex&#146;s goal
to award grants in line with the 50th percentile of this group. In fiscal 2006, our Committee
relied upon these factors to approve stock option and stock awards for the named executive officers
and other senior officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2006, the Board approved the establishment of an option committee (the &#147;Option Committee&#148;),
that was initially comprised of Barry Caldwell, Larry Tannenbaum and Antoinette Ryglisyn, and, as
Administrator of the Plan, the Board delegated to the Option Committee authority to grant options
to new employees, other than new employees who will report directly to the Company&#146;s Chief
Executive Officer, pursuant to the guidelines that were approved by the Board. The exercise price
for options granted by the Option Committee is set equal to the last posted closing sales price of
the Company&#146;s Common Stock, as listed on NASDAQ-Online on the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex does not backdate options or grant options retroactively. In addition, we do not plan
to coordinate grants of options so that they are made before announcement of favorable information,
or after announcement of unfavorable information. It is the Company&#146;s practice to grant options to
executive officers at the first meeting of the Board following the Company&#146;s Annual Meeting of
Stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><I>Retirement Benefits under the </I><I>401(k)</I><I> Plan, Executive Perquisites and Generally Available
Benefit Programs</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2006, the executive officers were eligible to receive health care coverage that is
generally available to other Iridex employees. Mr.&nbsp;Caldwell also received a home relocation
benefit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex also maintains the tax-qualified 401(k) Plan, which provides for broad-based employee
participation. Under the 401(k) Plan, all Iridex employees are eligible to receive matching
contributions from Iridex that are subject to vesting over time. The matching contribution for the
401(k) Plan year 2006 was 50% of a 401(k) participant&#146;s payroll contribution up to a maximum of
$1,000. Iridex does not provide defined benefit pension plans or defined contribution retirement
plans to its executives or other employees other than: (a)&nbsp;the 401(k) Plan, or (b)&nbsp;as required in
certain countries other than the United States for legal or competitive reasons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Iridex also offers a number of other benefits to the named executive officers pursuant to
benefit programs that provide for broad-based employee participation. These benefits programs
include the employee stock purchase plan, medical, dental and vision insurance, disability
insurance, life and accidental death and dismemberment insurance, health and dependent care
flexible spending accounts, business travel insurance, and certain other benefits. Many employees
are also eligible for variable pay under sale incentive plans, profit sharing programs and/or the
incentive plans described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 401(k) Plan and other generally available benefit programs allow Iridex to remain
competitive for employee talent, and Iridex believes that the availability of the benefit programs
generally enhances employee productivity and loyalty to Iridex. The main objectives of Iridex&#146;s
benefits programs are to give our employees access to quality healthcare, financial protection from
unforeseen events, assistance in achieving retirement financial goals, enhanced health and
productivity and to provide support for global workforce mobility, in full compliance with
applicable legal requirements. These generally available benefits typically do not specifically
factor into decisions regarding an individual executive&#146;s total compensation or equity award
package.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-29-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On an annual basis, Iridex benchmarks its overall benefits programs, including our 401(k)
Plan, against our peers, using the Radford Survey. Iridex generally targets its overall benefits
programs in the 50th percentile of this peer group, which Iridex believes allows us to remain
competitive in attracting and retaining talent. We also evaluate the competitiveness of our 401(k)
Plan as related to similar plans of our peer group members by analyzing the dollar value to an
employee and the dollar cost to Iridex for the benefits under the applicable plan using a standard
population of employees. We analyze changes to our benefits programs in light of the overall
objectives of the program, including the effectiveness of the retention and incentive features of
such programs and our targeted percentile range.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Ownership Guidelines</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not currently have stock ownership guidelines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compensation of Chief Executive Officer</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to recruit Mr.&nbsp;Caldwell to the Company, he was given assurance of certain severance
payments if the Company terminates his employment without cause, as described under the section
entitled &#147;Employment Agreements.&#148; The Company believes that this agreement was necessary in order
to induce Mr.&nbsp;Caldwell to accept an offer of employment with the Company and that the size of the
severance package is appropriate for an executive of his caliber and for a company of Iridex&#146;s
size.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impact of Accounting and Tax Treatments of Compensation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accounting and tax treatment of compensation generally has not been a factor in
determining the amounts of compensation for our executive officers. However, the Committee and
management have considered the accounting and tax impact of various program designs to balance the
potential cost to the Company with the benefit/value to the executive. With regard to Code Section
162(m), it is the Committee&#146;s intent to maximize deductibility of executive compensation while
retaining some discretion needed to compensate executives in a manner commensurate with performance
and the competitive landscape for executive talent. With the adoption of FAS 123R, we do not
expect accounting treatment of differing forms of equity awards to vary significantly and,
therefore, accounting treatment is not expected to have a material effect on the selection of forms
of equity compensation in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Summary Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows, as to the Named Executive Officers, information concerning
compensation awarded to, earned by or paid for their services to the Company in all capacities
during 2006. The entries under the column heading &#147;All Other Compensation&#148; in the table represent
the cost of 401(k) matching contributions for each Named Executive Officer, except as otherwise
noted.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-30-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Executive
Officer Summary Compensation Table, 2006</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Grants ($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Salary($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Bonus($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(4)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (5)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total ($)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Barry G. Caldwell (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">513,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">50,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">864,062</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">President and Chief<br>
Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Larry Tannenbaum (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">217,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">256,965</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Chief Business Officer,<br>
and Senior Vice
President,<br> Finance and
Administration</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Eduardo Arias (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">254,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">275,192</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Senior Vice President,<br>
International Sales and<br>
Business Development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Timothy S. Powers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">191,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">221,524</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Vice President, Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Donald J. Todd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">205,692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">151,076</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">125,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">486,248</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Senior Vice President,<br>
Marketing and Customer<br>
Support</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Caldwell joined the Company in July&nbsp;2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Tannenbaum joined the Company in May&nbsp;2003 and served as Chief Financial
Officer until February of 2007 at which time Meryl Rains assumed the duties of
Chief Financial Officer.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Arias&#146;s salary includes $69,391 in commissions.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the dollar amount recognized for financial statement reporting purposes
for fiscal 2006, in accordance with FAS 123(R), and thus may include amounts for
awards granted in and prior to 2006. The assumptions used in the valuation of
these awards are set forth in the notes of our Annual Report on Form 10-K for the
year ended December&nbsp;30, 2006 and filed with the SEC on March&nbsp;30, 2007. These
amounts reflect the Company&#146;s accounting expense for these awards and do not
correspond to the actual value that will be recognized by the named executive
officers.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes relocation gross up of $49,927 for Mr.&nbsp;Caldwell and $124,730 for Mr.&nbsp;Todd.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-31-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Stock Option Grants and Exercises During Last Fiscal Year</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information for each grant of options to purchase the
Company&#146;s Common Stock during fiscal 2006 to each of the Named Executive Officers. Each of these
options granted by the Company was granted under the 1998 Plan, except where otherwise indicated.
Each option granted in 2006 has a term of 7&nbsp;years, subject to earlier termination in the event
optionee&#146;s services to the Company cease. In accordance with the rules of the Commission, also
shown below is the option&#146;s FAS 123R. These amounts are mandated by the Commission and do not
represent the Company&#146;s estimate of future stock price.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Grants of Plan-Based Awards in 2006</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise or</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Grant Date Fair</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Base Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Value of Stock</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>and Option</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Grant</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(#) (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (2)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Barry G. Caldwell</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Tannenbaum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">37,564</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eduardo Arias</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">41,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Timothy S. Powers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">41,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald J. Todd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">30,904</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects options granted under the 1998 Stock Plan. The options
granted to Messrs.&nbsp;Tannenbaum, Arias, Powers and Todd vest at the rate
of 1/48th of the shares subject to the option each month following the
date of grant. See discussion of 1998 Stock Plan above for a further
description of certain terms relating to these awards.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the grant date fair value of each equity award computed in
accordance with FAS 123(R). The assumptions used in the valuation of
these awards are set forth in the notes of our Annual Report on Form
10-K for the year ended December&nbsp;30, 2006 and filed with the SEC on
March&nbsp;30, 2007. These amounts do not correspond to the actual value
that will be recognized by the named executive officers.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows, as to the Named Executive Officers, the number of options
exercisable and unexercisable at December&nbsp;30, 2006.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-32-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Outstanding
Equity Awards, 2006</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Number of Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Underlying Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Expiration</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>(4)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>(5)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Grant</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Date (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Unexercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Date</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Barry G. Caldwell (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/5/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/5/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/5/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/5/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Tannenbaum (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/19/2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/19/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3/31/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3/31/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eduardo Arias (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/28/1997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/28/2007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/30/1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/30/2008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12/7/1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12/7/2008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/19/2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/19/2011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/23/2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/23/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3/31/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3/31/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Timothy S. Powers (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/15/1997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/15/2007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/30/1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/30/2008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12/7/1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12/7/2008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/24/2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/24/2011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/19/2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/19/2012</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/23/2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/23/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3/31/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3/31/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald J. Todd (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10/14/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10/14/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10/14/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10/14/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The options granted to Mr.&nbsp;Caldwell include (a)&nbsp;an incentive stock
option to purchase up to 65,896 shares of the Company&#146;s Common Stock
which vests over a four year period at a rate of 1/4<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of
the total shares subject to the option vesting on July&nbsp;5, 2006 and
then 1/48<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of the total number of shares subject to the
option vesting each full month thereafter, and (b)&nbsp;a stand-alone
option issued outside the Company&#146;s existing stock plans which
entitles Mr.&nbsp;Caldwell to purchase up to 234,104 shares of the
Company&#146;s Common Stock and which vests over a four year period at a
rate of
1/4<SUP style="font-size: 85%; vertical-align: text-top">th</sup> of the total shares subject to the option vesting on
July&nbsp;5, 2006 and then
1/48<SUP style="font-size: 85%; vertical-align: text-top">th</sup> of the total number of shares subject to
the stand-alone option vesting each full month thereafter.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The options granted to Messrs.&nbsp;Tannenbaum, Arias, Powers and Todd vest
at the rate of 1/48<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of the shares subject to the option
each month following the date of grant, except the 47,047 shares
granted to Mr.&nbsp;Todd on October&nbsp;14, 2005 which vest over a four year
period at a rate of 1/4<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of the total shares subject to
the option vesting on October&nbsp;14, 2006 and then 1/48<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of
the total number of shares subject to the option vesting each full
month thereafter.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Options were granted at an exercise price equal to the fair market
value of the Company&#146;s Common Stock, as determined by reference to the
closing price reported on the Nasdaq Global Market on the date of
grant.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Options may terminate before their expiration dates if the optionee&#146;s
status as an employee is terminated or upon the optionee&#146;s death or
disability.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-33-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2006 Option Exercises</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents information concerning each exercise of stock options during
fiscal 2006 for each of the named executive officers. No shares were acquired upon vesting of
stock awards during fiscal 2006 for any of the named executive officers.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>2006 Option Exercises</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Option Awards</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Value</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Acquired</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Realized on</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>on Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (1)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eduardo Arias</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/30/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">28,100</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the difference between the market price on the date of exercise and the exercise price.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employment Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Executive Transition Agreement between the Company and Theodore A. Boutacoff</I>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;28, 2005 (the &#147;Effective Date&#148;), the Company entered into an Executive Transition
Agreement (the &#147;Transition Agreement&#148;) with Theodore A. Boutacoff, the Company&#146;s President and
Chief Executive Officer. Pursuant to the terms of the Transition Agreement, Mr.&nbsp;Boutacoff, upon
resignation as President and Chief Executive Officer of the Company, agreed to transition into the
position of senior principal advisor to the new Chief Executive Officer. As senior principal
advisor to the Chief Executive Officer, Mr.&nbsp;Boutacoff continues to receive salary and benefits
equivalent to the salary and benefits he received as of April&nbsp;2005 for three years, until July&nbsp;5,
2008. In addition, Mr.&nbsp;Boutacoff received an option to purchase 75,000 shares of the Company&#146;s
Common Stock pursuant to the Company&#146;s 1998 Stock Plan. In the event that Mr.&nbsp;Boutacoff&#146;s
employment is terminated by the Company without his consent or other than for cause, or Mr.
Boutacoff voluntarily terminates his employment for good reason, Mr.&nbsp;Boutacoff will receive:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Severance pay equal to his base salary rate, as then in effect, had he continued
in his employment with the Company through the date occurring three years from the
date a new Chief Executive Officer commenced employment, or July&nbsp;5, 2008 (such
period is referred to as the &#147;Severance Payment Period&#148;) ;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Continued coverage of employee benefits under the Company&#146;s employee benefit
plans during the Severance Payment Period; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Acceleration in full of his options to purchase shares of Company common stock
then outstanding on the date of such termination and release in full
of any of his shares of Company Common Stock subject to a Company repurchase right.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Mr.&nbsp;Boutacoff is terminated for cause or voluntarily terminates his
employment other than for good reason, Mr.&nbsp;Boutacoff will (i)&nbsp;receive earned but unpaid base salary
through the date of termination and (ii)&nbsp;receive accrued vacation, expense reimbursements and other
benefits due through the date of termination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Transition Agreement terminates upon the third anniversary of the Effective Date.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-34-<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Amended and Restated Severance and Change of Control Agreement between the Company and Larry
Tannenbaum</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;29, 2005, the Company entered into an Amended and Restated Severance and Change of
Control Agreement (the &#147;Change of Control Agreement&#148;) with Larry Tannenbaum, the Company&#146;s Chief
Financial Officer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Mr.&nbsp;Tannenbaum&#146;s employment is terminated by the Company as a result of an
actual termination by the Company or a successor other than for cause or Mr.&nbsp;Tannenbaum terminates
his employment for good reason and either of these terminations occurs at any time between the
public disclosure of any event that would result in a change of control and the occurrence of
abandonment of such event or between the occurrence of such change of control event and the nine
month anniversary of such event, Mr.&nbsp;Tannenbaum will receive:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Acceleration of 50% of the unvested shares subject to all of his outstanding
options to purchase shares of the Company Common Stock and release of 50% of any of
his shares of Company Common Stock subject to a Company repurchase right;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Severance pay equal to his base salary rate had he continued his employment with
the Company through the 18&nbsp;month anniversary of the termination (such period is
referred to as the &#147;Change of Control Severance Payment Period&#148;); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Continued coverage of employee benefits under the Company&#146;s employee benefit
plans during the Change of Control Severance Payment Period;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Mr.&nbsp;Tannenbaum&#146;s employment is terminated by the Company as a result of an
actual termination by the Company or a successor other than for cause or Mr.&nbsp;Tannenbaum terminates
his employment for good reason and either of these terminations does not occur at any time between
the public disclosure of any event that would result in a change of control and the occurrence of
abandonment of such event or between the occurrence of such change of control event and the nine
month anniversary of such event, Mr.&nbsp;Tannenbaum would be entitled to receive:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Severance pay equal to his base salary rate had he continued his employment with
the Company through the 12&nbsp;month anniversary of the termination (such period is
referred to as the &#147;Non-Change of Control Severance Payment Period&#148;); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Continued coverage of employee benefits under the Company&#146;s employee benefit
plans during the Non-Change of Control Severance Payment Period;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Mr.&nbsp;Tannenbaum is terminated for cause or voluntarily terminates his
employment other than for good reason, Mr.&nbsp;Tannenbaum will (i)&nbsp;receive earned but unpaid base
salary through the date of termination and (ii)&nbsp;receive accrued vacation, expense reimbursements
and other benefits due through the date of termination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Change of Control Agreement is renewable upon the third anniversary of its effective date.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-35-<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Employment Agreement between the Company and Barry G. Caldwell</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2005, the Company entered into an employment agreement with Barry G. Caldwell, the
Company&#146;s new President and Chief Executive Officer. Pursuant to the terms of the employment
agreement, Mr.&nbsp;Caldwell is entitled to receive an annualized salary of $300,000, is eligible to
participate in the Company&#146;s existing profit and executive bonus programs and receives relocation
benefits in connection with his establishment of full-time residence in the San Francisco Bay Area.
If Mr.&nbsp;Caldwell terminates his employment within 12&nbsp;months, he is required to repay the relocation
benefits on a pro-rata basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Severance and Change of Control Agreement between the Company and Barry G. Caldwell</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Mr.&nbsp;Caldwell&#146;s employment is terminated by the Company as a result of an
actual termination by the Company or a successor other than for cause or Mr.&nbsp;Caldwell terminates
his employment for good reason and either of these terminations occurs at any time between the
public disclosure of any event that would result in a change of control and the occurrence of
abandonment of such event or between the occurrence of such change of control event and the nine
month anniversary of such event, Mr.&nbsp;Caldwell will receive:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Acceleration of 50% of the unvested shares subject to all of his outstanding
options to purchase shares of the Company Common Stock and release of 50% of any of
his shares of Company Common Stock subject to a Company repurchase right;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Severance pay equal to his base salary rate had he continued his employment with
the Company through the 18&nbsp;month anniversary of the termination, or through the 12
month anniversary of the termination if the termination occurs prior to July&nbsp;2006
(such period is referred to as the &#147;Change of Control Severance Payment Period&#148;);
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Continued coverage of employee benefits under the Company&#146;s employee benefit
plans during the Change of Control Severance Payment Period;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Mr.&nbsp;Caldwell&#146;s employment is terminated by the Company as a result of an
actual termination by the Company or a successor other than for cause or Mr.&nbsp;Caldwell terminates
his employment for good reason and either of these terminations does not occur at any time between
the public disclosure of any event that would result in a change of control and the occurrence of
abandonment of such event or between the occurrence of such change of control event and the nine
month anniversary of such event, Mr.&nbsp;Caldwell would be entitled to receive:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Severance pay equal to his base salary rate had he continued his employment with
the Company through the 12&nbsp;month anniversary of the termination, or through the six
month anniversary of the termination if the termination occurs prior to July&nbsp;2006
(such period is referred to as the &#147;Non-Change of Control Severance Payment
Period&#148;); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Continued coverage of employee benefits under the Company&#146;s employee benefit
plans during the Non-Change of Control Severance Payment Period;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that Mr.&nbsp;Caldwell is terminated for cause or voluntarily terminates his
employment other than for good reason, Mr.&nbsp;Caldwell will (i)&nbsp;receive earned but unpaid base salary
through the date of termination and (ii)&nbsp;receive accrued vacation, expense reimbursements and other
benefits due through the date of termination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Change of Control Agreement is renewable upon the third anniversary of its effective date.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-36-<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other Employee Benefit Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>4</I><I>01(k)</I><I> Plan</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company sponsors a 401(k) Plan under which eligible employees may contribute, on a pre-tax
basis, up to 15% of the employee&#146;s total annual income from the Company, excluding bonuses, subject
to certain IRS limitations. The Company matches 50% of the employee&#146;s contribution up to a maximum
amount. The maximum Company match in fiscal year 2006 was $1,000 per employee and in fiscal year
2007 is $2,000 per employee. All full-time employees who have attained age 18 are eligible to
participate in the plan. All contributions are allocated to the employee&#146;s individual account and,
at the employee&#146;s election, are invested in one or more investment funds available under the plan.
Contributions are fully vested and not forfeitable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2005 Employee Stock Purchase Plan</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s 2005 Employee Stock Purchase Plan permits employees, including the Company&#146;s
officers, who are employed for at least twenty hours per week to purchase Common Stock of the
Company, through payroll deductions at the lower of 85% of the fair market value of the Common
Stock at the beginning or at the end of each six-month offering period. Payroll deductions may not
exceed 10% of an employee&#146;s compensation. Notwithstanding the foregoing, no employee may be
granted the right to purchase more than $25,000 worth or more than 2,000 shares of Common Stock
annually. The 2005 Employee Stock Purchase Plan provides for two offering periods during each
fiscal year, each having a duration of six months, and has such other features as described
previously.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2006 Incentive Plan</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s 2006 Incentive Plan (the &#147;2006 Incentive Plan&#148;) provides for the payment of cash
bonuses to the Company&#146;s employees, including the Company&#146;s officers, upon the Company&#146;s
achievement of a targeted operating income amount, excluding funds to be set aside for inclusion in
the 2006 Incentive Plan (the &#147;Targeted Operating Income&#148;). The 2006 Incentive Plan consists of a
profit sharing component in which substantially all of the Registrant&#146;s employees, with certain
exceptions, are eligible to participate and a management bonus program component in which executive
officers, director level employees and other managers are eligible to participate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Estimated Payments Upon Termination or Change in Control</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This table provides information concerning the estimated payments and benefits that would be
provided in the circumstances described above. Payments and benefits are estimated assuming that
the triggering event took place on the last business day of fiscal 2006 (December&nbsp;29, 2006), and
the price per share of Iridex&#146;s common stock is the closing price on the Nasdaq GM as of that date
($8.87). There can be no assurance that a triggering event would produce the same or similar
results as those estimated below if such event occurs on any other date or at any other price, of
if any other assumption used to estimate potential payments and benefits is not correct. Due to
the number of factors that affect the nature and amount of any potential payments or benefits, any
actual payments and benefits may be different.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-37-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Estimated Payments Upon Termination or Change of Control</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Involuntary Termination</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Voluntary Termination</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>Other Than For Cause</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>for Good Reason</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Outside of 9</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Months</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Within 9</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Outside of 9</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Within 9</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>from</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Months of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Months from</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Months of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Change in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Change in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Change in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Change in</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Control</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Control</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Control</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Control</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Type of Benefit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($) (2)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Barry G. Caldwell</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cash Severance Payments</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">300,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">450,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">300,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">450,000</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vesting Acceleration (3)</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">271,249</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">271,249</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:30px; text-indent:-15px">Continued Coverage of Employee Benefits (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,378</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">30,568</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,378</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">30,568</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Total Termination Benefits:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">320,378</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">751,817</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">320,378</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">751,817</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Tannenbaum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cash Severance Payments</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">217,115</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">325,673</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">217,115</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">325,673</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vesting Acceleration (3)</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">38,350</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">38,350</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:30px; text-indent:-15px">Continued Coverage of Employee Benefits (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,224</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">30,335</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,224</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">30,335</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Total Termination Benefits:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">237,339</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">394,358</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">237,339</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">394,358</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Theodore A.
Boutacoff</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cash Severance Payments</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">364,603</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">364,603</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">364,603</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">364,603</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vesting Acceleration (3)</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">305,339</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">305,339</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">305,339</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">305,339</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:30px; text-indent:-15px">
Continued Coverage of Employee Benefits (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,919</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,919</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,919</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">20,919</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Total Termination Benefits:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">690,862</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">690,862</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">690,862</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">690,862</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the terms of the Employment Agreements between the Company
and listed officers described above: Mr.&nbsp;Caldwell and Mr.&nbsp;Tannenbuam
have a Non-Change of Control Severance Period of 12&nbsp;months. Mr.
Boutacoff receives severance pay equal to his full salary until 3
years from the date a new CEO commenced employment (July&nbsp;5, 2005), or
18&nbsp;months and 7&nbsp;days.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the terms of the Employment Agreements between the Company
and listed officers described above: Mr.&nbsp;Caldwell and Mr.&nbsp;Tannenbuam
have a Change of Control Severance Period of 18&nbsp;months. Mr.&nbsp;Boutacoff
receives severance pay equal to his full salary until 3&nbsp;years from the
date a new CEO commenced employment (July&nbsp;5, 2005), or 18&nbsp;months and 7
days.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the aggregate market value of unvested option grants. For
unvested option grants, aggregate market value is computed by
multiplying (i)&nbsp;the difference between $8.87 and the exercise price of
the option, by (ii)&nbsp;the number of shares underlying unvested options
at December&nbsp;29, 2006. Mr.&nbsp;Boutacoff receives the acceleration in full
of his unvested options; Mr.&nbsp;Caldwell and Mr.&nbsp;Tannenbaum each receive
acceleration of 50% of their unvested options if within 9&nbsp;months of a
change in control.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Assumes continued coverage of employee benefits at the amounts paid by
the Company for fiscal 2006 for health, dental, vision, long-term
disability and life insurance coverage.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->-38-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<!-- link1 "REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE<BR> OF THE BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE<BR>
OF THE BOARD OF DIRECTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>General</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the fiscal year ended December&nbsp;30, 2006, the Compensation and Nominating Committee of the
Board of Directors established the overall executive compensation strategies of the Company and
approved compensation elements for the Company&#146;s Chief Executive Officer and other executive
officers. Among other things, the Compensation and Nominating Committee reviews and advises the
Board regarding all forms of compensation to be provided to the officers, employees, directors and
consultants of the Company, develops general criteria regarding the qualifications and selection of
Board members, and recommends candidates for election to the Board. The Compensation and
Nominating Committee is comprised of three independent, non-employee members of the Board of
Directors, none of whom has interlocking relationships as defined by the Commission. The
Compensation and Nominating Committee has available to it such external compensation advice and
data as the Compensation and Nominating Committee deems appropriate to obtain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The compensation philosophy of the Compensation and Nominating Committee is to provide a
comprehensive compensation package for each executive officer that is competitive with those
offered by companies of similar type and size, in the same geographical area and whose executives
perform similar skills to those performed by the executives of the Company. Accordingly, the
Compensation and Nominating Committee follows a compensation strategy that has used vesting terms
to incentivize and reward executives as the Company addresses the challenges associated with
growth. As the Compensation and Nominating Committee applies this compensation philosophy in
determining appropriate executive compensation levels and other compensation factors, the
Compensation and Nominating Committee reaches its decisions with a view towards the Company&#146;s
overall financial performance. The Compensation and Nominating Committee strives to structure each
officer&#146;s overall compensation package to enable the Company to attract, retain and reward
personnel who contribute to the success of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation and Nominating Committee has reviewed and discussed with management the
Compensation Discussion and Analysis for the named executive officers required by Item 402(b) of
Regulation&nbsp;S-K and based on this discussion the Compensation and Nominating Committee recommended
to the board of directors that the Compensation Discussion and Analysis be included in the
Company&#146;s Annual Report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Committee Charter</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation and Nominating Committee adopted its written charter in April&nbsp;2004. A copy
of the Compensation and Nominating Committee charter, including any updates thereto, is available
at our website at www.iridex.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Executive Officer Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The objectives of the executive officer compensation program are to attract, retain, motivate
and reward key personnel who possess the necessary leadership and management skills through
competitive base salary, annual cash bonus incentives, long-term incentive compensation in the form
of stock options, and various benefits generally available to employees of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Base Salary</I>. Base salary levels for the Company&#146;s executive officers are generally targeted
to be competitive with companies in the same stage of development and in the same industry and
geographic area.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-39-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In determining salaries, the Committee also takes into account the Chief Executive Officer&#146;s
recommendations, individual experience, contributions to corporate goals and the Company&#146;s
performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Incentive Bonuses. </I>The Compensation and Nominating Committee believes that a cash incentive
bonus plan can serve to motivate the Company&#146;s executive officers and management to address annual
performance goals, using more immediate measures for performance than those reflected in the
appreciation in value of stock options. The Company had an incentive bonus plan for executive
officers in fiscal 2006. The Company has discussed an incentive bonus plan for 2007, but requires
final Board approval before going into effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock Option Grants. </I>Stock options or other stock grants are granted to executive officers
and other employees under the Company&#146;s option plans. These stock option or other stock grants are
intended to focus the recipient on the Company&#146;s long-term performance to improve stockholder value
and to retain the services of executive officers in a competitive job market by providing
significant long-term earning potential. To this end, stock options generally vest over a
four-year period, based on continued employment. Factors considered in granting stock options to
executive officers of the Company are the duties and responsibilities of each individual, such
individual&#146;s contributions to the success of the Company and other relevant factors. The Company
views stock options as an important component of long-term compensation for executive officers
since options motivate executive officers to manage the Company in a manner that is consistent with
the interests of stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>CEO Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation for the Chief Executive Officer is consistent with the philosophies and practices
described above for executive officers in general.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">COMPENSATION AND NOMINATING COMMITTEE OF THE BOARD OF
DIRECTORS</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Donald L. Hammond</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Garrett A. Garrettson</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Robert K. Anderson</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-40-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<!-- link1 "REPORT OF THE AUDIT AND CORPORATE GOVERNANCE COMMITTEE<BR> OF THE BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF THE AUDIT AND CORPORATE GOVERNANCE COMMITTEE<BR>
OF THE BOARD OF DIRECTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>General</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the fiscal year ended December&nbsp;30, 2006, the Audit and Corporate Governance Committee of
the Board of Directors oversaw the accounting and financial reporting processes of the Company and
audits of the financial statements of the Company and assisted the Board with the oversight and
monitoring of the integrity of the Company&#146;s financial statements, the Company&#146;s compliance with
legal and regulatory requirements, the independent accountant&#146;s qualifications, independence and
performance, and the Company&#146;s internal accounting and financial controls. For the fiscal year
ended December&nbsp;30, 2006, the Audit and Corporate Governance Committee was comprised of the
directors named below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Committee and Charter</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;5, 2004, the Board established the Audit and Corporate Governance Committee. The
Audit and Corporate Governance Committee adopted its written charter in April&nbsp;2004. A copy of the
Audit and Corporate Governance Committee charter, including any updates thereto, is available on
our website at www.iridex.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board has determined that each member of the Audit and Corporate Governance Committee is
independent as defined under the Sarbanes-Oxley Act of 2002 and the listing standards of The Nasdaq
Stock Market and that Mr.&nbsp;Fitch is an &#147;audit committee financial expert&#148; as defined in rules of the
SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Review with Management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit and Corporate Governance Committee reviewed and discussed our audited financial
statements for the fiscal year ended December&nbsp;30, 2006 and the notes thereto, with management,
which has primary responsibility for the financial statements. PricewaterhouseCoopers LLP, our
independent registered public accounting firm, is responsible for expressing an opinion on the
conformity of the Company&#146;s audited financial statements with generally accepted accounting
principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Review and Discussions with Independent Registered Public Accounting Firm</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit and Corporate Governance Committee discussed with PricewaterhouseCoopers LLP, our
independent registered public accounting firm, the matters required to be discussed by the
Statement on Accounting Standards No.&nbsp;61 (Communications with Audit Committees), as may be modified
or supplemented (Codification of Statements on Auditing Standards), which includes, among other
items, matters related to the conduct of the audit of our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit and Corporate Governance Committee also received written disclosures and the letter
from PricewaterhouseCoopers LLP, required by Independence Standards Board Standard No.&nbsp;1
(Independence Discussions with Audit Committees), which relates to the auditors&#146; independence from
us and our related entities and has discussed with PricewaterhouseCoopers LLP that firm&#146;s
independence from us. The Audit and Corporate Governance Committee also concluded that
PricewaterhouseCoopers LLP&#146;s provision of non-audit services, as described previously, to the
Company is compatible with PricewaterhouseCoopers LLP&#146;s independence.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->-41-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Conclusion</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the review and discussions referred to above, the Audit and Corporate Governance
Committee recommended to the Board that our audited financial statements be included in our Annual
Report on Form 10-K for the fiscal year ended December&nbsp;30, 2006 for filing with the Commission.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AUDIT AND CORPORATE GOVERNANCE COMMITTEE OF THE
BOARD OF DIRECTORS</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sanford Fitch</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Garrett A. Garrettson</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Donald L. Hammond</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->-42-<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="010"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the beginning of the Company&#146;s last fiscal year, there has not been nor is there
currently proposed any transaction or series of similar transactions to which the Company was or is
to be a party in which the amount involved exceeds $120,000 and in which any director, executive
officer, holder of more than 5% of the Common Stock of the Company or any member of the immediate
family of any of the foregoing persons had or will have a direct or indirect material interest,
other than indemnification agreements between the Company and each of its directors and officers.
</DIV>
<!-- link1 "SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" -->
<DIV align="left"><A NAME="011"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16(a) of the Exchange Act requires the Company&#146;s executive officers and directors, and
persons who own more than 10% of a registered class of the Company&#146;s equity securities to file
reports of ownership and changes in ownership with the Commission and the National Association of
Securities Dealers, Inc. Such executive officers, directors and greater than 10% stockholders are
also required by SEC rules to furnish the Company with copies of all forms that they file pursuant
to Section&nbsp;16(a). Specific due dates have been established by the Commission, and the Company is
required to disclose in this Proxy Statement any failure to file by those dates. Based solely on
its review of the copies of such forms received by it, or written representations from certain
reporting persons that no filings were required for such persons, the Company is aware of the
following late Section 16(a) filing: Barry Caldwell filed a late Form&nbsp;4 reporting one transaction
in June&nbsp;2006. The Company believes that all other reports required to be filed under Section 16(a)
have been filed on a timely basis during the Company&#146;s 2006 fiscal year.
</DIV>
<!-- link1 "OTHER MATTERS" -->
<DIV align="left"><A NAME="012"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OTHER MATTERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors does not know of any other matters to be presented at this meeting. If
any other matters properly come before the meeting, it is the intention of the persons named in the
enclosed form of Proxy to vote the shares they represent as the Board may recommend.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">THE BOARD OF DIRECTORS

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dated: April&nbsp;27, 2007

</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align=center>
<TABLE style="FONT-SIZE: 10pt" cellSpacing=0 cellPadding=0 width="100%" border=0>
<!-- Begin Table Head -->

  <TR vAlign=bottom>
    <TD width="6%"></TD>
    <TD width="41%"></TD>
    <TD width="44%"></TD></TR><!-- End Table Head --><!-- Begin Table Body -->
  <TR vAlign=bottom>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left><IMG alt="(BAR CODE)" src="f29454def2945401.gif"></TD>
</TR>
  <TR vAlign=bottom>
    <TD vAlign=bottom align=left>&nbsp;&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<IMG alt="(IRIDEX LOGO)" src="f29454def2945400.gif"> </TD>
    <TD vAlign=top  align=left>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD vAlign=top align=left nowrap><IMG alt="(BAR CODE)" src="f29454def2945404.gif">
<FONT  style="FONT-SIZE: 8pt">&nbsp;&nbsp;&nbsp;&nbsp;<font color="#ec008c">C123456789</font></FONT></TD>
</TR>

<TR vAlign=bottom style="FONT-SIZE: 8pt">
    <TD vAlign=top align=center>&nbsp;</TD>
    <TD vAlign=top align=center><font color="#ec008c">000004</font></TD>
    <TD vAlign=top align=left><br><font color="#ec008c">000000000.000000 ext&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;000000000.000000 ext<br>
000000000.000000 ext&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;000000000.000000 ext<br>
000000000.000000 ext&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;000000000.000000 ext</font></TD>
</TR><!-- End Table Body --></TABLE></DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 1pt">
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="font-size: 1pt">

<TD valign="top" rowspan="9"><DIV style="margin-left:45px; text-indent:-15px"><IMG src="f29454def2945402.gif" alt="(BAR CODE)"></DIV></TD>
    <TD>&nbsp;</TD>
 <TD vAlign=top noWrap align=left rowspan="9" style="font-size: 7pt"><font color="#ec008c">MR A SAMPLE<BR> DESIGNATION (IF ANY)<BR>
 ADD 1<BR> ADD 2<BR> ADD 3<BR> ADD 4<BR> ADD 5<BR> ADD 6</font><BR><BR>
<IMG alt="(SCALE)" src="f29454def2945403.gif"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top"><font style="color: #ec008c">&nbsp;</font></TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left" nowrap>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left" style="font-size: 9pt"><B>Electronic
Voting Instructions</B></TD>
</TR>

<TR style="font-size: 3pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>You can vote by Internet or telephone!<BR>
Available 24 hours a day, 7&nbsp;days a week!</B></TD>
</TR>
<TR style="font-size: 3pt">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="font-size:8pt">Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left" style="font-size:8pt">VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.</TD>

</TR>
<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD colspan="3" valign="top" align="left" style="font-size:8pt"><B>Proxies submitted by the Internet or telephone must be received by
1:00 a.m., Central Time, on June 7, 2007.</B></TD>
</TR>
<TR valign="bottom" style="font-size: 6pt">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="MIDDLE"><IMG src="f29454def2945405.gif" alt="(INTERNET)">
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="font-size: 9pt"><B>&nbsp;Vote by Internet</B> <br>
<DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;<B>&#149;</B>&nbsp;&nbsp; Log on to the Internet and go to<br>
<B>www.investorvote.com</B><BR></DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;<B>&#149;</B>&nbsp;&nbsp; &nbsp;Follow the steps
outlined on the secured website.</DIV></TD>
</TR>
<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><IMG src="f29454def2945406.gif" alt="(TELEPHONE)">
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="font-size: 9pt"><B>&nbsp;Vote by telephone</B> <br>
<DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;<B>&#149;</B> &nbsp; Call toll free 1-800-652-VOTE (8683)&nbsp;within the
United
States, Canada &#038; Puerto Rico any time on a touch tone
telephone. There is <B>NO CHARGE </B>to you for the call.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px">&nbsp;&nbsp;<B>&#149;</B>&nbsp;&nbsp; &nbsp;Follow the
instructions provided by the recorded message.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" valign="top" align="left"><DIV style="margin-left:6%">Using a <B><u>black
ink</u></B> pen, mark your votes with an <B>X</B> as shown in this example. Please do not write outside the designated areas.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="MIDDLE" style="border-top: 1px solid #000000; border-BOTTOM: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000">
<div style="font-size: 18pt">X</div></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="font-size:8pt">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" valign="top" align="left" style="border-top: 2px solid #9a258f">&nbsp;</TD>
</TR>
<TR valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
    <TD valign="top" style="background-color: #efe3f0"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" style="background-color: #efe3f0; font-size: 12pt"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Annual
Meeting Proxy Card</B>
</DIV></TD>
    <TD align="left" valign="top"><IMG src="f29454def2945408.gif" alt="(LOGO)"></TD>
    <TD align="left" valign="middle" style="background-color: #efe3f0">&nbsp;</TD>

    <TD style="background-color: #efe3f0"><FONT style="FONT-SIZE: 8pt"><U><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C0123456789&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></U></FONT>
</TD>
    <TD align="left" valign="top" nowrap style="background-color: #efe3f0"><B>&nbsp;</B>
</TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid" vAlign=bottom       align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12345&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD align="center" valign="top" style="background-color: #efe3f0"><FONT style="white-space: nowrap"><B>&nbsp;</B></FONT></TD>

    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
</TR>

<TR valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
    <TD valign="top" style="background-color: #efe3f0"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
    <TD style="background-color: #efe3f0">&nbsp;</TD>
    <TD align="left" valign="top" style="background-color: #efe3f0">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="9" valign="top" align="left" style="border-top: 2px solid #9a258f">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 6pt"><FONT face="webdings">&#054;</FONT> <B>IF YOU HAVE NOT VOTED VIA THE INTERNET <U>OR</U> TELEPHONE,
FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. </B><FONT face="webdings">&#054;</FONT></DIV>



<DIV align="center"><DIV style="font-size: 3pt; margin-top: 5pt; width: 100%; border-top: 2px dashed #ec008c">&nbsp;</DIV></DIV>


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<TD valign="middle" align="center" style="background:#000000"><font color="#FFFFFF">&nbsp;<B>A</B>&nbsp;&nbsp;</FONT></TD>
    <TD valign=top align=left colspan="15" style="font-size: 10pt"><b>&nbsp;&nbsp;Proposals
&#151; The Board of Directors recommends a vote <U>FOR</U> all  the
nominees listed
and <u>FOR</u> Proposal 2. and 3.</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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</table>
<div>

<DIV align=center>
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  <TR vAlign=bottom>
    <TD vAlign=top noWrap>
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">1. Election of Directions:
      </DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><B>For</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><B>Withhold</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><B>For</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><B>Withhold</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><B>For</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><B>Withhold</B></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap>
      <DIV        style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;01
      - Theodore A. Boutacoff
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face=Wingdings>o</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face=Wingdings>o</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=left>02 - James L. Donovan</TD>
    <TD>&nbsp;</TD>
    <TD style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=left>03 - Donald L. Hammond</TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap>
      <DIV        style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;04
      - Garrett A. Garrettson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face=Wingdings>o</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face=Wingdings>o</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=left>05 - Robert K. Anderson</TD>
    <TD>&nbsp;</TD>
    <TD style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=left>06 - Sanford Fitch </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face="Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap>
      <DIV        style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;07
      - Barry G. Caldwell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face=Wingdings>o</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center><FONT face=Wingdings>o</FONT> </TD>
    <TD>&nbsp;</TD>
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    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center> </TD>
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    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=left>&nbsp; </TD>
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    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center> </TD>
    <TD>&nbsp;</TD>
    <TD  style="FONT-SIZE: 14pt" vAlign=top align=center></TD>
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      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><B>For</B></TD>
    <TD vAlign=top align=center nowrap><B>Against</B> </TD>
    <TD vAlign=top align=center nowrap><B>Abstain</B></TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=center><B>For</B></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=center><B>Against</B> </TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=center><B>Abstain</B></TD>
    <TD>&nbsp;</TD>
</TR>

  <TR vAlign=bottom>
    <TD vAlign=top align=center>2&nbsp;</TD>
<TD valign="top" colspan="2"><DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: -0px"> Proposal to approve the amended and restated 1998 Stock Plan.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center><FONT style="FONT-SIZE: 16pt" face=Wingdings>o</FONT> </TD>
    <TD vAlign=top align=center><FONT style="FONT-SIZE: 16pt" face=Wingdings>o</FONT> </TD>
    <TD vAlign=top align=center><FONT style="FONT-SIZE: 16pt" face=Wingdings>o</FONT></TD>
    <TD vAlign=top align=left>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top align=center>&nbsp;</TD>
    <TD vAlign=top align=center>3&nbsp;</TD>
    <TD vAlign=top align=left> Proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for fiscal year ending December&nbsp;29, 2007.</TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=center><FONT style="FONT-SIZE: 16pt" face=Wingdings>o</FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=center><FONT style="FONT-SIZE: 16pt" face=Wingdings>o</FONT></TD>
    <TD>&nbsp;</TD>
    <TD vAlign=top noWrap align=center><FONT style="FONT-SIZE: 16pt" face=Wingdings>o</FONT></TD>
    <TD>&nbsp;</TD>
</TR>
  <TR vAlign=bottom><!-- Blank Space -->
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    <TD vAlign=top colspan="2">
      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px">&nbsp;</DIV></TD>
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    <TD vAlign=top align=center>&nbsp;</TD>
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<TD valign="middle" colspan="7"><DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: -0px">
In their discretion, the proxies and attorneys-in-fact are authorized to vote upon such other matters which may properly come before the meeting and any adjournment(s) or postponement(s) thereof.
</DIV></TD>
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<TR valign="bottom">

<TD valign="middle" align="center" style="background:#000000"><font color="#FFFFFF">&nbsp;<B>B</B>&nbsp;</FONT></TD>
    <TD align="left" valign="top" colspan="4" style="font-size: 10pt"><B>&nbsp;&nbsp;Non-Voting Items</B></TD>
</TR>
<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top" colspan="4" nowrap><DIV style="margin-left:0px; text-indent:-0px"><B>Change of Address </B>&#151; Please print new address
below.</DIV></TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top" style="border-top: 1px solid #000000; border-BOTTOM: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; font-size: 16pt" colspan="5">

<DIV style="margin-left:0px; text-indent:-0px">&nbsp;<br><br>
</DIV></TD>
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</DIV>





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<TD valign="middle" align="center" style="background:#000000"><font color="#FFFFFF">&nbsp;<B>C</B>&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap><B>Authorized Signatures &#151; This section must be completed for your vote to be counted. &#151; Date and
Sign Below</B></TD>
</TR>

<TR valign="bottom" style="font-size: 3pt">
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
<TD valign="middle" align="center" colspan="3" style="font-size: 8pt"><DIV align="justify">
This Proxy should be marked, dated, signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both should sign. If a corporation, please sign in full corporate name by authorized person. If a partnership, please sign in partnership name by authorized person.

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    <TD colspan="3" valign="top" align="left">Date (mm/dd/yyyy) &#151; Please print date below.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature 1 &#151; Please keep signature within the box.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature 2 &#151; Please keep signature within the box.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000;border-left: 1px solid #000000; border-right: 1px solid #000000">&nbsp;</TD>

    <TD>&nbsp;</TD>
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</TR>
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    <TD align="center" valign="top" style="border-left: 1px solid #000000; border-right: 0px solid #000000"><DIV style="margin-left:0px; text-indent:-0px; font-size:24pt">

/
</DIV></TD>
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/
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      <DIV style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px"><FONT        face=Wingdings>n</FONT> </DIV></TD>
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    <TD vAlign=top align=left><IMG alt="(BAR CODE)" src="f29454def2945407.gif"> </TD>
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    <TD NOWRAP vAlign=top align=left><font color="#ec008c">C 1234567890</font><BR><BR>1 U P X </TD>
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    <TD vAlign=top nowrap align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font color="#ec008c">J N
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    <TD style="FONT-SIZE: 6pt" vAlign=top noWrap align=left><font color="#ec008c">MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE<br> 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND<br> MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND<br> MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND </font>
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<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 6pt; margin-top: 250pt"><FONT face="webdings">&#054;</FONT>
<B>IF YOU HAVE NOT VOTED VIA THE INTERNET <U>OR</U> TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.</B><FONT face="webdings">&#054;</FONT>
</DIV>

<DIV align="center" style="margin-top: 3pt"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 2px dashed #ec008c">&nbsp;</DIV></DIV>
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</TR>
<TR valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Proxy &#151; Iridex Corporation</B></TD>
</TR>
<TR valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size:6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size:10pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
<B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS</B></TD>
</TR>
<TR valign="bottom" style="font-size:6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>2007 ANNUAL MEETING OF STOCKHOLDERS<BR>
June&nbsp;7, 2007</B></TD>
</TR>

<TR valign="bottom" style="font-size:6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="justify" valign="top"><DIV align="justify">


The undersigned stockholder of IRIDEX Corporation,
 a Delaware corporation (&#147;IRIDEX&#148;), hereby acknowledges receipt of the Notice of Annual Meeting of
 Stockholders and Proxy Statement, each dated April&nbsp;27, 2007, and hereby appoints Barry G. Caldwell and Larry
 Tannenbaum, or either of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf
 and in the name of the undersigned, to represent the undersigned at the 2007 Annual Meeting of Stockholders of IRIDEX
 to be held on June&nbsp;7, 2007, at 10:00&nbsp;a.m., Pacific Daylight Savings Time, at the principal offices of IRIDEX
 located at 1212 Terra Bella, Mountain View, California 94043, and at any adjournment(s) or postponement(s) thereof and
to vote all shares of Common Stock of IRIDEX which the undersigned would be entitled to vote if then and there personally
 present, on the matters set forth on the reverse side of this Proxy.
</DIV>
</TD>
</TR>
<TR valign="bottom" style="font-size:6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="justify" valign="top"><DIV align="justify">

<B>This proxy will be voted as directed or, if no
 contrary direction is indicated, will be voted FOR the election of directors, FOR approval of the
 amended and restated 1998 Stock Plan, FOR ratification of the appointment of the Company&#146;s independent
 registered public accounting firm, and as said proxies deem advisable on such other matters as may come before
 the meeting and any adjournment(s) or postponement(s) thereof. The Board of Directors unanimously recommends a
 vote &#147;FOR&#148; each of Proposals 1, 2, and 3.</B>
</DIV></TD>
</TR>
<TR valign="bottom" style="font-size:6pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 8pt">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="justify" valign="top"><B>CONTINUED AND TO BE SIGNED ON REVERSE SIDE</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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-----END PRIVACY-ENHANCED MESSAGE-----
