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<SEC-DOCUMENT>0000950134-08-007616.txt : 20080428
<SEC-HEADER>0000950134-08-007616.hdr.sgml : 20080428
<ACCEPTANCE-DATETIME>20080428170722
ACCESSION NUMBER:		0000950134-08-007616
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20080611
FILED AS OF DATE:		20080428
DATE AS OF CHANGE:		20080428
EFFECTIVENESS DATE:		20080428

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:			1230

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27598
		FILM NUMBER:		08781995

	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>f40174dedef14a.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: 14pt; margin-top: 12pt"><B>Proxy Statement Pursuant to Section&nbsp;14(a) of the Securities<BR>
Exchange Act of 1934</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Filed by the Registrant <FONT face="Wingdings">&#254;</FONT><BR>
Filed by a Party other than the Registrant <FONT face="Wingdings">&#111;</FONT>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">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: 24pt; margin-top: 12pt"><B>IRIDEX CORPORATION</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>


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


<DIV align="center" style="font-size: 10pt; margin-top: 24pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&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: 12pt">Payment of Filing Fee (Check the appropriate box):
</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="1%" nowrap align="left"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No fee required.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</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="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Title of each class of securities to which transaction applies:</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></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>Aggregate number of securities to which transaction applies:</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></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>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>

<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></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>Proposed maximum aggregate value of transaction:</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></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">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Total fee paid:</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="1%" 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="1%" 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="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amount Previously Paid:</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></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>Form, Schedule or Registration Statement No.:</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></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>Filing Party:</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></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>Date Filed:</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></TD>
</TR>

</TABLE>
</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">NOTICE OF ANNUAL MEETING OF STOCKHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">INFORMATION CONCERNING SOLICITATION AND VOTING</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">PROPOSAL ONE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES LISTED ABOVE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">PROPOSAL TWO</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006"> THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF THE 2008 EQUITY INCENTIVE PLAN AND THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">PROPOSAL THREE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF BURR, PILGER & MAYER LLP</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">REPORT OF THE AUDIT AND CORPORATE GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">OTHER MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">IRIDEX CORPORATION</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"><B>IRIDEX CORPORATION</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<!-- link1 "NOTICE OF ANNUAL MEETING OF STOCKHOLDERS" -->
<DIV align="left"><A NAME="000"></A></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;11, 2008</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 Wednesday, June&nbsp;11, 2008 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 the adoption of the 2008 Equity Incentive Plan (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 Burr, Pilger &#038; Mayer LLP as independent registered
public accountants of the Company for the fiscal year ending January&nbsp;3, 2009 (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;15, 2008 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,
she or it 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="45%">&nbsp;</TD>
    <TD width="5%">&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</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">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">Theodore A. Boutacoff</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">April&nbsp;28, 2008
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>President and Chief Executive Officer</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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


<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<BR>
1212 Terra Bella Avenue<BR>
Mountain View, CA 94043</B>
</DIV>


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

</DIV>
<!-- link1 "FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>FOR THE 2008 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>
<!-- link1 "INFORMATION CONCERNING SOLICITATION AND VOTING" -->
<DIV align="left"><A NAME="002"></A></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 Wednesday, June&nbsp;11,
2008, 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;29, 2007, including financial statements, were mailed on or about April&nbsp;28, 2008 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;15, 2008 (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, 8,824,301 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. At the Record Date
500,000 shares of the Company&#146;s Series&nbsp;A Preferred Stock, par value $0.01 were issued and
outstanding. Each share of the Company&#146;s Series&nbsp;A Preferred Stock entitles the holder thereof to
the number of votes equal to the aggregate number of shares of Common Stock issuable upon the
conversion of such holder&#146;s shares of the Series&nbsp;A Preferred Stock to Common; each share of Series
A Preferred Stock is convertible into two shares of Common Stock.
</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 and two votes for each
share of Series&nbsp;A Preferred Stock held by such stockholder. Holders of the Company&#146;s Common Stock
and Series&nbsp;A Preferred Stock are the only security holders of the Company entitled to vote at the
Annual Meeting, and shall vote together as one class on each of the proposals presented in this
Proxy Statement. The stockholders may not cumulate votes in the election of directors.
</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>

<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: 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 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 adoption of the 2008 Equity Incentive
Plan; (iii)&nbsp;FOR the ratification of Burr, Pilger &#038; Mayer LLP as the independent registered public
accounting firm of the Company for the fiscal year ending January&nbsp;3, 2009; 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;). All proposals by any stockholder to be presented at the 2009 Annual Meeting of
Stockholders must be received by the Company at its principal executive offices, attention:
Secretary, no later than January&nbsp;1, 2009 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>

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /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;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 must be delivered in writing to the Secretary of the Company
at the principal executive offices of the Company no less than 45&nbsp;days, nor more than 120&nbsp;days,
prior to the date on which the Company first mailed its proxy materials for the prior year&#146;s Annual
Meeting. However, in the event the date of the 2009 Annual Meeting of Stockholders is more than 30
days before or after (other than as a result of adjournment) the one year anniversary of the 2008
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 2009 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 2009 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 January&nbsp;1, 2009
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 2009 Annual Meeting of Stockholders when and if the proposal is raised at the Company&#146;s Annual
Meeting in 2009.
</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;29, 2007,
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;29, 2007, 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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<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 "PROPOSAL ONE" -->
<DIV align="left"><A NAME="003"></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, Donovan, Fitch, Hawkins and Moore 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
as 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to provisions of the Securities Purchase Agreement by and between the Company and
BlueLine Capital Partners (&#147;BlueLine&#148;), dated August&nbsp;31, 2007, BlueLine received the right to
designate two individuals for appointment to the Company&#146;s Board, one of which was to be designated
at BlueLine&#146;s sole discretion and one of which was to be subject to the Company&#146;s approval. Mr.
Moore was designated as a director at BlueLine&#146;s sole discretion and Mr.&nbsp;Hawkins was designated by
BlueLine with the Company&#146;s approval. There are no other arrangements or understandings between any
director or executive officer and any other person pursuant to which such director or officer 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;15, 2008 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="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&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>&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">Theodore A. Boutacoff
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief
Executive Officer,
Chairman of the Board
of Directors
</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">James L. Donovan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70</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" style="background: #cceeff">
    <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">67</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">
    <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">64</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lead Independent
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">Donald L. Hammond, D.Sc. (1)(4)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">80</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">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">James B. Hawkins (1) (2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</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">2007</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">William M. Moore (1)(4)
</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
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2007</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>



<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Theodore A. Boutacoff </I>currently serves as the President, Chief Executive Officer and Chairman
of the Company&#146;s Board of Directors. 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 again from October&nbsp;2007
to the present. Mr.&nbsp;Boutacoff also served as senior principal advisor to the Company&#146;s Chief
Executive Officer from July&nbsp;2005 to October&nbsp;2007. Mr.&nbsp;Boutacoff 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>Sanford Fitch </I>has served as a director of the Company since 2004. Mr.&nbsp;Fitch has served as a
director and Audit Committee Chairman of Masimo Corp, a public company that designs, develops,
manufacturers and sells medical devices since November&nbsp;2006. Mr.&nbsp;Fitch also currently serves as a
director of Ozone International, Inc., and Paracor Medical, Inc., both privately held technology
companies. Mr.&nbsp;Fitch served as a director and Audit Committee Chairman of Foxhollow Technologies,
Inc., a public company, that designed, developed, manufactured and sold medical devices, from June
2004 until October&nbsp;2007. He also served as a director and Audit Committee Chairman of Conceptus
Inc., a medical device company, from December&nbsp;1994 until April&nbsp;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.
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 President of G.Garrettson Consulting, a management consulting company.
From Dec 2005 to January&nbsp;2008 he was CEO of Fresco Technologies, a privately held digital imaging
company. From 2001 until 2004, he was the President and Chief Executive Officer of ClairVoyante, 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.&nbsp;Garrettson served as the President and
Chief Executive Officer of Censtor Corporation, a developer of contact magnetic recording head disc
technology for the data storage industry, from 1993 to 1996. 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. He is currently a director of Catalyst Semiconductor, GSI
Group, and Giga-Tronics, all public companies, as well as Purdy Electronics, a private company. Dr.
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: 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.
</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>James B. Hawkins </I>joined Natus Medical Incorporated where he currently serves as President,
Chief Executive Officer, and Director in April&nbsp;2004. Natus Medical Incorporated is a provider of
healthcare products used for the screening, detection, treatment, monitoring and tracking of common
medical ailments such as hearing impairment, neurological dysfunction, epilepsy, sleep disorders,
and certain newborn conditions. Prior to joining Natus Medical, Mr.&nbsp;Hawkins was President, Chief
Executive Officer, and a Director of Invivo Corporation, a developer and manufacturer of
multi-parameter vital sign monitoring equipment, and its predecessor, from 1985 through January
2004. Mr.&nbsp;Hawkins also served as Secretary of Invivo from 1986 until January&nbsp;2004<I>.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>William M. Moore </I>currently serves on the board of directors of Natus Medical Inc. a company he
co-founded in 1990 and for which he served as its CEO until 1993. Natus Medical Incorporated is a
provider of healthcare products used for the screening, detection, treatment, monitoring and
tracking of common medical ailments such as hearing impairment, neurological dysfunction, epilepsy,
sleep disorders, and certain newborn conditions. Mr.&nbsp;Moore has served as a consultant to BlueLine
Partners, a private equity firm, since February&nbsp;2004, and currently serves on the board of
directors of Urologix, Inc., which develops, manufactures and markets minimally invasive medical
products for the treatment of urological disorders. From
March&nbsp;2003 until February&nbsp;2004, Mr.&nbsp;Moore
was a general partner of Alpine Partners, a venture capital firm. Mr.&nbsp;Moore served as CEO of
Metasensors, Inc., a medical device company, from 1998 to March&nbsp;2003.
</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; above.
</DIV>
<!-- link1 "THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES LISTED ABOVE" -->
<DIV align="left"><A NAME="004"></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 twenty-three (23)&nbsp;meetings during the fiscal year ended December&nbsp;29,
2007. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 until October&nbsp;9, 2007, at which time
Dr.&nbsp;Hammond resigned and Mr.&nbsp;Hawkins was appointed to fill the vacancy. 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, members of the Company&#146;s
executive management team 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
</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">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
consisted of Mr.&nbsp;Anderson and Drs.&nbsp;Hammond and Garrettson, until September&nbsp;6, 2007 when Mr.
Anderson resigned from the Board. On October&nbsp;9, 2007 Mr.&nbsp;Moore was appointed to the vacancy
created by Mr.&nbsp;Anderson&#146;s resignation. The Compensation and Nominating Committee held four (4)
meetings during the last fiscal year. Dr.&nbsp;Garrettson is chairman of the Compensation and
Nominating Committee. 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; below. 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>Director Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Members of the Board (if non-employees) receive $1,500 per Board meeting attended. The
Chairman of the Board (if non-employee) 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. The Lead Independent Director receives an additional payment of
$1,250 per month and an annual stock option grant of 5,000 shares. 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;15, 2008, options issued under the Director Plan to purchase 60,000 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 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. Options granted under the
Director Plan had a contractual term of ten years. In the event of our merger with or into another
corporation, resulting in a change of control, or the sale of substantially all of our assets, each
Director Plan options become exercisable in full and shall be exercisable for 30&nbsp;days after written
notice to the holder of the event causing the change in control.
</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;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 Stock 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. Since the expiration of the Company&#146;s Director Option
Plan, equity compensation granted to the Company&#146;s non-employee directors has been granted under
the 1998 Stock Plan, and the Company anticipates future awards will be granted under the Company&#146;s
2008 Equity Incentive Plan, if approved by the stockholders at the Annual Meeting. On March&nbsp;8,
2006, the Board approved a policy 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, with such option vesting ratably over a thirty-six (36)&nbsp;month period following the date
of grant and to 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, with such option vesting
ratably over a twelve (12)&nbsp;month period following the date of grant. 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 June&nbsp;29, 2007, Drs.&nbsp;Garrettson and Hammond and Mr.&nbsp;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 $5.26 per share, are subject to vesting over
12&nbsp;months, with 1/12th of the shares subject to the option vesting each month following the grant
date and have a term of 7&nbsp;years. In connection with Mr.&nbsp;Moore&#146;s appointment to the Board, he
received a non-qualified stock option for the purchase of 15,000 shares of Common Stock, effective
as of September&nbsp;31, 2007 at an exercise price per share equal to the fair market value on that
date, which vest and become exercisable over 36&nbsp;months, with 1/36th of the shares subject to the
option vesting each month following the grant date. In connection with Mr.&nbsp;Hawkins&#146;s appointment
to the Board, he received a non-qualified stock option for the purchase of 15,000 shares of Common
Stock, effective as of October&nbsp;31, 2007 at an exercise price per share equal to the fair market
value on that date, which vest and become exercisable over 36&nbsp;months, with 1/36th of the shares
subject to the option vesting each month following the grant date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Compensation for Fiscal 2007</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 2007. Mr.&nbsp;Boutacoff and Mr.&nbsp;Donovan, who are our employees, do
not receive additional compensation for their services as a director.
</DIV>

<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="center" style="font-size: 10pt; margin-top: 18pt"><B>Non-Employee Directors &#151; Summary Compensation Table &#151; 2007</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 in</B></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 nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option 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="left"><DIV style="margin-left:30px; text-indent:-0px"><B>Name</B></DIV></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">Sanford Fitch</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">42,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">31,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">74,379</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Garrett
Garrettson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">44,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">33,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">78,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald L. Hammond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">37,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">35,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">72,514</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James B. Hawkins (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William M. Moore (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,129</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 2007, in accordance with FAS 123(R), and this may include amounts for awards
granted in and prior to 2007. 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;29, 2007 and filed with the SEC on April&nbsp;10, 2008. 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, 2007, the aggregate number of underlying options outstanding for
each of our non-employee directors was:</TD>
</TR>

</TABLE>


<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 Shares</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Underlying Outstanding</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><DIV style="margin-left:30px; text-indent:-0px"><B>Name</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<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">19,166</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Garrett A. Garrettson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,166</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">32,292</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James B. Hawkins</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,249</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William M. Moore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,666</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</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="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Appointed to the Board as of October&nbsp;9, 2007.</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%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Appointed to the Board as of September&nbsp;6, 2007.</TD>
</TR>

</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;Boutacoff, who is the President and Chief Executive Officer of the Company, 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;Boutacoff, Donovan, Fitch and Dr.&nbsp;Garrettson attended the Company&#146;s 2007 Annual
Meeting of Stockholders.
</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 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="2%" 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="2%" 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="2%" 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="2%" 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="2%" 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
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="2%" 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 select 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>

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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>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, 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>

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /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>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;29, 2007, we had three equity compensation plans under which securities are
authorized for issuance. These plans are the Amended and Restated 1989 Incentive Stock 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;29, 2007:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Securities Authorized for Issuance Under Equity Compensation Plans, 2007</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="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(a)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(c)</TD>
    <TD>&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 nowrap align="left" colspan="2">Number of securities</TD>
    <TD>&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 nowrap align="left" colspan="2">remaining available for</TD>
    <TD>&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 nowrap align="left" colspan="2">future issuance under</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of securities to be</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Weighted-average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">equity compensation</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">issued upon exercise of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">exercise price of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">plans (excluding</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">outstanding options,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">outstanding options,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">securities reflected in</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Plan category</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">warrants and rights</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">warrants and rights</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2">column (a))</TD>
    <TD>&nbsp;</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="left">&nbsp;</TD>
    <TD align="right">1,531,111</TD>
    <TD nowrap>&nbsp;(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">337,959</TD>
    <TD nowrap>&nbsp;(2)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity compensation plans not approved by
security holders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">328,426</TD>
    <TD nowrap>&nbsp;(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,859,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">337,959</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 1,367,361 options to purchase shares outstanding under the 1998 Stock Option Plan, 60,000 options to purchase shares outstanding
under the 1995 Director Option Plan and 103,750, options to purchase shares outstanding under the Amended and Restated 1989 Incentive Stock
Plan. The 1995 Director Option Plan and the Amended and Restated 1989 Incentive Stock Plan have both expired and no further options to
purchase shares shall be issued under either plan, although outstanding options under such plans remain subject to the terms and conditions
of such plans. Our 2005 Employee Stock Purchase Plan was suspended until further notice in February of 2007 and no shares are outstanding
thereunder.</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 337,959 options available for future issuance under the 1998 Stock Plan as of December&nbsp;29, 2007.</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 four items:</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 first item 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, as a material inducement to Mr.&nbsp;Caldwell accepting employment with the Company. Mr.&nbsp;Caldwell left the services of the
Company in October of 2007 and as of December&nbsp;29, 2007 there were 143,426 shares outstanding and exercisable under this option, which will
terminate if not exercised by April&nbsp;16, 2009.
</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 relates to a warrant to purchase 25,000 shares of the Company&#146;s Common Stock at an exercise price of $6.07 per share issued
to Paul Gomory on July&nbsp;5, 2005 pursuant to services rendered under a recruiting contract entered into by and between the Company and Mr.
Gomory regarding the recruitment of the Company&#146;s then current Chief Executive Officer. This warrant is exercisable at any time and will
terminate if not exercised by July&nbsp;5, 2008.</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 third item is the grant of 235,000 non-qualified stock options to a total of 54 new employees hired in connection with the Company&#146;s
acquisition of the aesthetics business of Laserscope to purchase shares of the Company&#146;s Common Stock at an exercise price of $6.17 per
share. As of December&nbsp;29, 2007, 110,000 shares remain outstanding all of which will terminate if not exercised by February&nbsp;28, 2014.</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 fourth 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.&nbsp;Tomasco to purchase up to 50,000 shares of the Company&#146;s common stock at an
exercise price of $8.26 per share, all of which are outstanding. Ms.&nbsp;Tomasco left the Company on March&nbsp;7, 2008 and her options will
terminate if not exercised by June&nbsp;5, 2008.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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

<!-- link1 "PROPOSAL TWO" -->
<DIV align="left"><A NAME="005"></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 ADOPTION OF THE 2008 EQUITY INCENTIVE PLAN</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board is requesting that our stockholders approve a new equity incentive plan titled the
2008 Equity Incentive Plan (the &#147;Incentive Plan&#148;). The Company&#146;s 1998 Stock Plan, as amended (the
&#147;1998 Stock Plan&#148;) expired on February&nbsp;23, 2008. Our Board has approved the Incentive Plan,
subject to approval from the stockholders at the 2008 Annual Meeting. Approval of the Incentive
Plan requires the affirmative vote of the holders of a majority of the shares of our Common Stock
and Series&nbsp;A Preferred Stock, voting together as a single class, that are present in person or by
proxy and entitled to vote at the 2008 Annual Meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board believes that long-term incentive compensation programs align the interests of
management, employees and our stockholders to create long-term stockholder value. The Board
believes that plans such as the Incentive Plan increase our ability to achieve this objective,
especially, in the case of the Incentive Plan, by allowing for several different forms of long-term
incentive awards, which the Board believes will help the Company to recruit, reward, motivate and
retain talented personnel. As a result, we are seeking stockholder approval of the Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no material changes in the Incentive Plan from the 1998 Stock Plan. The Board
believes strongly that the approval of the Incentive Plan is essential to our continued success.
In particular, we believe that our employees are our most valuable assets and that the awards
permitted under the Incentive Plan are vital to our ability to attract and retain outstanding and
highly skilled individuals in the extremely competitive labor markets in which the Company
competes. Such awards also are crucial to our ability to motivate our employees to achieve the
Company&#146;s goals.
</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;The approval of the Incentive Plan requires the affirmative vote of a majority of the votes of
the holders of Common Stock and Series&nbsp;A Preferred Stock, voting as a single class, cast on the
proposal at the Annual Meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Summary of the 2008 Equity Incentive Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the principal features of the Incentive Plan and its operation.
The summary is qualified in its entirety by reference to the Incentive Plan, a copy of which is set
forth in <U>Appendix&nbsp;A</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Incentive Plan provides for the grant of the following types of incentive awards: (i)
stock options, (ii)&nbsp;stock appreciation rights, (iii)&nbsp;restricted stock, (iv)&nbsp;restricted stock units,
(v)&nbsp;performance units and performance shares, and (vi)&nbsp;and other stock or cash awards. Each of
these is referred to individually as an &#147;Award.&#148; Those who will be eligible for Awards under the
Incentive Plan include employees, directors and consultants who provide services to the Company and
its parent or subsidiaries. As of April&nbsp;15, 2008, approximately 150 of our employees, directors and
consultants would be eligible to participate in the Incentive 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 Incentive Plan</I>. The maximum aggregate
number of shares that may be awarded and sold under the Incentive Plan is 300,000 shares plus any
shares subject to stock options or similar awards granted under the 1998 Stock Plan that expire or
otherwise terminate without having been exercised in full and shares issued pursuant to awards
granted under the 1998 Stock Plan that are forfeited to the Company on or after the date the 1998
Stock Plan expires. As of December&nbsp;29, 2007, there were 1,367,361 shares subject to stock options
outstanding under the 1998 Stock
</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">Plan. The shares may be authorized, but unissued, or reacquired common stock. As of April&nbsp;15,
2008, no Awards have been granted under the Incentive Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares subject to Awards granted with an exercise price less than the fair market value on the
date of grant count against the share reserve as two shares for every one share subject to such an
Award. To the extent that a share that was subject to an Award that counted as two shares against
the Incentive Plan share reserve pursuant to the preceding sentence is returned to the Incentive
Plan, the Incentive Plan reserve will be credited with two shares that will thereafter be available
for issuance under the Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If an Award expires or becomes unexercisable without having been exercised in full, or, with
respect to restricted stock, restricted stock units, performance shares or performance units, is
forfeited to or repurchased by the Company, the unpurchased shares (or for Awards other than
options and stock appreciation rights, the forfeited or repurchased shares) which were subject
thereto will become available for future grant or sale under the Incentive Plan. Upon exercise of
a stock appreciation right settled in shares, the gross number of shares covered by the portion of
the stock appreciation right will cease to be available under the Incentive Plan. Shares that have
actually been issued under the Incentive Plan under any Award will not be returned to the Incentive
Plan and will not become available for future distribution under the Incentive Plan; provided,
however, that if shares of restricted stock, restricted stock units, performance shares or
performance units are repurchased by the Company or are forfeited to the Company, such shares will
become available for future grant under the Incentive Plan as described above. Shares used to pay
the exercise price of an Award and/or used to satisfy tax withholding obligations will not become
available for future grant or sale under the Incentive Plan. To the extent an Award is paid out in
cash rather than stock, such cash payment will not reduce the number of shares available for
issuance under the Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we declare a stock dividend or engage in a reorganization or other change in our capital
structure, including a merger, the Administrator will adjust the (i)&nbsp;number and class of shares
available for issuance under the Incentive Plan, (ii)&nbsp;number, class and price of shares subject to
outstanding Awards, and (iii)&nbsp;specified per-person limits on Awards to reflect the change.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Administration of the Incentive Plan</I>. The Board, or our Compensation Committee, or a
committee of directors or of other individuals satisfying applicable laws and appointed by the
Board (referred to as the &#147;Administrator&#148;), will administer the Incentive Plan. To make grants to
certain of the Company&#146;s officers and key employees, the members of the Board acting as the
Administrator must qualify as &#147;non-employee directors&#148; under Rule&nbsp;16b-3 of the Exchange Act, and as
&#147;outside directors&#148; under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;) (so that the Company can receive a federal tax deduction for certain compensation paid
under the Incentive Plan).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms of the Incentive Plan, the Administrator has the sole discretion to
select the employees, consultants, and directors who will receive Awards, to determine the terms
and conditions of Awards, to modify or amend each Award (subject to the restrictions of the
Incentive Plan), and to interpret the provisions of the Incentive Plan and outstanding Awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Options</I>. The Administrator is able to grant nonstatutory stock options and incentive stock
options under the Incentive Plan. The Administrator determines the number of shares subject to
each option, although the Incentive Plan provides that a participant may not receive options for
more than 200,000 shares in any fiscal year, except in connection with his or her initial
employment with the Company, in which case he or she may be granted an option covering up to an
additional 400,000 shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Administrator determines the exercise price of options granted under the Incentive Plan,
provided the exercise price must be at least equal to the fair market value of our 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%
</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">of the total voting power of all classes of our 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 each option will be stated in the Award agreement. The term of an option may not
exceed ten 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 years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After a 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 the participant&#146;s Award agreement, the 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;twelve months following his or her termination due
to death or disability. The participant&#146;s Award agreement may also provide that if the exercise of
an option following the termination of the participant&#146;s status as a service provider (other than
as a result of the participant&#146;s death or disability) would result in liability under Section 16(b)
of the Exchange Act, then the option will terminate on the earlier of (i)&nbsp;the expiration of the
term of the option, or (ii)&nbsp;the 10<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> day after the last date on which such exercise
would result in such liability under Section&nbsp;16(b). The participant&#146;s Award agreement may also
provide that if the exercise of an option following the termination of the participant&#146;s status as
a service provider (other than as a result of the participant&#146;s death or disability) would be
prohibited because the issuance of shares would violate securities laws, then the option will
terminate on the earlier of (i)&nbsp;the expiration of the term of the option, or (ii)&nbsp;the expiration of
a period of three months after the termination of the participant during which the exercise of the
option would not violate securities laws.
</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 our
common stock, which vest in accordance with the terms and conditions established by the
Administrator in its sole discretion. For example, the Administrator may set restrictions based on
the achievement of specific performance goals. The Administrator, in its discretion, may
accelerate the time at which any restrictions will lapse or be removed. The Award agreement
generally will 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
Administrator 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
restricted 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>. Awards of restricted stock units result in a payment to a participant
only if the vesting criteria the Administrator establishes is satisfied. For example, the
Administrator may set vesting criteria based on the achievement of specific performance goals. The
restricted stock units will vest at a rate determined by the Administrator; provided, however, that
after the grant of restricted stock units, the Administrator, in its sole discretion, may reduce or
waive any restrictions for such restricted stock units. Upon satisfying the applicable vesting
criteria, the participant will be entitled to the payout specified in the Award agreement. The
Administrator, in its sole discretion, may pay earned restricted stock units in cash, shares, or a
combination thereof. Restricted stock units that are fully paid in cash will not reduce the number
of shares available for grant under the Incentive Plan. On the date set forth in the Award
agreement, all unearned restricted stock units will be forfeited to the Company. The Administrator
determines the number of restricted stock units granted to any participant, but during any fiscal
year of the Company, no participant may be granted more than 150,000 restricted stock units during
any fiscal year, except that the participant may be granted up to an additional 150,000 restricted
stock units in connection with his or her initial employment to the Company.
</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 Administrator will be able to grant stock appreciation rights,
which are rights 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, shares
of common stock, or a combination thereof. The Administrator, subject to the terms of the
Incentive Plan, will have complete discretion to determine the terms and conditions of stock
appreciation rights granted under the Incentive Plan, provided, however, that the exercise price
may not be less than 100% of the fair market value of a share on the date of grant and the term of
a stock appreciation right may not exceed ten years. 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 employment 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 vested stock appreciation rights for the same period
of time as applies to stock options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Performance Units and Performance Shares</I>. The Administrator will be able to 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 Administrator may establish are achieved or
the Awards otherwise vest. Earned performance units and performance shares will be paid, in the
sole discretion of the Administrator, in the form of cash, shares, or in a combination thereof.
The Administrator will establish performance 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. The performance units and
performance shares will vest at a rate determined by the Administrator; provided, however, that
after the grant of a performance unit or performance share, the Administrator, in its sole
discretion, may reduce or waive any performance objectives or other vesting provisions for such
performance unit or performance share. During any fiscal year, no participant will receive more
than 150,000 performance shares and no participant will receive performance units having an initial
value greater than $1,000,000, except that a participant may be granted performance shares covering
up to an additional 150,000 shares in connection with his or her initial employment with the
Company. Performance units will have an initial value established by the Administrator on or
before the date of grant. Performance shares will have an initial value equal to the fair market
value of a share of our common stock on the grant date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Performance Goals</I>. Awards and other incentives granted under the Incentive Plan may be made
subject to the attainment of performance goals relating to one or more business criteria within the
meaning of Section 162(m) of the Code and may provide for a targeted level or levels of achievement
including: cash position, earnings per share, individual objectives, net income, operating cash
flow, operating income, return on assets, return on equity, return on sales, revenue, and total
stockholder return. The performance goals may differ from participant to participant and from
Award to Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Transferability of Awards</I>. Awards granted under the Incentive Plan are generally not
transferable, 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>Change in Control</I>. In the event of a merger or change in control of the Company, each
outstanding Award will be treated as the Administrator determines, including that each Award will
be assumed or an equivalent option or right substituted by the successor corporation or a parent or
subsidiary of the successor corporation. In the event that the successor corporation, or the
parent or subsidiary of the successor corporation, does not assume or substitute for the Award, the
participant will fully vest in and have the right
</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">to exercise all of his or her outstanding options or stock appreciation rights, including
shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on
restricted stock will lapse, and, with respect to restricted stock units, performance shares and
performance units, all performance goals or other vesting criteria will be deemed achieved at
target levels and all other terms and conditions met. In addition, if an option or stock
appreciation right becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a change in control, the Administrator will notify the participant in writing or
electronically that the option or stock appreciation right will be fully vested and exercisable for
a period of time determined by the Administrator in its sole discretion, and the option or stock
appreciation right will terminate upon the 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 Incentive Plan</I>. The Administrator will have the authority to
amend, alter, suspend or terminate the Incentive Plan, except that stockholder approval will be
required for any amendment to the Incentive Plan to the extent required by any applicable laws. No
amendment, alteration, suspension or termination of the Incentive Plan will impair the rights of
any participant, unless mutually agreed otherwise between the participant and the Administrator and
which agreement must be in writing and signed by the participant and the Company. The Incentive
Plan will terminate on June&nbsp;11, 2018, unless the Board terminates it earlier.
</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 Incentive
Plan is in the discretion of the Administrator and therefore cannot be determined in advance. The
following table sets forth (a)&nbsp;the aggregate number of shares of Common Stock subject to options
granted under the 1998 Stock Plan during the last fiscal year, (b)&nbsp;the average per share exercise
price of such options.
</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 Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Per Share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name of Individual or Group</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Granted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exercise 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">All executive officers, as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors who are not
executive officers, as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.85</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">133,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.59</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 Incentive 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>Nonstatutory Stock Options</I>. No taxable income is reportable when a nonstatutory stock option
with an exercise price equal to the fair market value of the underlying stock on the date of grant
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 taxable income recognized in connection with an option
exercise by an employee of the Company is subject to tax withholding by the Company. Any
additional gain or loss recognized upon any later disposition of the shares would be capital gain
or loss.
</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;As a result of Section&nbsp;409A of the Code and the Treasury regulations promulgated thereunder
(&#147;Section&nbsp;409A&#148;), however, nonstatutory stock options and stock appreciation rights granted with an
exercise price below the fair market value of the underlying stock or with a deferral feature may
be taxable to the recipient in the year of vesting in an amount equal to the difference between the
then fair market value of the underlying stock and the exercise price of such awards and may be
subject to an additional 20% federal income tax plus penalties and interest. In addition, during
each subsequent tax year (until the option is exercised or terminates), the option may be subject
to additional annual income and penalty taxes, plus interest charges, on any increase in value of
the underlying stock. Finally, certain states, such as California, have adopted similar tax
provisions.
</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 nonstatutory 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
with an exercise price equal to the fair market value of the underlying stock on the date of grant
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>Section&nbsp;409A</I>. Section&nbsp;409A of the Code, which was added by the American Jobs Creation Act of
2004, provides certain new requirements on non-qualified deferred compensation arrangements.
Awards granted with a deferral feature will be subject to the requirements of Section&nbsp;409A,
including discount stock options and stock appreciation rights discussed above. If an Award is
subject to and fails to satisfy the requirements of Section&nbsp;409A, the recipient of that award may
recognize ordinary income on the amounts deferred under the Award, to the extent vested, which may
be prior to when the compensation is actually or constructively received. Also, if an Award that
is subject to Section&nbsp;409A fails to comply with Section&nbsp;409A&#146;s provisions, Section&nbsp;409A imposes an
additional 20% federal income tax on compensation recognized as ordinary income, as well as
interest on such deferred compensation. Some states may also apply a penalty tax (for instance,
California imposes a 20% penalty tax in addition to the 20% federal penalty tax). The Internal
Revenue Service has not issued complete and final guidance under Section&nbsp;409A and, accordingly, the
requirements of Section&nbsp;409A (and the application of those requirements to Awards issued under the
Incentive Plan) are not entirely clear.
</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>Tax Effect for the Company</I>. The Company generally will be entitled to a tax deduction in
connection with an Award under the Incentive 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 nonstatutory stock option). Special rules limit the deductibility of compensation
paid to the Company&#146;s Chief Executive Officer (i.e., its principal executive officer) and to each
of its three most highly compensated executive officers for the taxable year (other than the
principal executive officer or principal financial officer). Under Section 162(m) of the Code, the
annual compensation paid to any of these specified executives will be deductible only to the extent
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 Incentive 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 Incentive Plan has
been designed to permit the Administrator 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">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 INCENTIVE PLAN. IT DOES NOT
PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT&#146;S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
PARTICIPANT MAY RESIDE.
</DIV>

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<DIV align="left"><A NAME="006"></A></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>
ADOPTION OF THE 2008 EQUITY INCENTIVE PLAN AND THE NUMBER OF SHARES<BR>
RESERVED FOR ISSUANCE THEREUNDER.</B>
</DIV>


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</DIV>

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



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<DIV align="left"><A NAME="007"></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<BR>
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 Burr, Pilger &#038; Mayer LLP (&#147;BPM&#148;),
independent registered public accountants, to audit the financial statements of the Company for the
fiscal year ending January&nbsp;3, 2009, and recommends that stockholders vote for ratification of such
appointment. BPM also served as the Company&#146;s independent registered public accountants for the
fiscal year ending December&nbsp;29, 2007. Representatives of BPM 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: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Resignation of PricewaterhouseCoopers LLP and retention of Burr, Pilger &#038; Mayer LLP as the
Company&#146;s Principal Independent Accountants.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;23, 2007, PricewaterhouseCoopers LLP (&#147;PWC&#148;) resigned as the Company&#146;s independent
registered public accounting firm, and on October&nbsp;2, 2007, the Audit Committee approved the
appointment of BPM as the Company&#146;s registered independent public accounting firm. During the
Company&#146;s two preceding fiscal years ended December&nbsp;31, 2005 and December&nbsp;30, 2006 and through
October&nbsp;2, 2007, neither the Company nor anyone acting on behalf of the Company consulted with BPM
regarding either: (i)&nbsp;the application of accounting principles to a specified transaction,
completed or proposed, or any other decision as to the accounting, auditing or financial reporting
issue or (ii)&nbsp;any matter that was either the subject of a disagreement (as that term is defined in
Item&nbsp;304(a)(1)(iv) of Regulation&nbsp;S-K and the related instructions to Item&nbsp;304 of Regulation&nbsp;S-K) or
a reportable event (as that term is described in Item&nbsp;304(a)(1)(v) of Regulation&nbsp;S-K).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee did not recommend, nor was it asked to approve PWC&#146;s resignation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PWC&#146;s report regarding the Company&#146;s financial statements as of and for the fiscal year ended
December&nbsp;30, 2006, contained an explanatory paragraph expressing substantial doubt about the
Company&#146;s ability to continue as a going concern, did not contain any adverse opinion or disclaimer
of opinion, and was not further qualified or modified as to uncertainty, audit scope, or accounting
principle. PWC&#146;s report regarding the Company&#146;s financial statements as of and for the fiscal year
ended December&nbsp;31, 2005, did not contain any adverse opinion or disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope, or accounting principle.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fiscal years ended December&nbsp;31, 2005 and December&nbsp;30, 2006, and through August&nbsp;23,
2007, there were no disagreements as described under Item&nbsp;304(a)(1)(iv) of Regulation&nbsp;S-K with PWC
on any matter of accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no &#147;reportable events&#148; as that term is described in Item&nbsp;304(a)(1)(v) of Regulation
S-K during the fiscal years ended December&nbsp;31, 2005 and December&nbsp;30, 2006, and through August&nbsp;23,
2007 except 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="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As disclosed in the Item&nbsp;4T section of the Company&#146;s Form 10-Q for the quarter ended
June&nbsp;30, 2007, along with related matters, the following control deficiencies each
constituted a material weakness in the Company&#146;s internal control over financial
reporting as of June&nbsp;30, 2007:</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="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In connection with the acquisition of two foreign
subsidiaries, management of the Company determined that these entities lack
the necessary internal control and disclosure procedures such that there is
more than a remote likelihood that a material misstatement of the Company&#146;s
financial statements would not be prevented or detected.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In connection with the annual audit of the Company&#146;s
financial statements as of and for the fiscal year ended December&nbsp;30, 2006,
PWC communicated to the management of the Company and to the Audit Committee
of the Board of Directors of the Company that the Company failed to maintain
adequate period-end review procedures to ensure the completeness and
accuracy of certain journal entries impacting general ledger accounts.
Management and the Audit Committee concurred with the determination that a
material weakness existed. As a result, incorrect entries were recorded to
the financial statements that were not identified and corrected by
management of the Company in a timely manner.</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="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The material weakness related to journal entries described above and to related
matters were also disclosed in the Item&nbsp;4 sections of the Company&#146;s Forms 10-Q for the
quarters ended March&nbsp;31, 2007, September&nbsp;30, 2006 and July&nbsp;1, 2006 and in the Item&nbsp;4
section of the Company&#146;s Form 10-Q/A for the quarter ended April&nbsp;1, 2006 and in the
Item&nbsp;9A sections of the Company&#146;s Forms 10-K for the year ended December&nbsp;30, 2006 and
for the year ended December&nbsp;31, 2005.</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"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As disclosed in our Current Report on Form 8-K dated August&nbsp;21, 2006, in August&nbsp;2006
and in the Item&nbsp;4 sections of the Company&#146;s Forms 10-Q for the quarters ended September
30, 2006 and July&nbsp;1, 2006 and in the Item&nbsp;4 section of the Company&#146;s Form 10-Q/A for
the quarter ended April&nbsp;1, 2006, the Audit Committee initiated an independent review of
the facts and circumstances concerning our revenue recognition practices. In the course
of this review, errors in revenue recognition were identified from the period beginning
in 2003 through the first quarter of 2006. As a result of these errors, the Audit
Committee determined that it was necessary to restate our financial results for the
quarter ended April&nbsp;1, 2006 to reflect adjustments to the previously reported financial
information. While errors were identified in prior years, we concluded that the errors
were not material to the previously issued financial statements. Specifically the
material weakness regarding accounting for revenue related to the fact that effective
controls were not designed and in place to ensure that all terms and conditions related
to revenue agreements, including verbal or written side agreements, non standard terms
and multiple element arrangements, were identified to ensure revenue was accurately
recorded in accordance with generally accepted accounting principles. Additionally,
effective controls were not designed and in place to ensure that sales personnel did
not enter in unauthorized side agreements with customers, including rights of return.
As a result, restatements of the Company&#146;s financial statements were required for the
quarter ended March&nbsp;31, 2006 related to revenue, cost of goods sold, operating expenses
and inventory. Additionally, adjustments to the Company&#146;s financial records for the
quarter ended June&nbsp;30, 2006 related to revenue, cost of goods sold, operating expenses
and inventory were required.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /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 style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company authorized PWC to respond fully to the inquiries of BPM concerning the subject
matter of the material weakness disclosed above.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Fees Billed To Company By the Company&#146;s Principal Independent Accounts During The Previous Two
Fiscal Years</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 its principal independent accountants for the fiscal
years ended December&nbsp;29, 2007 and December&nbsp;30, 2006.
</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="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

<TD nowrap align="left" style="border-bottom: 1px solid #000000"><DIV style="margin-left:20px; text-indent:-0px"><B>(in thousands)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fiscal 2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fiscal 2006</B></TD>
    <TD>&nbsp;</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="left">$</TD>
    <TD align="right">551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">500</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">1,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</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 nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" 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="left">$</TD>
    <TD align="right">1,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">520</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. The 2007 figure can be broken down as follows:
PWC billed $315,000 of the fees and BPM billed $236,000 of the fees.</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; Neither PWC nor BPM
performed any such services for the Company in fiscal years 2007 or 2006.</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.
Neither PWC nor BPM performed any such services for the Company in fiscal years 2007 or 2006.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>All Other Fees consisted of fees attributable to PWC&#146;s review of the Company&#146;s filings under
the Exchange Act, unrelated to its audit of the Company&#146;s financial statements, and fees
related to the acquisition of the Laserscope Aesthetics business and the associated carve-out
audits for the years ended December&nbsp;31, 2006, 2005 and 2004. The full amount of the fees
billed under this category is attributable to PWC; BPM did not bill any of the fees listed in
this category.</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 its principal independent accountants for non-audit services. Under the policy, management
may use its principal independent accountants 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 the Company&#146;s principal independent accountants is compatible with maintaining the
Company&#146;s principal independent accountants&#146; independence and has approved these non-audit services
in accordance with its charter and applicable laws, rules and regulations.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

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<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>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 Burr, Pilger &#038; Mayer LLP. See &#147;Information
Concerning Solicitation and Voting &#151; Quorum; Abstentions; Broker Non-Votes.&#148;
</DIV>
<!-- link1 "THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF BURR, PILGER & MAYER LLP" -->
<DIV align="left"><A NAME="008"></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; RATIFICATION OF THE APPOINTMENT OF BURR, PILGER &#038; MAYER LLP</B>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /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">

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" -->
<DIV align="left"><A NAME="009"></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, 2008 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, 2008</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>5% Stockholders, Directors and Officers (1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent of Total (2)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">BlueLine Partners, L.L.C. (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,328,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">23.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aberdeen Asset Management PLC (4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,002,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nationwide Fund Advisors (5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,002,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Black River Asset Management LLC (6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">685,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Black River Long/Short Fund Ltd. (7)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">571,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.4</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">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Directors (8)</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">James L. Donovan (9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sanford Fitch (10)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Garrett A.
Garrettson (11)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">*</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald L. Hammond (12)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">James B. Hawkins (13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">*</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William M. Moore (14)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">*</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>Named Executive Officers (15)</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">Theodore A. Boutacoff (16)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">309,047</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Tannenbaum (17)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">*</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald J. Todd (18)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">*</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Barry G. Caldwell (19)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors and executive officers as a group (10
persons) (20)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">858,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.1</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, CA 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
1, 2008, 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
8,927,301 shares of common stock outstanding on March&nbsp;1, 2008.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes shares owned by: BlueLine Capital Partners, L.P., BlueLine Capital Partners II, L.P., BlueLine
Capital Partners III, L.P., BlueLine Catalyst Fund VIII, L.P., BlueLine Partners, L.L.C. and BlueLine
Partners, L.L.C., together (&#147;BlueLine Partners&#148;). BlueLine Partners is located at 402 Railroad Ave., Suite
201, Danville, CA 94526. Also includes 1,000,000 shares of Common Stock that would be issued upon the
exercise of the 500,000 shares of Series&nbsp;A Preferred Stock issued according to the Securities Purchase
Agreement, by and between BlueLine and the Company, dated as of August&nbsp;31, 2007. This information was
obtained from a filing made with the SEC pursuant to Rule&nbsp;13d-1 of the Exchange Act on October&nbsp;25, 2007.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /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">



<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>Aberdeen Asset Management PLC is located at 10 Queens Terrace, Aberdeen, Scotland. This information was
obtained from a filing made with the SEC pursuant to Rule&nbsp;13d-1 of the Exchange Act on January&nbsp;24, 2008.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Nationwide Fund Advisors is located at 1200 River Road, Suite&nbsp;1000, Conshohocken, PA 19428. This
information was obtained from a filing made with the SEC pursuant to Rule&nbsp;13d-1 of the Exchange Act on
February&nbsp;15, 2008.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(6)</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, 2008.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(7)</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, 2008.</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 all Directors except those listed below as Named Executive Officers, see footnote 15.</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 36,143 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 21,250 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 21,250 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 35,313 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 2,916 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">(14)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 3,749 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 individuals listed below from the &#147;Executive Officer Summary Compensation Table &#150; 2007&#148; including
the Company&#146;s Chief Executive Officer and the former Chief Executive Officer, as well as the Company&#146;s
other two most highly compensated executive officers.</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 155,000 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 74,304 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 37,028 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 175,001 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</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 563,455 shares subject to options that are exercisable within 60&nbsp;days of March&nbsp;1, 2008.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /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"><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 Executive
Officers as of April&nbsp;15, 2008.
</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="35%">&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="35%">&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">Theodore A. Boutacoff
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief
Executive Officer,
Chairman of the Board of
Directors</TD>
</TR>
<TR valign="bottom">
    <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" 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">70</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Corporate
Business Development and
Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">James Mackaness
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <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">
    <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">55</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>Theodore A. Boutacoff </I>currently serves as the President, Chief Executive Officer and Chairman
of the Company&#146;s Board of Directors. 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 again from October&nbsp;2007
to the present. Mr.&nbsp;Boutacoff also served as senior principal advisor to the Company&#146;s Chief
Executive Officer from July&nbsp;2005 to October&nbsp;2007. He 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>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>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>James Mackaness </I>joined the Company in January&nbsp;2008 as Chief Financial Officer. Prior to his
appointment with the Company, from September&nbsp;2001 to December&nbsp;2007, Mr.&nbsp;Mackaness served as Chief
Financial Officer, Vice President of Finance and Assistant Secretary of NextHop Technologies, Inc.,
a networking wireless technology company. Prior to September&nbsp;2001, Mr.&nbsp;Mackaness served as a Senior
Manager of Business Development at Cisco Systems, Inc.; as Vice President, Finance, Chief Financial
Officer, and Secretary of InfoGear Technology Corporation; and as Assistant Controller at
Electroglas, Inc. Mr.&nbsp;Mackaness commenced his career with Ernst &#038; Young LLP where he spent seven
years and advanced to the position of audit manager. Mr.&nbsp;Mackaness is a director of NextHop
Technologies Private Ltd. a wholly owned Indian Subsidiary of NextHop Technologies Inc.
Mr.&nbsp;Mackaness received his B.A. in Psychology from the University of Warwick, England and is a
Chartered Accountant and member of the Institute of Chartered Accountants of England and Wales.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</DIV>

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<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;<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>

<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 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>

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /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>Summary Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows, with respect to the Company&#146;s Chief Executive Officer, former Chief
Executive Officer and each of the Company&#146;s other two most highly compensated executive officers
earning more than $100,000 in salary and bonus (the &#147;Named Executive Officers&#148;), information
concerning compensation awarded to, earned by or paid for their services to the Company in all
capacities during 2007. The entries under the column heading &#147;All Other Compensation&#148; in the table
include the cost of 401(k) matching contributions for each Named Executive Officer, except as
otherwise noted.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Executive Officer Summary Compensation Table &#150; 2007</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 ($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>Salary($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>Bonus($)</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>($) (5)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>Total ($)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Theodore A. Boutacoff (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">241,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">110,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">354,667</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">President and Chief</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">240,000</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">167,626</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">408,626</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Executive Officer<BR>
Chairman of the Board</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">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">211,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">233,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Chief Business Officer,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">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">Donald J. Todd</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">208,246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">90,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">301,911</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Senior Vice President,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">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>
<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">Barry G. Caldwell (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">257,742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">290,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">54,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">603,752</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Former President and Chief</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">
    <TD><DIV style="margin-left:0px; text-indent:-0px">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>
<!-- 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;Boutacoff served as Senior Principal Advisor to the Chief Executive Officer throughout 2006 and
until October&nbsp;2007. Mr.&nbsp;Boutacoff assumed the position of the Company&#146;s Chief Executive Officer in
October&nbsp;2007 after Mr.&nbsp;Caldwell resigned.</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 resigned as the Company&#146;s Chief Business Officer and Senior Vice President, Finance
and Administration and left the Company in January&nbsp;2008.</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;Caldwell resigned as the Company&#146;s Chief Executive Officer and left the Company in October&nbsp;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>Reflects the dollar amount recognized for financial statement reporting purposes for fiscal 2006
and 2007, in accordance with FAS 123(R), and thus may include amounts for awards granted in and
prior to 2006 and 2007. The assumptions used in the valuation of these awards are set forth in the
notes of our Annual Reports on Form 10-K for the years ended December&nbsp;30, 2006 and December&nbsp;29,
2007 and filed with the SEC on March&nbsp;30, 2007 and April&nbsp;10, 2008 respectively. 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>In 2007 Mr.&nbsp;Caldwell received a relocation gross up of $7,806, COBRA payments of $5,059 and
consulting fees of $40,000; in 2006 Mr.&nbsp;Caldwell received a relocation gross up of $49,927.
<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>
In 2006 Mr.&nbsp;Todd received a relocation gross up of $124,730.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /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;None of the Company&#146;s Named Executive Officers received any equity grants from the Company in
2007.
</DIV>

<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;29, 2007.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Outstanding Equity Awards &#150; 2007</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>&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">&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>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>Underlying Unexercised 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"><B>(3)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(4)</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>Grant Date</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">Theodore A. Boutacoff (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/23/1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/23/2008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/23/1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2/23/2008</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">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">$</TD>
    <TD align="right">7.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1/30/2008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12/7/1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.00</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">11/11/2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11/11/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11/11/2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11/11/2013</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">4/28/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/28/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/28/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/28/2015</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="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Larry Tannenbaum (1)</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">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/19/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3/31/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">3,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald J. Todd (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10/14/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">2,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10/14/2015</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</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">2,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9/7/2013</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Barry G. Caldwell (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/5/2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/5/2010</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">143,426</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">6.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7/5/2010</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 Messrs.&nbsp;Boutacoff, Tannenbaum and Todd vest at the rate of 1/48th 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 vests over a four year period at a rate
of 1/4th of the total shares subject to the option vesting on October&nbsp;14, 2006 and then 1/48th
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">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The options granted to Mr.&nbsp;Caldwell were modified pursuant to his Separation Agreement with
the Company, dated October&nbsp;17, 2007 whereby Mr.&nbsp;Caldwell&#146;s vested options terminate on April
16, 2009.</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 -->29<!-- /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>2007 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 2007 for each of the named executive officers. No shares were acquired upon vesting of
stock awards during fiscal 2007 for any of the named executive officers.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>2007 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="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&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="6" style="border-bottom: 0px solid #000000"><B>Option Awards</B></TD>
    <TD>&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="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value</B></TD>
    <TD>&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="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Realized</B></TD>
    <TD>&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="2"><B>Acquired on</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>on</B></TD>
    <TD>&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="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&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="2"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>($) (1)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Theodore A. Boutocoff</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/2/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/3/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,000</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">4/4/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4/5/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,125</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">4/9/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,600</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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="4%" 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="4%" 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="4%" 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>
<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 style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</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 on July&nbsp;5, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Separation 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;On October&nbsp;19, 2007, the Company and Barry G. Caldwell entered into a Separation Agreement and
Release (the &#147;Caldwell Separation Agreement&#148;) pursuant to Mr.&nbsp;Caldwell&#146;s resignation. The Caldwell
Separation Agreement effectively terminates the Change of Control and Severance Agreement between
Mr.&nbsp;Caldwell and the Company dated July&nbsp;5, 2005. The Caldwell Separation Agreement releases the
Company from all claims relating to or arising from Mr.&nbsp;Caldwell&#146;s employment relationship with the
Company and the termination of such relationship. The Caldwell Separation Agreement extends the
exercise period during which Mr.&nbsp;Caldwell can exercise his vested stock options until April&nbsp;16,
2009, eighteen months from the date of the Separation Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Separation 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 January&nbsp;22, 2008, the Company and Larry Tannenbaum entered into a Separation Agreement and
Release (the &#147;Tannenbaum Separation Agreement&#148;) which effectively terminated the Amended and
Restated Severance and Change of Control Agreement between Mr.&nbsp;Tannenbaum and the Company dated
April&nbsp;29, 2005. The Tannenbaum Separation Agreement releases the Company from any and all claims
relating to or arising from Mr.&nbsp;Tannenbaum&#146;s employment relationship with the Company and the
termination of such relationship, and extends the exercise period during which Mr.&nbsp;Tannenbaum can
exercise his vested stock options until eighteen months from his termination.
</DIV>

<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)&nbsp;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 was $1,000 per employee in fiscal year 2006 and $2,000 per
employee in fiscal year 2007. 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 is eligible
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. In February of 2007 the Board suspended the 2005 Employee Stock Purchase
Plan until further notice.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->31<!-- /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>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>
<!-- link1 "REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="010"></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;29, 2007, 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: 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>

<P align="center" style="font-size: 10pt"><!-- Folio -->32<!-- /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>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. 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 2007, although no incentive bonuses were paid because performance goals were not
achieved. The Company has discussed an incentive bonus plan for 2008, 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. The Chief Executive Officer&#146;s base salary was
not increased in 2007. Mr.&nbsp;Boutacoff assumed the responsibilities of Chief Executive Officer in
October&nbsp;2007 at the same base salary he received as Chief Executive Officer in July&nbsp;2005.
</DIV>

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

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">Donald L. Hammond, D.Sc.<BR>
Garrett A. Garrettson, Ph.D.<BR>
William M. Moore

</DIV>
<!-- link1 "REPORT OF THE AUDIT AND CORPORATE GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS" -->
<DIV align="left"><A NAME="011"></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;29, 2007, 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;29, 2007, the Audit and Corporate Governance Committee was comprised of the
directors named below.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->33<!-- /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>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;29, 2007 and the notes thereto, with management,
which has primary responsibility for the financial statements. Burr, Pilger &#038; Mayer 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 Burr, Pilger &#038; Mayer 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 Burr, Pilger &#038; Mayer 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 Burr, Pilger &#038; Mayer LLP that firm&#146;s
independence from us. The Audit and Corporate Governance Committee also concluded that Burr,
Pilger &#038; Mayer LLP&#146;s provision of non-audit services, as described previously, to the Company is
compatible with Burr, Pilger &#038; Mayer LLP&#146;s independence.
</DIV>

<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;29, 2007 for filing with the Commission.
</DIV>

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

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">Sanford Fitch<BR>
Garrett A. Garrettson<BR>
James B. Hawkins

</DIV>

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

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="012"></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;On August&nbsp;31, 2007, the Company entered into a Securities Purchase Agreement with BlueLine
pursuant to which it sold to BlueLine units, (the &#147;Units&#148;), consisting of one share of the
Company&#146;s Series&nbsp;A Preferred Stock and one warrant to purchase 1.2 shares of the Company&#146;s Common
Stock. In connection with this transaction the Company issued an aggregate of 500,000 Units at
$10.00 per Unit, resulting in the issuance of 500,000 shares of Series&nbsp;A Preferred Stock,
convertible into 1&nbsp;million shares of Common Stock pursuant to the provisions of the Certificate of
Designation filed by the Company in connection with the sale, and warrants (the &#147;Warrants&#148;) to
purchase an aggregate of 600,000 shares Common Stock at an exercise price of $0.01 per share. The
Warrants were exercisable after August&nbsp;31, 2007 and were exercised prior to their expiration on
December&nbsp;31, 2007. Pursuant to the Securities Purchase Agreement, BlueLine has the right to
designate two individuals for appointment to the Company&#146;s Board of Directors, one of which is at
BlueLine&#146;s discretion and the second of which is subject to the Company&#146;s reasonable approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company also entered into an Investor Rights Agreement with BlueLine, pursuant to which
the Company has agreed to grant BlueLine certain registration rights, including the right to
request that the Company file a Form S-3 registration statement within 90&nbsp;days of becoming eligible
to file a Form S-3 registration statement and the right to request the Company file a Form S-1
registration statement any time after February&nbsp;29, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This financing was completed through a private placement to accredited investors and was
exempt from registration pursuant to Section&nbsp;4(2) of the Securities Act of 1933, as amended (the
&#147;Securities Act&#148;) and the shares of the Series&nbsp;A Preferred Stock together with the shares of the
Common Stock issuable upon the conversion of the Series&nbsp;A Preferred Stock and the Warrants together
with the shares of the Common Stock issuable upon the exercise of the Warrants have not been
registered under the Securities Act or any state securities laws. Unless so registered, such
securities may not be offered or sold in the United States absent an exemption from, or in a
transaction not subject to, the registration requirement of the Securities Act and any applicable
state securities laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the transaction with BlueLine described above, 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="013"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SECTION&nbsp;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&nbsp;16(a) filing: Eduardo Arias filed a late Form&nbsp;5 in March&nbsp;2008 reporting one
transaction in April&nbsp;2007. 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 2007 fiscal year.
</DIV>

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

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<DIV style="font-family: 'Times New Roman',Times,serif">
<!-- link1 "OTHER MATTERS" -->
<DIV align="left"><A NAME="014"></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: 12pt">Dated: April&nbsp;28, 2008
</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="center" style="font-size: 10pt; margin-top: 18pt">APPENDIX A
</DIV>

<!-- link1 "IRIDEX CORPORATION" -->
<DIV align="left"><A NAME="015"></A></DIV>

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


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>2008 EQUITY INCENTIVE PLAN</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Purposes of the Plan</U>. The purposes of this Plan are:
</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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to attract and retain the best available personnel for positions of
substantial responsibility,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to provide incentives to individuals who perform services to the Company, 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="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to promote the success of the Company&#146;s business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance
Shares and other stock or cash awards as the Administrator may determine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Definitions</U>. As used herein, the following definitions will apply:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &#147;<U>Administrator</U>&#148; means the Board or any of its Committees as will be administering
the Plan, in accordance with Section&nbsp;4 of the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &#147;<U>Affiliate</U>&#148; means any corporation or any other entity (including, but not limited
to, partnerships and joint ventures) controlling, controlled by, or under common control with the
Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &#147;<U>Applicable Laws</U>&#148; means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &#147;<U>Award</U>&#148; means, individually or collectively, a grant under the Plan of Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance
Shares and other stock or cash awards as the Administrator may determine.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) &#147;<U>Award Agreement</U>&#148; means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award Agreement is
subject to the terms and conditions of the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &#147;<U>Board</U>&#148; means the Board of Directors of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) &#147;<U>Cash Position</U>&#148; means as to any Performance Period, the Company&#146;s level of cash,
cash equivalents, available-for-sales securities, and the long term portion of available-for-sales
securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) &#147;<U>Change in Control</U>&#148; means the occurrence of any of the following events:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;A change in the ownership of the Company which occurs on the date that any one person, or
more than one person acting as a group, (&#147;<U>Person</U>&#148;) acquires ownership of the stock of the
Company that, together with the stock held by such Person, constitutes more than 50% of the total
voting
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->A-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">power of the stock of the Company; provided, however, that for purposes of this subsection
(i), the acquisition of additional stock by any one Person, who is considered to own more than 50%
of the total voting power of the stock of the Company will not be considered a Change in Control;
or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;A change in the effective control of the Company which occurs on the date that a majority
of members of the Board is replaced during any twelve (12)&nbsp;month period by Directors whose
appointment or election is not endorsed by a majority of the members of the Board prior to the date
of the appointment or election. For purposes of this clause (ii), if any Person is considered to
effectively control the Company, the acquisition of additional control of the Company by the same
Person will not be considered a Change in Control; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;A change in the ownership of a substantial portion of the Company&#146;s assets which occurs
on the date that any Person acquires (or has acquired during the twelve (12)&nbsp;month period ending on
the date of the most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 50% of the total gross fair market value
of all of the assets of the Company immediately prior to such acquisition or acquisitions;
provided, however, that for purposes of this subsection (iii), the following will not constitute a
change in the ownership of a substantial portion of the Company&#146;s assets: (A)&nbsp;a transfer to an
entity that is controlled by the Company&#146;s stockholders immediately after the transfer, or (B)&nbsp;a
transfer of assets by the Company to: (1)&nbsp;a stockholder of the Company (immediately before the
asset transfer) in exchange for or with respect to the Company&#146;s stock, (2)&nbsp;an entity, 50% or more
of the total value or voting power of which is owned, directly or indirectly, by the Company, (3)&nbsp;a
Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all
the outstanding stock of the Company, or (4)&nbsp;an entity, at least 50% of the total value or voting
power of which is owned, directly or indirectly, by a Person described in this subsection (iii).
For purposes of this subsection (iii), gross fair market value means the value of the assets of the
Company, or the value of the assets being disposed of, determined without regard to any liabilities
associated with such assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this Section&nbsp;2(h), persons will be considered to be acting as a group if they
are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of
stock, or similar business transaction with the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) &#147;<U>Code</U>&#148; means the Internal Revenue Code of 1986, as amended. Any reference to a
section of the Code herein will be a reference to any successor or amended section of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) &#147;<U>Committee</U>&#148; means a committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section&nbsp;4 hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) &#147;<U>Common Stock</U>&#148; means the common stock of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) &#147;<U>Company</U>&#148; means IRIDEX Corporation a Delaware corporation, or any successor
thereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) &#147;<U>Consultant</U>&#148; means any person, including an advisor, engaged by the Company or its
Affiliates to render services to such entity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) &#147;<U>Determination Date</U>&#148; means the latest possible date that will not jeopardize the
qualification of an Award granted under the Plan as &#147;performance-based compensation&#148; under Section
162(m) of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) &#147;<U>Director</U>&#148; means a member of the Board.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->A-2<!-- /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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) &#147;<U>Disability</U>&#148; means total and permanent disability as defined in Section&nbsp;22(e)(3)
of the Code, provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the Administrator from time to
time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) &#147;<U>Earnings Per Share</U>&#148; means as to any Performance Period, the Company&#146;s or a
business unit&#146;s Net Income, divided by a weighted average number of Common Stock outstanding and
dilutive common equivalent Shares deemed outstanding.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) &#147;<U>Employee</U>&#148; means any person, including Officers and Directors, employed by the
Company or its Affiliates. Neither service as a Director nor payment of a director&#146;s fee by the
Company will be sufficient to constitute &#147;employment&#148; by the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) &#147;<U>Exchange Act</U>&#148; means the Securities Exchange Act of 1934, as amended.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) &#147;<U>Fair Market Value</U>&#148; means, as of any date, the value of the Common Stock as the
Administrator may determine in good faith by reference to the price of such stock on any
established stock exchange or a national market system on the day of determination if the Common
Stock is so listed on any established stock exchange or a national market system. If the Common
Stock is not listed on any established stock exchange or a national market system, the value of the
Common Stock will be determined as the Administrator may determine in good faith.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) &#147;<U>Fiscal Year</U>&#148; means the fiscal year of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) &#147;<U>Incentive Stock Option</U>&#148; means an Option that by its terms qualifies and is
otherwise intended to qualify as an incentive stock option within the meaning of Section&nbsp;422 of the
Code and the regulations promulgated thereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) <U>Individual Objectives</U>&#148; means as to a Participant for any Performance Period, the
objective and measurable goals set by a &#147;management by objectives&#148; process and approved by the
Administrator (in its discretion).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) &#147;<U>Net Income</U>&#148; means as to any Performance Period, the Company&#146;s or a business
unit&#146;s income after taxes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) &#147;<U>Nonstatutory Stock Option</U>&#148; means an Option that by its terms does not qualify or
is not intended to qualify as an Incentive Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) &#147;<U>Officer</U>&#148; means a person who is an officer of the Company within the meaning of
Section&nbsp;16 of the Exchange Act and the rules and regulations promulgated thereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) &#147;<U>Operating Cash Flow</U>&#148; means as to any Performance Period, the Company&#146;s or a
business unit&#146;s sum of Net Income plus depreciation and amortization plus changes in working
capital comprised of accounts receivable, inventories, other current assets, trade accounts
payable, accrued expenses, product warranty, advance payments from customers and long-term accrued
expenses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) &#147;<U>Operating Income</U>&#148; means as to any Performance Period, the Company&#146;s or a
business unit&#146;s income from operations but excluding any unusual items or non-operating or non-cash
related expenses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) &#147;<U>Option</U>&#148; means a stock option granted pursuant to Section&nbsp;6 of the 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) &#147;<U>Parent</U>&#148; means a &#147;parent corporation,&#148; whether now or hereafter existing, as
defined in Section&nbsp;424(e) of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) &#147;Participant&#148; means the holder of an outstanding Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) &#147;Performance Goals&#148; will have the meaning set forth in Section&nbsp;11 of the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) &#147;<U>Performance Period</U>&#148; means any Fiscal Year or such other period as determined by
the Administrator in its sole discretion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) &#147;<U>Performance Share</U>&#148; means an Award denominated in Shares which may be earned in
whole or in part upon attainment of Performance Goals or other vesting criteria as the
Administrator may determine pursuant to Section&nbsp;10.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) &#147;<U>Performance Unit</U>&#148; means an Award which may be earned in whole or in part upon
attainment of Performance Goals or other vesting criteria as the Administrator may determine and
which may be settled for cash, Shares or other securities or a combination of the foregoing
pursuant to Section&nbsp;10.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj) &#147;<U>Period of Restriction</U>&#148; means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial
risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of
target levels of performance, or the occurrence of other events as determined by the Administrator.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk) &#147;<U>Plan</U>&#148; means this 2008 Equity Incentive Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll) &#147;<U>Restricted Stock</U>&#148; means Shares issued pursuant to an Award of Restricted Stock
under Section&nbsp;8 of the Plan, or issued pursuant to the early exercise of an Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm) &#147;<U>Restricted Stock Unit</U>&#148; means a bookkeeping entry representing an amount equal to
the Fair Market Value of one Share, granted pursuant to Section&nbsp;9. Each Restricted Stock Unit
represents an unfunded and unsecured obligation of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn) &#147;<U>Return on Assets</U>&#148; means as to any Performance Period, the percentage equal to
the Company&#146;s or a business unit&#146;s Operating Income, divided by average net Company or business
unit, as applicable, assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo) &#147;<U>Return on Equity</U>&#148; means as to any Performance Period, the percentage equal to
the Company&#146;s Net Income divided by average stockholder&#146;s equity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp) &#147;<U>Return on Sales</U>&#148; means as to any Performance Period, the percentage equal to the
Company&#146;s or a business unit&#146;s Operating Income, divided by the Company&#146;s or the business unit&#146;s,
as applicable, revenue.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq) &#147;<U>Revenue</U>&#148; means as to any Performance Period, the Company&#146;s or business unit&#146;s
net sales.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr) &#147;<U>Rule&nbsp;16b-3</U>&#148; means Rule&nbsp;16b-3 of the Exchange Act or any successor to Rule&nbsp;16b-3,
as in effect when discretion is being exercised with respect to the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss) &#147;Section&nbsp;16(b)&#148; means Section&nbsp;16(b) of the Exchange Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt) &#147;Service Provider&#148; means an Employee, Director, or Consultant.
</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu) &#147;<U>Share</U>&#148; means a share of the Common Stock, as adjusted in accordance with
Section&nbsp;14 of the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv) &#147;<U>Stock Appreciation Right</U>&#148; means an Award, granted alone or in connection with an
Option, that pursuant to Section&nbsp;7 is designated as a Stock Appreciation Right.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww) &#147;<U>Subsidiary</U>&#148; means a &#147;subsidiary corporation,&#148; whether now or hereafter existing,
as defined in Section&nbsp;424(f) of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) &#147;<U>Total Stockholder Return</U>&#148; means as to any Performance Period, the total return
(change in share price plus reinvestment of any dividends) of a Share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Stock&nbsp;Subject&nbsp;to&nbsp;the&nbsp;Plan</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to the provisions of Section&nbsp;14 of the Plan, the maximum aggregate number of
Shares that may be awarded and sold under the Plan is 300,000 Shares, plus any Shares subject to
stock options or similar awards granted under the Company&#146;s 1998 Stock Plan (the &#147;1998 Plan&#148;) that
expire or otherwise terminate without having been exercised in full and Shares issued pursuant to
awards granted under the 1998 Plan that are forfeited to or repurchased by the Company on or after
the date the 1998 Plan expires, with the maximum number of Shares to be added to the Plan from the
1998 Plan to be no more than 1,367,361 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Full Value Awards</U>. Any Shares subject to Options or Stock Appreciation Rights
will be counted against the numerical limits of this Section&nbsp;3 as one Share for every Share subject
thereto. Any Shares subject to Awards of Restricted Stock, Restricted Stock Units, Performance
Shares or Performance Units with a per share or unit purchase price lower than 100% of Fair Market
Value on the date of grant will be counted against the numerical limits of this Section&nbsp;3 as two
(2)&nbsp;Shares for every one Share subject thereto. To the extent that a Share that was subject to an
Award that counted as two (2)&nbsp;Shares against the Plan reserve pursuant to the preceding sentence is
recycled back into the Plan under the next paragraph of this Section&nbsp;3, the Plan will be credited
with two (2)&nbsp;Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Lapsed Awards</U>. If an Award expires or becomes unexercisable without having been
exercised in full, or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares
or Performance Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for
Awards other than Options and Stock Appreciation Rights, the forfeited or repurchased Shares) which
were subject thereto will become available for future grant or sale under the Plan (unless the Plan
has terminated). Upon exercise of a Stock Appreciation Right settled in Shares, the gross number
of Shares covered by the portion of the Award so exercised will cease to be available under the
Plan. Shares that have actually been issued under the Plan under any Award will not be returned to
the Plan and will not become available for future distribution under the Plan; provided, however,
that if unvested Shares of Restricted Stock, Restricted Stock Units, Performance Shares or
Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will
become available for future grant under the Plan. Shares used to pay the tax and/or exercise price
of an Award will not become available for future grant or sale under the Plan. To the extent an
Award under the Plan is paid out in cash rather than Shares, such cash payment will not reduce the
number of Shares available for issuance under the Plan. Notwithstanding the foregoing provisions
of this Section&nbsp;3(c), subject to adjustment provided in Section&nbsp;14, the maximum number of Shares
that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share
number stated in Section&nbsp;3(a), plus, to the extent allowable under Section&nbsp;422 of the Code, any
Shares that become available for issuance under the Plan under this Section&nbsp;3(c).
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Share Reserve</U>. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as will be sufficient to satisfy the requirements
of the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Administration of the Plan</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Procedure</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>Multiple Administrative Bodies</U>. Different Committees with respect to different
groups of Service Providers may administer the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Section&nbsp;162(m)</U>. To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as &#147;performance-based compensation&#148; within the
meaning of Section&nbsp;162(m) of the Code, the Plan will be administered by a Committee of two (2)&nbsp;or
more &#147;outside directors&#148; within the meaning of Section&nbsp;162(m) of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<U>Rule&nbsp;16b-3</U>. To the extent desirable to qualify transactions hereunder as exempt
under Rule&nbsp;16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule&nbsp;16b-3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;<U>Other Administration</U>. Other than as provided above, the Plan will be
administered by (A)&nbsp;the Board or (B)&nbsp;a Committee, which committee will be constituted to satisfy
Applicable Laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Powers of the Administrator</U>. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator will have the authority, in its discretion:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;to determine the Fair Market Value;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;to select the Service Providers to whom Awards may be granted hereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;to determine the terms and conditions, not inconsistent with the terms of the Plan, of
any Award granted hereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of satisfying applicable
foreign laws;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;to modify or amend each Award (subject to Section&nbsp;19(c) of the Plan). Notwithstanding
the previous sentence, the Administrator may not, without the approval of the Company&#146;s
stockholders: (A)&nbsp;modify or amend an Option or Stock Appreciation Right to reduce the exercise
price of such Option or Stock Appreciation Right after it has been granted (except for adjustments
made pursuant to Section&nbsp;14), or (B)&nbsp;cancel any outstanding Option or Stock Appreciation Right and
replace it with a new Option or Stock Appreciation Right with a lower exercise price;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator;
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;to allow a Participant to defer the receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an Award pursuant to such procedures
as the Administrator may determine; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;to make all other determinations deemed necessary or advisable for administering the
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Effect of Administrator&#146;s&nbsp;Decision</U>. The Administrator&#146;s decisions,
determinations, and interpretations will be final and binding on all Participants and any other
holders of Awards.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Eligibility</U>. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares and Performance Units as the Administrator
determines may be granted to Service Providers. Incentive Stock Options may be granted only to
Employees of the Company or any Parent or Subsidiary of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Stock Options</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Limitations</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Each Option will be designated in the Award Agreement as either an Incentive Stock Option
or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000 (U.S.), such Options will be treated as
Nonstatutory Stock Options. For purposes of this Section&nbsp;6(a), Incentive Stock Options will be
taken into account in the order in which they were granted. The Fair Market Value of the Shares
will be determined as of the time the Option with respect to such Shares is granted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;The Administrator will have complete discretion to determine the number of Shares subject
to an Option granted to any Participant, provided that during any Fiscal Year, no Participant will
be granted an Option covering more than 200,000 Shares. Notwithstanding the limitation in the
previous sentence, in connection with his or her initial service as an Employee, an Employee may be
granted Options covering up to an additional 400,000 Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Term of Option</U>. The Administrator will determine the term of each Option in its
sole discretion; provided, however, that the term will be no more than ten (10)&nbsp;years from the date
of grant thereof. Moreover, in the case of an Incentive Stock Option granted to a Participant who,
at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the
total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option will be five (5)&nbsp;years from the date of grant or such shorter
term as may be provided in the Award Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Option Exercise Price and Consideration</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>Exercise Price</U>. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option will be determined by the Administrator, but will be no less than 100% of
the Fair Market Value per Share on the date of grant. In addition, in the case of an Incentive
Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than 10% of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market
Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section
6(c), Options may be granted with a per Share
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">exercise price of less than 100% of the Fair Market Value per Share on the date of grant
pursuant to a transaction described in, and in a manner consistent with, Section&nbsp;424(a) of the
Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Waiting Period and Exercise Dates</U>. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and will determine any
conditions that must be satisfied before the Option may be exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<U>Form of Consideration</U>. The Administrator will determine the acceptable form(s)
of consideration for exercising an Option, including the method of payment, to the extent permitted
by Applicable Laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Exercise of Option</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>Procedure for Exercise; Rights as a Stockholder</U>. Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An Option will be deemed exercised when the Company receives: (i)&nbsp;notice of exercise (in such
form as the Administrator specifies from time to time) from the person entitled to exercise the
Option, and (ii)&nbsp;full payment for the Shares with respect to which the Option is exercised
(together with any applicable withholding taxes). No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are issued, except as
provided in Section&nbsp;14 of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Termination of Relationship as a Service Provider</U>. If a Participant ceases to be
a Service Provider, other than upon the Participant&#146;s termination as the result of the
Participant&#146;s death or Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent that the Option is vested on
the date of termination (but in no event later than the expiration of the term of such Option as
set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for three (3)&nbsp;months following the Participant&#146;s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
within the time specified by the Administrator, the Option will terminate, and the Shares covered
by such Option will revert to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<U>Disability of Participant</U>. If a Participant ceases to be a Service Provider as
a result of the Participant&#146;s Disability, the Participant may exercise his or her Option within
such period of time as is specified in the Award Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term of such Option as
set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve (12)&nbsp;months following the Participant&#146;s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
within the time specified herein, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;<U>Death of Participant</U>. If a Participant dies while a Service Provider, the Option
may be exercised following the Participant&#146;s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of death (but in no event
may the option be exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Participant&#146;s designated beneficiary, provided such beneficiary has been designated prior to
Participant&#146;s death in a form acceptable to the Administrator. If no such beneficiary has been
designated by the Participant, then such Option may be exercised by the personal representative of
the Participant&#146;s estate or by the person(s) to whom the Option is transferred pursuant to the
Participant&#146;s will or in accordance with the laws of descent and distribution. In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for twelve (12)&nbsp;months
following Participant&#146;s death. Unless otherwise provided by the Administrator, if at the time of
death Participant is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will immediately revert to the Plan. If the Option is not so exercised
within the time specified herein, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;<U>Other Termination</U>. A Participant&#146;s Award Agreement may also provide that if the
exercise of the Option following the termination of Participant&#146;s status as a Service Provider
(other than upon the Participant&#146;s death or Disability) would result in liability under Section
16(b), then the Option will terminate on the earlier of (A)&nbsp;the expiration of the term of the
Option set forth in the Award Agreement, or (B)&nbsp;the 10th day after the last date on which such
exercise would result in such liability under Section&nbsp;16(b). Finally, a Participant&#146;s Award
Agreement may also provide that if the exercise of the Option following the termination of the
Participant&#146;s status as a Service Provider (other than upon the Participant&#146;s death or Disability)
would be prohibited at any time solely because the issuance of Shares would violate the
registration requirements under the Securities Act, then the Option will terminate on the earlier
of (A)&nbsp;the expiration of the term of the Option, or (B)&nbsp;the expiration of a period of three (3)
months after the termination of the Participant&#146;s status as a Service Provider during which the
exercise of the Option would not be in violation of such registration requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Stock Appreciation Rights</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Grant of Stock Appreciation Rights</U>. Subject to the terms and conditions of the
Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to
time as will be determined by the Administrator, in its sole discretion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Number of Shares</U>. The Administrator will have complete discretion to determine
the number of Stock Appreciation Rights granted to any Participant, provided that during any Fiscal
Year, no Participant will be granted Stock Appreciation Rights covering more than 200,000 Shares.
Notwithstanding the limitation in the previous sentence, in connection with his or her initial
service as an Employee, an Employee may be granted Stock Appreciation Rights covering up to an
additional 400,000 Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Exercise Price and Other Terms</U>. The Administrator, subject to the provisions of
the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation
Rights granted under the Plan, provided, however, that the exercise price will be not less than
100% of the Fair Market Value of a Share on the date of grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Stock Appreciation Right Agreement</U>. Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term of the Stock
Appreciation Right, the conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Expiration of Stock Appreciation Rights</U>. A Stock Appreciation Right granted under
the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement; provided, however, that the term will be no more than ten (10)&nbsp;years
from the date of
grant thereof. Notwithstanding the foregoing, the rules of Section&nbsp;6(d) also will apply to
Stock Appreciation Rights.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Payment of Stock Appreciation Right Amount</U>. Upon exercise of a Stock Appreciation
Right, a Participant will be entitled to receive payment from the Company in an amount determined
by multiplying:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The difference between the Fair Market Value of a Share on the date of exercise over the
exercise price; times
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;The number of Shares with respect to which the Stock Appreciation Right is exercised.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be
in cash, in Shares of equivalent value, or in some combination thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Restricted Stock</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Grant of Restricted Stock</U>. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service
Providers in such amounts as the Administrator, in its sole discretion, will determine.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Restricted Stock Agreement</U>. Each Award of Restricted Stock will be evidenced by
an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and
such other terms and conditions as the Administrator, in its sole discretion, will determine.
Notwithstanding the foregoing sentence, for restricted stock intended to qualify as
&#147;performance-based compensation&#148; within the meaning of Section 162(m) of the Code, during any
Fiscal Year no Participant will receive more than an aggregate of 150,000 Shares of Restricted
Stock. Notwithstanding the foregoing limitation, in connection with his or her initial service as
an Employee, for restricted stock intended to qualify as &#147;performance-based compensation&#148; within
the meaning of Section 162(m) of the Code, an Employee may be granted an aggregate of up to an
additional 150,000 Shares of Restricted Stock. Unless the Administrator determines otherwise,
Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on
such Shares have lapsed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Transferability</U>. Except as provided in this Section&nbsp;8, Shares of Restricted Stock
may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Other Restrictions</U>. The Administrator, in its sole discretion, may impose such
other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Removal of Restrictions</U>. Except as otherwise provided in this Section&nbsp;8, Shares
of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released
from escrow as soon as practicable after the last day of the Period of Restriction. The
Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or
be removed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Voting Rights</U>. During the Period of Restriction, Service Providers holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Dividends and Other Distributions</U>. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other
distributions
paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>Return of Restricted Stock to Company</U>. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company
and again will become available for grant under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Section&nbsp;162(m) Performance Restrictions</U>. For purposes of qualifying grants of
Restricted Stock as &#147;performance-based compensation&#148; under Section&nbsp;162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals will be set by the Administrator on or before the Determination Date.
In granting Restricted Stock which is intended to qualify under Section&nbsp;162(m) of the Code, the
Administrator will follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Award under Section&nbsp;162(m) of the Code (e.g., in
determining the Performance Goals).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Restricted Stock Units</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Grant</U>. Restricted Stock Units may be granted at any time and from time to time as
determined by the Administrator. Each Restricted Stock Unit grant will be evidenced by an Award
Agreement that will specify such other terms and conditions as the Administrator, in its sole
discretion, will determine, including all terms, conditions, and restrictions related to the grant,
the number of Restricted Stock Units and the form of payout, which, subject to Section&nbsp;9(d), may be
left to the discretion of the Administrator. Notwithstanding anything to the contrary in this
subsection&nbsp;(a), for Restricted Stock Units intended to qualify as &#147;performance-based compensation&#148;
within the meaning of Section 162(m) of the Code, during any Fiscal Year of the Company, no
Participant will receive more than an aggregate of 150,000 Restricted Stock Units. Notwithstanding
the limitation in the previous sentence, for Restricted Stock Units intended to qualify as
&#147;performance-based compensation&#148; within the meaning of Section 162(m) of the Code, in connection
with his or her initial service as an Employee, an Employee may be granted an aggregate of up to an
additional 150,000 Restricted Stock Units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Vesting Criteria and Other Terms</U>. The Administrator will set vesting criteria in
its discretion, which, depending on the extent to which the criteria are met, will determine the
number of Restricted Stock Units that will be paid out to the Participant. After the grant of
Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any
restrictions for such Restricted Stock Units. Each Award of Restricted Stock Units will be
evidenced by an Award Agreement that will specify the vesting criteria, and such other terms and
conditions as the Administrator, in its sole discretion will determine. The Administrator, in its
discretion, may accelerate the time at which any restrictions will lapse or be removed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Earning Restricted Stock Units</U>. Upon meeting the applicable vesting criteria, the
Participant will be entitled to receive a payout as specified in the Award Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Form and Timing of Payment</U>. Payment of earned Restricted Stock Units will be made
as soon as practicable after the date(s) set forth in the Award Agreement. The Administrator, in
its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination
thereof. Shares represented by Restricted Stock Units that are fully paid in cash again will be
available for grant under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Cancellation</U>. On the date set forth in the Award Agreement, all unearned
Restricted Stock Units will be forfeited to the Company.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Section&nbsp;162(m) Performance Restrictions</U>. For purposes of qualifying grants of
Restricted Stock Units as &#147;performance-based compensation&#148; under Section&nbsp;162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals will be set by the Administrator on or before the Determination Date.
In granting Restricted Stock Units which are intended to qualify under Section&nbsp;162(m) of the Code,
the Administrator will follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Award under Section&nbsp;162(m) of the Code (e.g., in
determining the Performance Goals).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Performance Units and Performance Shares</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Grant of Performance Units/Shares</U>. Performance Units and Performance Shares may
be granted to Service Providers at any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have complete discretion in
determining the number of Performance Units/Shares granted to each Participant provided that during
any Fiscal Year, for Performance Units or Performance Shares intended to qualify as
&#147;performance-based compensation&#148; within the meaning of Section 162(m) of the Code, (i)&nbsp;no
Participant will receive Performance Units having an initial value greater than $1,000,000, and
(ii)&nbsp;no Participant will receive more than 150,000 Performance Shares. Notwithstanding the
foregoing limitation, for Performance Shares intended to qualify as &#147;performance-based
compensation&#148; within the meaning of Section 162(m) of the Code, in connection with his or her
initial service, a Service Provider may be granted up to an additional 150,000 Performance Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Value of Performance Units/Shares</U>. Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of grant. Each Performance
Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Performance Objectives and Other Terms</U>. The Administrator will set performance
objectives or other vesting provisions. The Administrator may set vesting criteria based upon the
achievement of Company-wide, business unit, or individual goals (including, but not limited to,
continued employment), or any other basis determined by the Administrator in its discretion. Each
Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the
Performance Period, and such other terms and conditions as the Administrator, in its sole
discretion, will determine. After the grant of Performance Units/Shares, the Administrator, in its
sole discretion, may reduce or waive any restrictions for such Awards.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Earning of Performance Units/Shares</U>. After the applicable Performance Period has
ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of
Performance Units/Shares earned by the Participant over the Performance Period, to be determined as
a function of the extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in
its sole discretion, may reduce or waive any performance objectives or other vesting provisions for
such Performance Unit/Share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Form and Timing of Payment of Performance Units/Shares</U>. Payment of earned
Performance Units/Shares will be made as soon as practicable after the expiration of the applicable
Performance Period. The Administrator, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the
value of the earned Performance Units/Shares at the close of the applicable Performance Period) or
in a combination thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Cancellation of Performance Units/Shares</U>. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and
again will be available for grant under the Plan.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Section&nbsp;162(m) Performance Restrictions</U>. For purposes of qualifying grants of
Performance Units/Shares as &#147;performance-based compensation&#148; under Section&nbsp;162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals will be set by the Administrator on or before the Determination Date.
In granting Performance Units/Shares which are intended to qualify under Section&nbsp;162(m) of the
Code, the Administrator will follow any procedures determined by it from time to time to be
necessary or appropriate to ensure qualification of the Award under Section&nbsp;162(m) of the Code
(e.g., in determining the Performance Goals).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Performance-Based Compensation Under Code Section&nbsp;162(m)</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>General</U>. If the Administrator, in its discretion, decides to grant an Award
intended to qualify as &#147;performance-based compensation&#148; under Code Section&nbsp;162(m), the provisions
of this Section&nbsp;11 will control over any contrary provision in the Plan; provided, however, that
the Administrator may in its discretion grant Awards that are not intended to qualify as
&#147;performance-based compensation&#148; under Section 162(m) of the Code to such Participants that are
based on Performance Goals or other specific criteria or goals but that do not satisfy the
requirements of this Section&nbsp;11.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Performance Goals</U>. The granting and/or vesting of Awards of Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units and other incentives under the
Plan may be made subject to the attainment of performance goals relating to one or more business
criteria within the meaning of Code Section 162(m) and may provide for a targeted level or levels
of achievement (&#147;<U>Performance Goals</U>&#148;) including (i)&nbsp;Cash Position, (ii)&nbsp;Earnings Per Share,
(iii)&nbsp;Individual Objectives, (iv)&nbsp;Net Income, (v)&nbsp;Operating Cash Flow, (vi)&nbsp;Operating Income, (vii)
Return on Assets, (viii)&nbsp;Return on Equity, (ix)&nbsp;Return on Sales, (x)&nbsp;Revenue, and (xi)&nbsp;Total
Stockholder Return. Any Performance Goals may be used to measure the performance of the Company as
a whole or a business unit of the Company and may be measured relative to a peer group or index.
The Performance Goals may differ from Participant to Participant and from Award to Award. Prior to
the Determination Date, the Administrator will determine whether any significant element(s) will be
included in or excluded from the calculation of any Performance Goal with respect to any
Participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Procedures</U>. To the extent necessary to comply with the performance-based
compensation provisions of Code Section&nbsp;162(m), with respect to any Award granted subject to
Performance Goals, within the first twenty-five percent (25%) of the Performance Period, but in no
event more than ninety (90)&nbsp;days following the commencement of any Performance Period (or such
other time as may be required or permitted by Code Section&nbsp;162(m)), the Administrator will, in
writing, (i)&nbsp;designate one or more Participants to whom an Award will be made, (ii)&nbsp;select the
Performance Goals applicable to the Performance Period, (iii)&nbsp;establish the Performance Goals, and
amounts of such Awards, as applicable, which may be earned for such Performance Period, and
(iv)&nbsp;specify the relationship between Performance Goals and the amounts of such Awards, as
applicable, to be earned by each Participant for such Performance Period. Following the completion
of each Performance Period, the Administrator will certify in writing whether the applicable
Performance Goals have been achieved for such Performance Period. In determining the amounts
earned by a Participant, the Administrator will have the right to reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into account additional
factors that the Administrator may deem relevant to the assessment of individual or corporate
performance for the Performance Period. A Participant will be eligible to receive payment pursuant
to an Award for a Performance Period only if the Performance Goals for such period are achieved.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Additional Limitations</U>. Notwithstanding any other provision of the Plan, any
Award which is granted to a Participant and is intended to constitute qualified performance based
compensation under Code Section 162(m) will be subject to any additional limitations set forth in
the Code (including any amendment to Section&nbsp;162(m)) or any regulations and ruling issued
thereunder that are requirements for
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">qualification as qualified performance-based compensation as described in Section 162(m) of
the Code, and the Plan will be deemed amended to the extent necessary to conform to such
requirements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Leaves of Absence</U>. Unless the Administrator provides otherwise, vesting of Awards
granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will
not cease to be an Employee in the case of (i)&nbsp;any leave of absence approved by the Company, or
(ii)&nbsp;transfers between locations of the Company or between the Company, its Parent, or any
Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3)&nbsp;months,
unless reemployment upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed,
then six (6)&nbsp;months and one day following the commencement of such leave any Incentive Stock Option
held by the Participant will cease to be treated as an Incentive Stock Option and will be treated
for tax purposes as a Nonstatutory Stock Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Transferability of Awards</U>. Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as the Administrator
deems appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Adjustments; Dissolution or Liquidation; Merger or Change in Control</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Adjustments</U>. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, or other change in the corporate structure
of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available under the Plan,
will adjust the number and class of Shares that may be delivered under the Plan and/or the number,
class, and price of Shares covered by each outstanding Award, and the numerical Share limits set
forth in Sections&nbsp;3, 6, 7, 8, 9, and 10.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Dissolution or Liquidation</U>. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of such proposed action.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Change in Control</U>. In the event of a merger or Change in Control, each
outstanding Award will be treated as the Administrator determines, including, without limitation,
that each Award will be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation (the &#147;<U>Successor
Corporation</U>&#148;). The Administrator will not be required to treat all Awards similarly in the
transaction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that the Successor Corporation does not assume or substitute for the Award, the
Participant will fully vest in and have the right to exercise all of his or her outstanding Options
and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be
vested or exercisable, all restrictions on Restricted Stock will lapse, and, with respect to
Restricted Stock Units, Performance Shares and Performance Units, all Performance Goals or other
vesting criteria will be deemed achieved at target levels and all other terms and conditions met.
In addition, if an Option or Stock Appreciation Right is not assumed or substituted for in the
event of a Change in Control, the Administrator will notify the Participant in writing or
electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for
a period of time
determined by the Administrator in its sole discretion, and the Option or Stock Appreciation
Right will terminate upon the expiration of such period.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the purposes of this subsection (c), an Award will be considered assumed if, following the
Change in Control, the Award confers the right to purchase or receive, for each Share subject to
the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or
other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of
which the Administrator determines to pay cash or a Performance Share or Performance Unit which the
Administrator can determine to pay in cash, the fair market value of the consideration received in
the merger or Change in Control by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares); provided, however,
that if such consideration received in the Change in Control is not solely common stock of the
Successor Corporation, the Administrator may, with the consent of the Successor Corporation,
provide for the consideration to be received upon the exercise of an Option or Stock Appreciation
Right or upon the payout of a Performance Share or Performance Unit, for each Share subject to such
Award (or in the case of Performance Units, the number of implied shares determined by dividing the
value of the Performance Units by the per share consideration received by holders of Common Stock
in the Change in Control), to be solely common stock of the Successor Corporation equal in fair
market value to the per share consideration received by holders of Common Stock in the Change in
Control.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything in this Section 14(c) to the contrary, an Award that vests, is earned
or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed
if the Company or its successor modifies any of such Performance Goals without the Participant&#146;s
consent; provided, however, a modification to such Performance Goals only to reflect the Successor
Corporation&#146;s post-Change in Control corporate structure will not be deemed to invalidate an
otherwise valid Award assumption.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Tax Withholding</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Withholding Requirements</U>. Prior to the delivery of any Shares or cash pursuant to
an Award (or exercise thereof), the Company will have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, local, foreign or other taxes (including the Participant&#146;s FICA obligation)
required to be withheld with respect to such Award (or exercise thereof).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Withholding Arrangements</U>. The Administrator, in its sole discretion and pursuant
to such procedures as it may specify from time to time, may permit a Participant to satisfy such
tax withholding obligation, in whole or in part by (without limitation) (i)&nbsp;paying cash,
(ii)&nbsp;electing to have the Company withhold otherwise deliverable cash or Shares having a Fair
Market Value equal to the minimum amount required to be withheld, (iii)&nbsp;delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to be withheld, or
(iv)&nbsp;selling a sufficient number of Shares otherwise deliverable to the Participant through such
means as the Administrator may determine in its sole discretion (whether through a broker or
otherwise) equal to the amount required to be withheld. The amount of the withholding requirement
will be deemed to include any amount which the Administrator agrees may be withheld at the time the
election is made, not to exceed the amount determined by using the maximum federal, state or local
marginal income tax rates applicable to the Participant with respect to the Award on the date that
the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be
withheld or delivered will be determined as of the date that the taxes are required to be withheld.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>No Effect on Employment or Service</U>. Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant&#146;s relationship as a Service
Provider with the Company, nor will they interfere in any way with the Participant&#146;s right or the
Company&#146;s right to terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Date of Grant</U>. The date of grant of an Award will be, for all purposes, the date
on which the Administrator makes the determination granting such Award, or such other later date as
is determined by the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;<U>Effective Date and Term of Plan</U>. The Plan will become effective upon the date the
stockholders of the Company approve the Plan. The Company will obtain such stockholder approval in
the manner and to the degree required under Applicable Laws. It will continue in effect for a term
of ten (10)&nbsp;years from the date of stockholder approval, unless terminated earlier under Section&nbsp;19
of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;<U>Amendment and Termination of the Plan</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Amendment and Termination</U>. The Administrator may at any time amend, alter,
suspend or terminate the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Stockholder Approval</U>. The Company will obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Effect of Amendment or Termination</U>. No amendment, alteration, suspension, or
termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise
between the Participant and the Administrator, which agreement must be in writing and signed by the
Participant and the Company. Termination of the Plan will not affect the Administrator&#146;s ability
to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior
to the date of such termination.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;<U>Conditions Upon Issuance of Shares</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Legal Compliance</U>. Shares will not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares will comply with
Applicable Laws and will be further subject to the approval of counsel for the Company with respect
to such compliance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Investment Representations</U>. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;<U>Inability to Obtain Authority</U>. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company&#146;s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->A-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: Helvetica,Arial,sans-serif">


<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="95%">
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</TR>
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<TR valign="bottom">
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    <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 colspan="3" valign="top" align="left"><IMG src="f40174def4017403.gif" alt="(BAR CODE)"></TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left" style="font-size: 12pt"><IMG src="f40174def4017400.gif" alt="(TRIDEX LOGO)"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR><TD align="left" valign="top" style="font-size:6pt">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>


    <TD align="LEFT" valign="top" COLSPAN="3">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" valign="top" align="left"></TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>


    <TD align="LEFT" valign="top" COLSPAN="3"></TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><IMG src="f40174def4017401.gif" alt="(BAR CODE)"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" NOWRAP COLSPAN="2">
<IMG src="f40174def4017402.gif" alt="(SCALE)"></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 valign="top" align="left" colspan="3"><br>
<FONT style="white-space: nowrap"><br>
<B><font style="font-size: 12pt">Electronic Voting Instructions</font><BR>

<div style="font-size: 10pt; margin-top: 3pt">You can vote by Internet or telephone!<BR>
Available 24 hours a day, 7 days a
week!</div><BR style="font-size: 3pt"></B>
Instead of mailing your proxy, or attending the Annual Meeting and voting <BR>your shares in person, you may choose one of the two voting methods <br>
outlined below to vote your proxy.
</FONT><br><BR style="font-size: 3pt">VALIDATION
DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
</TD>
</TR>


<TR valign="bottom">
    <TD 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 colspan="3" valign="top" align="left"><B>Proxies submitted by the Internet or telephone must be received by
<font style="white-space: nowrap">1:00 a.m.,</font>  Central Time, on June 11, 2008.</B></TD>
</TR>
<TR><TD align="left" valign="top" style="font-size:6pt">&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 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="f40174def4017404.gif" alt="(INTERNET LOGO)">
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" rowspan="2"><B>Vote by
Internet</B><br><BR style="font-size: 3pt">

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#183;</B>&nbsp;Log
on to the Internet and go
to<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>www.investorvote.com/IRIX</B><BR><BR style="font-size: 3pt">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#183;</B>&nbsp;Follow the steps outlined on the secured website.</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 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"></TD></TR>
<TR><TD align="left" valign="top" style="font-size:6pt">&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 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="f40174def4017405.gif" alt="(TELEPHONE LOGO)">
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" rowspan="2"><B>Vote by
telephone</B><br><BR style="font-size: 3pt">

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#183;</B>&nbsp;Call toll free 1-800-652-VOTE (8683)&nbsp;within the United<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;States, Canada &#038;
Puerto Rico any time on a touch tone<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;telephone. There is <B>NO CHARGE </B>to you for the call.</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 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>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" COLSPAN="4"><DIV style="margin-left:0px; text-indent:-0px">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 nowrap align="right" valign="top"><FONT face="Wingdings" style="font-size: 24pt">&#120;</FONT></TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#183;</B>&nbsp;Follow the instructions provided by the recorded message.</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">
    <TD width="60%"></TD>
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    <TD width="15%"></TD>
    <TD width="15%"></TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom" style="background: #f1e5f0">
    <TD align="left" valign="middle" nowrap style="border-bottom: 3px solid #9a258f; border-top: 3px solid #9a258f"><FONT face="arial" style="font-size: 12pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;Annual Meeting Proxy Card</B></font></TD>
    <TD align="center" valign="middle" style="border-bottom: 3px solid #9a258f; border-top: 3px solid #9a258f"><IMG src="f40174def4017406.gif" alt="(GRAPHIC)">&nbsp;</TD>

<TD align="center" valign="middle" style="border-bottom: 3px solid #9a258f; border-top: 3px solid #9a258f"><B><font style="border-bottom: 1px solid #000000">C0123456789</font></B></TD>

<TD align="center" valign="middle" style="border-bottom: 3px solid #9a258f; border-top: 3px solid #9a258f"><div style="border: 1px solid #000000; width: 80%"><BR STYLE="FONT-SIZE: 3PT">12345<BR><BR  STYLE="FONT-SIZE: 3PT"></div></TD>

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

<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 6pt; margin-top: 3pt; MARGIN-LEFT: 2%"><FONT style="font-size:10pt">&#9660;</FONT>
<B>IF YOU ARE NOT VOTING VIA THE INTERNET
 <u>OR</u> TELEPHONE,
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
</B>&nbsp;<FONT style="font-size:10pt">&#9660;</FONT></DIV>

<DIV align="center"><DIV style="font-size: 3pt; margin-top: 3pt; width: 100%; border-top: 1px dashed #000000">&nbsp;</DIV></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="3%"></TD>
    <TD width="97%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

    <TD nowrap align="left" valign="middle" colspan="2">&nbsp;&nbsp;&nbsp;&nbsp;

<FONT style="background:#000000;  width=2%">
<font color="#FFFFFF">&nbsp;<B>A</B>&nbsp;</FONT></FONT>
<B> Proposals &#151; The Board of Directors recommends a vote <u>FOR </u>
all the nominees listed and <u> FOR</u> Proposals 2 and 3.

</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 3pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom">
     <TD nowrap align="left">1.</TD>
    <TD nowrap align="left"> Election of Directors:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>For</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Withhold</B></TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>For</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Withhold</B></TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>For</B></TD>
    <TD nowrap align="center"><B>Withhold</B></TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD align="center" valign="top" style="font-size: 26pt" rowspan="3"><B>&#043;</B>&nbsp;</TD>

</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 3pt"><!-- Blank Space -->
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>


</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="middle" nowrap><DIV style="margin-left: 0px; text-indent:-0px">01 - Theodore A. Boutacoff
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>

    <TD>&nbsp;</TD>
    <TD align="left" nowrap valign="middle">02 - James L. Donovan


</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="middle" nowrap>03 -  Donald L. Hammond


</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>

</TR>

<tr>
    <TD colspan="10">
</td>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="middle"><DIV style="margin-left: 0px; text-indent:-0px">04 - Garrett A. Garrettson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" nowrap valign="middle">05 - James B. Hawkins

</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="middle">06 - Sanford Fitch


</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>

</TR>

<tr>
    <TD colspan="10">
</td>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="middle"><DIV style="margin-left: 0px; text-indent:-0px">07 -  William M. Moore


</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>

    <TD>&nbsp;</TD>
    <TD align="left" nowrap valign="middle">&nbsp;

</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt"></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt"></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="middle">

</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt"></FONT>
</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt"></FONT></TD>
    <TD>&nbsp;</TD>

</TR>
<tr>
    <TD colspan="10">
</td>



</tr>

<tr>
    <TD colspan="10">
</td>




</tr>
<tr>
    <TD colspan="10">&nbsp;</TD>

</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 1pt">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="2%" align="center"></TD>
    <TD width="2%" align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>For</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Against</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Abstain</B></TD>
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD nowrap align="center"></TD>
    <TD nowrap align="center" width="35%"></TD>
    <TD nowrap align="center"></TD>

    <TD nowrap align="center"><B>For</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Against</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Abstain</B></TD>

</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 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" width="35%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"></TD>
    <TD align="left" valign="top"></TD>
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    <TD align="left" valign="top"></TD>
    <TD align="left" valign="top"></TD>
    <TD align="left" valign="top"></TD>
    <TD align="left" valign="top"></TD>
    <TD align="center" valign="top" width="1%"></TD>
    <TD align="center" valign="top" width="5%">&nbsp;</TD>
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<tr  valign="bottom" style="font-size: 7pt">


    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" width="35%">
Proposal to approve the adoption of the 2008 Equity <br>Incentive Plan.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD valign="top" style="font-size: 7pt"><DIV style="margin-left:0px; text-indent:-0px">
</DIV>3.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" width="35%" style="font-size: 7pt"> Proposal to ratify the appointment of Burr,
Pilger &#38; Mayer LLP as independent registered public accounting firm for fiscal year ending January 3, 2009.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings" style="font-size: 17pt">&#111;</FONT></TD>
    <TD>&nbsp;</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" width="35%">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top" width="30%">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="center" valign="top" width="1%"></TD>
    <TD align="center" valign="top" width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->

<TD valign="top" colspan="9"><DIV align="justify" 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>

    <TD>&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top" width="30%">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="center" valign="top" width="1%">&nbsp;</TD>
    <TD align="center" valign="top" width="5%">&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top" colspan="13">
<b>&nbsp;
</b>

</TD>
    <TD align="left" valign="top"></TD>
    <TD align="left" valign="top"></TD>
    <TD align="left" valign="top"></TD>
    <TD align="left" valign="top"></TD>
    <TD align="center" valign="top" width="1%"></TD>
    <TD align="center" valign="top" width="5%">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>

<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="98%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
<font style="font-size: 10pt; background:#000000; color=#FFFFFF">&nbsp;<B>B</B>&nbsp;</font><B><font style="font-size: 10pt">&nbsp;Non-Voting
Items</font></B></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"><B>Change of Address &#151; </B>
Please print new address below.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR>
    <TD style="font-size: 1pt">&nbsp;</TD>
</TR>
<TR style="font-size: 30px">
    <TD valign="top" style="border: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border: 0px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="margin-top: 6pt; MARGIN-LEFT: 1%">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="97%">
<TR valign="bottom">

    <TD COLSPAN="2">
<DIV style="background:#000000; WIDTH: 1%">
<font color="#FFFFFF"><font style="font-size: 12pt">&nbsp;<B>C</B></font>&nbsp;</FONT></DIV></TD>

<TD align="left" width="97%" nowrap><font style="font-size: 10pt"><b>Authorized
Signatures &#151;
This section must be completed for your vote to be counted.  &#151;
Date and Sign Below</b></font>

</TD>
</TR>

</TABLE>
</DIV>





<DIV align="justify" style="font-size: 8pt; margin-top: 6pt; margin-left: 2%">

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.




</DIV>

<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 5pt">
    <TD width="30%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" nowrap align="left"><DIV style="margin-left:0px; text-indent:-0px">Date (mm/dd/yyyy) &#151; Please print date below.
</DIV></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>
</TR>
<TR>
    <TD style="font-size: 1pt">&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 20pt">
    <TD align="center" style="border-bottom: 1px solid #000000; border-top: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000">
&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000; border-top: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000; border-top: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000">&nbsp;</TD>

</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom" style="font-size: 10pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">

    <TD  valign="top" colspan="18"><IMG src="f40174def4017407.gif" alt="(BAR CODE)"></TD>
    <TD align="center" valign="bottom" style="font-size: 26pt" rowspan="3"><B>&#043;</B>&nbsp;</TD>
</TR>
</TABLE>
</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: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&nbsp;
</DIV>


<DIV align="center" style="font-size: 6pt; margin-top: 18pt"><B><FONT style="font-size:10pt">&#9660;</FONT><FONT style="white-space: nowrap"><B>IF
YOU ARE NOT VOTING VIA THE INTERNET <U>OR</U> TELEPHONE, PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.</B><FONT style="font-size:10pt">&#9660;</FONT></FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top:3pt"><DIV style="width: 100%; border-bottom: 1px dashed #000000; font-size: 1px">&nbsp;</DIV></div>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="f40174def4017400.gif" alt="(IRIDEX LOGO)">
</DIV>



<DIV align="left" style="font-size: 12pt; margin-top: 18pt"><DIV style="width: 100%; border-bottom: 2px solid #000000; font-size: 1px; MARGIN-BOTTOM:3PT">&nbsp;</DIV>
<B>Proxy &#151; Iridex Corporation</B>
<DIV style="width: 100%; border-bottom: 2px solid #000000; font-size: 1px; MARGIN-TOP:3PT">&nbsp;</DIV>
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<BR><br>
2008 ANNUAL MEETING OF STOCKHOLDERS <BR>June 11, 2008
</B>
</DIV>

<DIV align="justify" style="font-size: 9pt; margin-top: 6pt">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 28, 2008, and hereby appoints Theodore A. Boutacoff and James H. Mackaness, 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 2008 Annual Meeting of Stockholders of IRIDEX to be held on June 11, 2008, at 10:00 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>


<DIV align="justify" style="font-size: 9pt; margin-top: 6pt"><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 adoption of the 2008 Equity Incentive 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>

<DIV align="justify" style="font-size: 9pt; margin-top: 6pt"><b>CONTINUED AND TO BE SIGNED ON REVERSE SIDE
</b>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
