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<SEC-DOCUMENT>0000944075-08-000014.txt : 20080221
<SEC-HEADER>0000944075-08-000014.hdr.sgml : 20080221
<ACCEPTANCE-DATETIME>20080221172735
ACCESSION NUMBER:		0000944075-08-000014
CONFORMED SUBMISSION TYPE:	PRE 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20080423
FILED AS OF DATE:		20080221
DATE AS OF CHANGE:		20080221

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SOCKET COMMUNICATIONS INC
		CENTRAL INDEX KEY:			0000944075
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC COMPUTERS [3571]
		IRS NUMBER:				943155066
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		PRE 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13810
		FILM NUMBER:		08633860

	BUSINESS ADDRESS:	
		STREET 1:		39700 EUREKA DRIVE
		CITY:			NEWARK
		STATE:			CA
		ZIP:			94560-4808
		BUSINESS PHONE:		5109333000

	MAIL ADDRESS:	
		STREET 1:		39700 EUREKA DRIVE
		CITY:			NEWARK
		STATE:			CA
		ZIP:			94560-4808
</SEC-HEADER>
<DOCUMENT>
<TYPE>PRE 14A
<SEQUENCE>1
<FILENAME>proxy.htm
<DESCRIPTION>PRELIMINARY PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>

</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE  VLINK=PURPLE>
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<P ALIGN="CENTER"><font size="3" face="Times New Roman, Times, serif"><b>UNITED
  STATES<br>
  SECURITIES AND EXCHANGE COMMISSION<br>
  WASHINGTON, D.C. 20549</b></font></P>
<P ALIGN="CENTER"><font size="3" face="Times New Roman, Times, serif"><B>SCHEDULE
  14A</B></font></P>
<P ALIGN="CENTER"><font size="3" face="Times New Roman, Times, serif"><B>Proxy
  Statement Pursuant to Section 14(a) of<BR>
  the Securities Exchange Act of 1934 </B></font></P>
<TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
  <TR VALIGN="TOP">
    <TD WIDTH="100%" COLSPAN=3 height="23"><font size="3" face="Times New Roman, Times, serif">Filed
      by the Registrant /x/ </font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="100%" COLSPAN=3><font size="3" face="Times New Roman, Times, serif">Filed
      by a Party other than the Registrant /&nbsp;/</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="100%" COLSPAN=3 height="22"><font size="3" face="Times New Roman, Times, serif">Check
      the appropriate box:</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <td width="3%"><font size="3" face="Times New Roman, Times, serif">/x/</font></td>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%"><font size="3" face="Times New Roman, Times, serif">Preliminary
      Proxy Statement</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">/&nbsp;/</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%"><font size="3" face="Times New Roman, Times, serif">Confidential,
      for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <td width="3%"><font size="3" face="Times New Roman, Times, serif">/&nbsp;/</font></td>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%"><font size="3" face="Times New Roman, Times, serif">Definitive
      Proxy Statement</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">/&nbsp;/</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%"><font size="3" face="Times New Roman, Times, serif">Definitive
      Additional Materials</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">/&nbsp;/</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%"><font size="3" face="Times New Roman, Times, serif">Soliciting
      Material Pursuant to Section&nbsp;240.14a-11(c) or Section&nbsp;240.14a-12<BR>
      </font> </TD>
  </TR>
</TABLE>
<font face="Times New Roman, Times, serif" size="3"><!-- User-specified TAGGED TABLE -->
</font>
<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
  <TR VALIGN="TOP">
    <TD WIDTH="100%" COLSPAN=5 ALIGN="CENTER" height="37">&nbsp;</TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="100%" COLSPAN=5 ALIGN="CENTER" height="46">
      <hr NOSHADE>
      <FONT SIZE=2><B><font size="3" face="Times New Roman, Times, serif">SOCKET
      COMMUNICATIONS,&nbsp;INC.</font></B></FONT></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="100%" COLSPAN=5 ALIGN="CENTER" height="26"><font size="3" face="Times New Roman, Times, serif">(Name
      of Registrant as Specified in its Charter)</font>
      <hr NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3">&nbsp;</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="100%" COLSPAN=5><font size="3" face="Times New Roman, Times, serif">Payment
      of Filing Fee (Check the appropriate box):</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">/x/</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%" COLSPAN=3><font size="3" face="Times New Roman, Times, serif">No
      fee required.</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%" height="31"><font size="3" face="Times New Roman, Times, serif">/&nbsp;/</font></TD>
    <TD WIDTH="2%" height="31"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%" COLSPAN=3 height="31"><font size="3" face="Times New Roman, Times, serif">Fee
      computed on table below per Exchange Act Rules 14a-6(i)(4) and&nbsp;0-11.</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">1)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Title
      of each class of securities to which transaction applies:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">2)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Aggregate
      number of securities to which transaction applies:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">3)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Per unit
      price or other underlying value of transaction computed pursuant to Exchange
      Act Rule 0-11 (set forth the amount on which the filing fee is calculated
      and state how it was determined):<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">4)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Proposed
      maximum aggregate value of transaction:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">5)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Total
      fee paid:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">/&nbsp;/</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%" COLSPAN=3><font size="3" face="Times New Roman, Times, serif">Fee
      paid previously with preliminary materials.</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%" height="54"><font size="3" face="Times New Roman, Times, serif">/&nbsp;/</font></TD>
    <TD WIDTH="2%" height="54"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="95%" COLSPAN=3 height="54"><font size="3" face="Times New Roman, Times, serif">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.</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%" height="16"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%" height="16"><font size="3"></font></TD>
    <TD WIDTH="3%" height="16"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%" height="16"><font size="3"></font></TD>
    <TD WIDTH="90%" height="16"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">1)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Amount
      Previously Paid:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">2)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Form,
      Schedule or Registration Statement No.:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">3)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Filing
      Party:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
  <TR VALIGN="TOP">
    <TD WIDTH="3%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="2%"><font size="3">&nbsp;</font></TD>
    <TD WIDTH="3%"><font size="3" face="Times New Roman, Times, serif">4)</font></TD>
    <TD WIDTH="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="90%"><font size="3" face="Times New Roman, Times, serif">Date Filed:<BR>
      &nbsp;&nbsp;&nbsp;&nbsp;N/A</font>
      <HR NOSHADE>
    </TD>
  </TR>
</TABLE>
<p>&nbsp;</p>
<p>&nbsp;</p>
<HR NOSHADE>
<P ALIGN="CENTER"><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  COMMUNICATIONS, INC.</b></font></P>
<P ALIGN="CENTER"><b>DBA SOCKET MOBILE, INC.</b></P>
<P ALIGN="CENTER"><font face="Times New Roman, Times, serif" size="3"><b> NOTICE
  OF 2008 ANNUAL MEETING OF STOCKHOLDERS<br>
  </b></font><font face="Times New Roman, Times, serif" size="3"><b>To Be Held
  April 23, 2008 </b></font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif" size="3"><br>
  Dear Stockholders:<br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif" size="3"> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>You
  are cordially invited to attend the Annual Meeting of Stockholders of Socket
  Communications, Inc., a Delaware corporation, DBA Socket Mobile, Inc. (the "Company"),
  to be held Wednesday, April 23, 2008 at 9:00 a.m., local time, at the Company's
  headquarters at 39700 Eureka Drive, Newark, California 94560 for the following
  purposes:<br>
  <br>
  <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(1)
  To elect eight directors to serve until their respective successors are elected.<br>
  <br>
  <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(2)
  To ratify the appointment of Moss Adams LLP as independent public accountants
  of the Company for the fiscal year ending December 31, 2008.<br>
  <br>
  <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(3)
  To approve a proposal to amend the Company's Amended and Restated Certificate
  of Incorporation to effect a corporate name change.</font></P>
<p><font face="Times New Roman, Times, serif" size="3"> <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(4)
  To approve a proposal to amend the Company's Amended and Restated Certificate
  of Incorporation to effect a reverse stock split of the Company's Common Stock
  at a ratio within the range from one-for-5 to one-for-10, together with a corresponding
  reduction <i></i>in the number of authorized shares of the Common Stock and
  capital stock, at any time prior to December 31, 2008.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(5)
  To transact such other business as may properly come before the meeting or any
  adjournment thereof.<br>
  <br>
  <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  foregoing items of business are more fully described in the Proxy Statement
  accompanying this notice.</font></p>
<P ALIGN="left"><font face="Times New Roman, Times, serif" size="3"> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Only
  stockholders of record at the close of business on February 25, 2008 are entitled
  to notice of and to vote at the meeting. All stockholders are cordially invited
  to attend the meeting in person. However, to ensure your representation at the
  meeting, you are urged to mark, sign, date and return the enclosed Proxy as
  promptly as possible in the postage-prepaid envelope enclosed for that purpose.
  Any stockholder attending the meeting may vote in person even if he or she has
  returned a Proxy.</font></P>
<P ALIGN="left">&nbsp;</P>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="BOTTOM">
    <td width="48%"><font size=2>&nbsp;</font></td>
    <td width="2%"><font size=2>&nbsp;</font></td>
    <td width="50%"><font size="3" face="Times New Roman, Times, serif">Sincerely,</font></td>
  </tr>
  <tr valign="BOTTOM">
    <td width="48%"><font size=2><br>
      &nbsp;</font></td>
    <td width="2%"><font size=2><br>
      &nbsp;</font></td>
    <td width="50%"><font size="3" face="Times New Roman, Times, serif"><br>
      Kevin J. Mills</font></td>
  </tr>
  <tr valign="BOTTOM">
    <td width="48%"><font size=2>&nbsp;</font></td>
    <td width="2%"><font size=2>&nbsp;</font></td>
    <td width="50%"><font size="3" face="Times New Roman, Times, serif">President
      and Chief Executive Officer</font></td>
  </tr>
  <tr valign="BOTTOM">
    <td width="48%"><font size=2><br>
      <font size="3" face="Times New Roman, Times, serif">Newark, California<br>
      March 10, 2008</font></font></td>
    <td width="2%"><font size=2><br>
      &nbsp;</font></td>
    <td width="50%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
  </tr>
</table>
<P>&nbsp;</P>
<P align="center"><font face="Times New Roman, Times, serif" size="3"><b>YOUR
  VOTE IS IMPORTANT. <br>
  </b></font><b>IN ORDER TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
  <br>
  YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY<br>
  AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.</b></P>
<blockquote>
  <blockquote>&nbsp;</blockquote>
</blockquote>
<P align="center">&nbsp;</P>
<hr NOSHADE>
<P align="center">&nbsp;</P>
<P align="center"><b>SOCKET COMMUNICATIONS, INC. DBA SOCKET MOBILE, INC.</b></P>
<P align="center"> <b>PROXY STATEMENT FOR <br>
  2008 ANNUAL MEETING OF STOCKHOLDERS </b><br>
  <br>
  <b>INFORMATION CONCERNING SOLICITATION AND VOTING</b><br>
</P>
<P align="left"><b>GENERAL</b></P>
<P align="left"> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  enclosed proxy is solicited on behalf of the Board of Directors (the "Board")
  of Socket Communications, Inc., a Delaware corporation, DBA Socket Mobile, Inc.
  (the "Company"), for use at the 2008 Annual Meeting of Stockholders (the "2008
  Annual Meeting") to be held Wednesday April 23, 2008 at 9:00 a.m., local time,
  or at any adjournment thereof, for the purposes set forth herein and in the
  accompanying Notice of the 2008 Annual Meeting of the Stockholders. The 2008
  Annual Meeting will be held at the Company's headquarters at 39700 Eureka Drive,
  Newark, California 94560. The Company's telephone number at that location is
  (510) 933-3000.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>These
  proxy solicitation materials and our Annual Report on Form 10-K for the year
  ended December 31, 2007, including financial statements, were first mailed on
  or about March 12, 2008 to all stockholders entitled to vote at the 2008 Annual
  Meeting.<br>
  <br>
  <b>RECORD DATE AND PRINCIPAL SHARE OWNERSHIP</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Holders
  of record of our Common Stock at the close of business on February 25, 2008
  (the "Record Date") are entitled to notice of and to vote at the 2008 Annual
  Meeting. At the Record Date, 32,015,975 shares of Common Stock were issued and
  outstanding. Each share of Common Stock is entitled to one vote. The Company
  has no other class of voting securities outstanding and entitled to be voted
  at the meeting. <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  only person known by the Company to beneficially own more than five percent
  of the Company's Common Stock as of the Record Date was Charlie Bass, the Chairman
  of the Company's Board of Directors. Please see "Security Ownership of Certain
  Beneficial Owners and Management" for more information on Dr. Bass. </P>
<P align="left"><b> REVOCABILITY OF PROXIES</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Any
  proxy given pursuant to this solicitation may be revoked by the person giving
  it at any time before its use by delivering to the Secretary of the Company
  a written notice of revocation or a duly executed proxy bearing a later date
  or by attending the 2008 Annual Meeting and voting in person. <br>
  <br>
</P>
<P align="left"><font face="Times New Roman, Times, serif" size="3"><b>VOTING
  AND SOLICITATION</b><br>
  </font></P>
<P>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Generally
  each stockholder is entitled to one vote for each share of Common Stock held
  on all matters to be voted on by the stockholders. If, however, any stockholder
  at the 2008 Annual Meeting gives notice of his or her intention to cumulate
  votes with respect to the election of directors, then each stockholder voting
  for the election of directors (Proposal One) may cumulate such stockholder's
  votes and give one candidate a number of votes equal to the number of directors
  to be elected multiplied by the number of shares of Common Stock that such stockholder
  is entitled to vote, or may distribute such stockholder's votes on the same
  principle among as many candidates as the stockholder may select, provided that
  votes cannot be cast for more than eight candidates. However, no stockholder
  shall be entitled to cumulate votes for a candidate unless the candidate's name
  has been placed in nomination prior to the voting and the stockholder, or any
  other stockholder, has given notice at the meeting, prior to the voting, of
  the intention to cumulate votes. On all other matters, stockholders may not
  cumulate votes.<br>
  <br>
</P>
<p align="center"><font face="Times New Roman, Times, serif" size="3">1<br>
  </font></p>
<hr NOSHADE>
<P><br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>This solicitation
  of proxies is made by the Company, and all related costs will be borne by the
  Company. In addition, the Company may reimburse brokerage firms and other persons
  representing beneficial owners of stock for their expenses in forwarding solicitation
  material to such beneficial owners. Proxies may also be solicited by the Company's
  directors, officers and regular employees, without additional compensation,
  personally or by telephone, email or facsimile. The Company may engage the services
  of a professional proxy solicitation firm to aid in the solicitation of proxies
  from brokers, bank nominees and other institutional investors. The Company's
  costs for such services, if retained, are not expected to be material.</P>
<P><b> QUORUM; ABSTENTIONS; BROKER NON-VOTES</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  presence at the 2008 Annual Meeting, either in person or by proxy, of the holders
  of a majority of votes entitled to be cast with respect to the outstanding shares
  of Common Stock shall constitute a quorum for the transaction of business. Shares
  that are voted "FOR," "AGAINST", "WITHHELD or "ABSTAIN" on a subject matter
  are treated as being present at the meeting for purpose of establishing a quorum
  entitled to vote on the matter (the "Votes Cast").</P>
<P> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Company also intends to count abstentions for purposes of determining both (i)
  the presence or absence of a quorum for the transaction of business and (ii)
  the total number of Votes Cast with respect to a proposal (other than the election
  of directors). Thus, abstentions will have the same effect as a vote against
  a proposal.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Broker
  non-votes will be counted for purpose of determining the presence or absence
  of a quorum for the transaction of business, but will not be counted for purposes
  of determining the number of Votes Cast with respect to a particular proposal.
  Thus, a broker non-vote will not have any effect on the outcome of the voting
  on a proposal.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>A
  plurality of the votes duly cast is required for the election of directors.
  Thus, neither abstentions nor broker non-votes affect the election of directors,
  as only affirmative votes will affect the outcome of election.<br>
  <b><br>
  DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS TO BE INCLUDED IN THE COMPANY'S
  PROXY MATERIALS</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<font face="Times New Roman, Times, serif" size="3"><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Company currently intends to hold its 2009 Annual Meeting of Stockholders in
  April 2009 and to mail proxy statements relating to such meeting in March 2009.
  Proposals of stockholders of the Company that are intended to be presented by
  such stockholders at the 2009 Annual Meeting must be received by the Company
  no later than November 16, 2008, and must otherwise be in compliance with applicable
  laws and regulations, in order to be considered for inclusion in the Company's
  proxy statement and proxy card relating to that meeting.</font></P>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp</i>If a
  stockholder intends to submit a proposal at the 2009 Annual Meeting, but does
  not wish to have it included in the proxy statement and proxy for that meeting,
  the stockholder must do so no later than January 22, 2009. If the a stockholder
  fails to comply with the foregoing notice provision, the proxy holders will
  be allowed to use their discretionary authority to vote against the proposal
  when it is raised at the 2009 Annual Meeting.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  attached proxy card grants the persons named as proxies discretionary authority
  to vote on any matter raised at the 2008 Annual Meeting that is not included
  in this Proxy Statement. The Company has not been notified by any stockholder
  of his or her intent to present a stockholder proposal at the 2008 Annual Meeting.</p>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">2<br>
  </font></p>
<hr NOSHADE>
<P align="center">&nbsp;</P>
<P align="center"><font face="Times New Roman, Times, serif" size="3"><b>PROPOSAL
  ONE</b></font></P>
<p align="center"><b><font face="Times New Roman, Times, serif" size="3">ELECTION
  OF DIRECTORS</font></b></p>
<div align="left">
  <p><font face="Times New Roman, Times, serif" size="3"> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i></font><font face="Times New Roman, Times, serif" size="3">The
    proxy holders will vote to elect as directors the eight nominees named below,
    unless a proxy card is marked otherwise. The nominees consist of the eight
    current directors. If a person other than a management nominee is nominated
    at the 2008 Annual Meeting, the holders of the proxies may choose to cumulate
    their votes and allocate them among such nominees of management as the proxy
    holders shall determine in their discretion in order to elect as many nominees
    of management as possible. The eight candidates receiving the highest number
    of votes will be elected. In the event any nominee is unavailable for election,
    which is not currently anticipated, the proxy holders may vote in accordance
    with their judgment for the election of substitute nominees designated by
    the Board of Directors.<br>
    &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<br>
    &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>All
    eight directors will be elected for one-year terms expiring at the 2009 Annual
    Meeting of Stockholders, subject to the election and qualification of their
    successors or their earlier death, resignation or removal. <br>
    </font></p>
  <p><font face="Times New Roman, Times, serif" size="3">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
    following table sets forth information concerning the nominees for director.<br>
    </font></p>
</div>
<TABLE WIDTH="99%" BORDER=0 CELLSPACING=0 CELLPADDING=0 align="center" height="175">
  <TR VALIGN="BOTTOM">
    <TH WIDTH="26%" ALIGN="LEFT" height="18"><font size="3" face="Times New Roman, Times, serif"><B>Name
      of Nominee<BR>
      </B></font>
      <HR NOSHADE>
    </TH>
    <TH WIDTH="2%" height="18"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TH>
    <TH WIDTH="5%" ALIGN="CENTER" height="18"><font size="3" face="Times New Roman, Times, serif"><B>Age</B></font>
      <HR NOSHADE>
    </TH>
    <TH WIDTH="2%" height="18"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TH>
    <TH WIDTH="50%" ALIGN="CENTER" height="18"><font size="3" face="Times New Roman, Times, serif"><B>Position(s)
      Held With the Company</B></font>
      <HR NOSHADE>
    </TH>
    <TH WIDTH="2%" height="18"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TH>
    <TH WIDTH="13%" ALIGN="CENTER" height="18"><font size="3" face="Times New Roman, Times, serif"><B>Director
      Since</B></font>
      <HR NOSHADE>
    </TH>
  </TR>
  <TR BGCOLOR="#CCEEFF" VALIGN="top">
    <TD WIDTH="26%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Charlie
      Bass (1)(2)</font></TD>
    <TD WIDTH="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="5%" ALIGN="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">66</font></div>
    </TD>
    <TD WIDTH="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="50%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Chairman
      of the Board</font></TD>
    <TD WIDTH="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="13%" ALIGN="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1992</font></div>
    </TD>
  </TR>
  <tr bgcolor="#CCEEFF" valign="top">
    <td width="26%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">50</font></div>
    </td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="50%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Executive
      Vice President and Director</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="13%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1992</font></div>
    </td>
  </tr>
  <tr bgcolor="#CCEEFF" valign="top">
    <td width="26%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Leon
      Malmed (1)(2)</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">70</font></div>
    </td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="50%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Director</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="13%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2000</font></div>
    </td>
  </tr>
  <tr bgcolor="#CCEEFF" valign="top">
    <td width="26%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Thomas
      O. Miller(1)</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">56</font></div>
    </td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="50%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Director,
      Chairman, Technology Advisory Board</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="13%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2008</font></div>
    </td>
  </tr>
  <tr bgcolor="#CCEEFF" valign="top">
    <td width="26%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">47</font></div>
    </td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="50%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">President,
      Chief Executive Officer and Director</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="13%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2000</font></div>
    </td>
  </tr>
  <tr bgcolor="#CCEEFF" valign="top">
    <td width="26%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Gianluca
      Rattazzi (1)(2)</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">55</font></div>
    </td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="50%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Director</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="13%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1998</font></div>
    </td>
  </tr>
  <tr bgcolor="#CCEEFF" valign="top">
    <td width="26%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Peter
      Sealey (2)(3)</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">67</font></div>
    </td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="50%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">Director</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="6"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="13%" align="RIGHT" bgcolor="#FFFFFF" height="6">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2002</font></div>
    </td>
  </tr>
  <tr bgcolor="#CCEEFF" valign="top">
    <td width="26%" bgcolor="#FFFFFF" height="13"><font size="3" face="Times New Roman, Times, serif">Enzo
      Torresi (2)(3)</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="13"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="5%" align="RIGHT" bgcolor="#FFFFFF" height="13">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">63</font></div>
    </td>
    <td width="2%" bgcolor="#FFFFFF" height="13"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="50%" bgcolor="#FFFFFF" height="13"><font size="3" face="Times New Roman, Times, serif">Director</font></td>
    <td width="2%" bgcolor="#FFFFFF" height="13"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="13%" align="RIGHT" bgcolor="#FFFFFF" height="13">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2000</font></div>
    </td>
  </tr>
</TABLE>
<div align="center"><font face="Times New Roman, Times, serif" size="3"><br>
  </font></div>
<table width="100%" border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td>
      <hr NOSHADE align="LEFT" width="120">
      <font face="Times New Roman, Times, serif" size="2">(1) Member of the Audit
      Committee. Mr. Miller's appointment was effective on February 17, 2008.<br>
      (2) Member of the Nominating Committee. <br>
      (3) Member of the Compensation Committee</font></td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif" size="3">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>There
  are no family relationships among any of the directors or executive officers
  of the Company. </font></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Charlie Bass</i>
  co-founded the Company in March 1992 and has been the Chairman of the Board
  of Directors from such time to the present. Dr. Bass served as the Company's
  Chief Executive Officer from April 1997 to March 2000. Dr. Bass has served as
  the Trustee of The Bass Trust since April 1988. Dr. Bass holds a Ph.D. in electrical
  engineering from the University of Hawaii. <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Micheal L.
  Gifford</i> has been a director of the Company since its inception in March
  1992, has served as the Company's Executive Vice President since October 1994
  and is currently the General Manager of the Company's OEM Business Unit (formerly
  Development Services). Mr. Gifford served as the Company's President from the
  Company's inception in March 1992 to September 1994 and as the Company's Chief
  Executive Officer from March 1992 to June 1994. From December 1986 to December
  1991, Mr. Gifford served as a director and as Director of Sales and Marketing
  for Tidewater Associates, a computer consulting and computer product development
  company. Prior to working for Tidewater Associates, Mr. Gifford co-founded and
  was President of Gifford Computer Systems, a computer network integration company.
  Mr. Gifford holds a B.S. in Mechanical Engineering from the University of California
  at Berkeley.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Leon Malmed</i>
  has been a director of the Company since June 2000. Mr. Malmed served as Senior
  Vice President of Worldwide Marketing and Sales of SanDisk Corporation, a manufacturer
  of flash memory products, from 1992 to his retirement in March 2000. Prior to
  his tenure with SanDisk Corporation, Mr. Malmed was Executive Vice President
  of Worldwide Marketing and Sales for Syquest Corporation, a disk storage manufacturer,
  President of Iota, a Syquest subsidiary from 1990 to 1992, and Senior Vice President
  of Worldwide Sales, Marketing and Programs for Maxtor Corporation, a disk drive
  supplier, from 1984 to 1990. Mr. Malmed holds a B.S. in Mechanical Engineering
  from the University of Paris, and also has completed the AEA/UCLA Senior Executive
  Program at the University of California at Los Angeles and the AEA/Stanford
  Executive Institute Program for Management of High Technology Companies at Stanford
  Business School.</p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">3<br>
  </font></p>
<hr NOSHADE>
<p><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Thomas O. Miller</i>
  was appointed a director of the Company by the Board of Directors on February
  17, 2008. Since August 2006 he has been affiliated with Stinsights, Inc., an
  international management consulting company focused on business strategy and
  market research. Mr. Miller has also been engaged in an advisory capacity to
  private equity firms who invest in wireless and mobility companies. Prior to
  Stinsights, Mr. Miller was a member of the executive team at Intermec Corporation,
  a leader in the automated data collection, wireless and mobile computing industries,
  serving as its President in 2004 and 2005. He was also Vice President of Corporate
  Development until July 2006 with Intermec's parent company UNOVA. Prior to his
  appointment as President of Intermec, he was Executive Vice President, Global
  Sales and Marketing from 2001 to 2003 and Senior Vice President, Americas and
  System and Solutions from 1999 through 2001. Mr. Miller was Chairman of the
  Automatic Industry and Mobility Association from 2003 to March 2006 and was
  recognized for his contributions to the industry with induction into the AIDC100
  organization in 2004. He has been a member of the board of InfoLogix, Inc.,
  an enterprise mobility automation company serving the healthcare industry, since
  October 2006 and has been on the Company's Technology Advisory Board, currently
  as its Chairman, since 2006. Mr. Miller holds a Bachelor of Business and a Master
  of Business Administration degree from Western Illinois University.&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i><i></i><i></i></i></p>
<p><i> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbspKevin J. Mills</i></i></i>
  was appointed the Company's President and Chief Executive Officer and a director
  of the Company in March 2000. He served as the Company's Chief Operating Officer
  from September 1998 to March 2000. Mr. Mills joined the Company in September
  1993 as Vice President of Operations and has also served as our Vice President
  of Engineering. Prior to joining the Company, Mr. Mills worked from September
  1987 to August 1993 at Logitech, Inc., a computer peripherals company, serving
  most recently as its Director of Operations. He holds a B.E. in Electronic Engineering
  with honors from the University of Limerick, Ireland.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Gianluca Rattazzi</i>
  has been a director of the Company since June 1998. He has been President and
  CEO of MaxiScale, Inc., a private software development company, since January
  2007. He also has served as Chairman of Envivio, Inc., a provider of video delivery
  systems, since August 2007. In 2000, Dr. Rattazzi co-founded BlueArc Corporation,
  a provider of network attached storage. He served as its Chairman from its inception
  through March 2007 and also served as its CEO from 2002 through 2005. Prior
  to BlueArc, he co-founded Meridian Data, Inc., a provider of CD ROM networking
  software and systems, as Parallan in July 1988. He served as President and a
  director of Meridian Data from inception and was appointed Chief Executive Officer
  of Meridian Data, serving from 1995 until its sale to Quantum Corporation in
  September 1999. From 1985 to 1988, Dr. Rattazzi held various executive level
  positions at Virtual Microsystems, Inc., a networking company, most recently
  as its President. Dr. Rattazzi holds an M.S. in Electrical Engineering and Computer
  Science from the University of California at Berkeley and a Ph.D. in Nuclear
  Chemistry from the University of Rome, Italy.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbspPeter Sealey</i></i>
  has been a director of the Company since June 2002. Dr. Sealey has served as
  Chief Executive Officer and founder of The Sausalito Group, Inc., a management
  consulting firm, since its founding in July 1997. Dr. Sealey also serves as
  an Adjunct Professor of Marketing at the Peter F. Drucker Graduate Management
  School at the Claremont Graduate University in Claremont, California and serves
  on the board of MaxWorldwide Inc., a media holding company. He previously served
  as an Adjunct Professor of Marketing at the Haas School of Business, University
  of California at Berkeley from 1996 to 2006. From July 1969 to August 1993,
  Dr. Sealey served in various senior marketing positions with the Coca-Cola Company,
  including as its Senior Vice President, Global Marketing and Chief Marketing
  Officer from December 1989 to August 1993. Dr. Sealey holds a doctorate from
  the Peter F. Drucker Graduate Management School at the Claremont Graduate University.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Enzo Torresi</i>
  has been a director of the Company since June 2000. Dr. Torresi founded and
  has managed EuroFund Partners, a venture capital fund, since 1999. In 1997 and
  1998, he was Chairman and Chief Executive Officer of ICAST Corporation, a software
  company specializing in broadcasting solutions for the Internet. During 1995
  and 1996, he was Entrepreneur-In-Residence at Accel Partners, a venture capital
  fund. From November 1993 to 1994, he was Vice-Chairman of Power Computing Corporation,
  a PC manufacturer he co-founded From 1989 to October 1994, Dr. Torresi was President
  and Chief Executive Officer of NetFRAME Systems, Inc., a computer manufacturer
  that is now part of Micron Electronics, Inc. Dr. Torresi holds a Doctorate in
  Electronics Engineering from the Polytechnic Institute in Torino, Italy.</p>
<p align="left"><font face="Times New Roman, Times, serif" size="3"><b> </b></font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">4<br>
  </font></p>
<hr NOSHADE>
<p><br>
  <br>
</p>
<p align="left"><font face="Times New Roman, Times, serif" size="3"><b>BOARD MEETINGS
  AND COMMITTEES<br>
  </b> </font> </p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Board of Directors has determined that all of the nominees, except Messrs. Mills
  and Gifford, satisfy the definition of "independent director," as established
  by NASDAQ listing standards. The Board of Directors has an Audit Committee,
  a Nominating Committee and a Compensation Committee. Each committee has adopted
  a written charter, all of which are available on the Company's web site at http://www.mkr-group.com/SCKT/board_committee.html.
  The Board of Directors has also determined that each member of the Audit Committee,
  the Nominating Committee and the Compensation Committee satisfies the definition
  of "independent director," as established by NASDAQ listing standards.</p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The Board
  of Directors held a total of four regular meetings during fiscal 2007 and two
  telephone meetings. The Company strongly encourages members of the Board of
  Directors to attend all meetings, including meetings of committees on which
  they serve, as well as the annual meeting of stockholders. No director attended
  fewer than 75 percent of the meetings of the Board of Directors and the Board
  committees on which he served. Messrs. Gifford, Malmed, Mills, Rattazzi, Sealey
  and Torresi attended the 2007 Annual Meeting of Stockholders.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><font face="Times New Roman, Times, serif" size="3">The
  Audit Committee consists of Messrs. Bass, Malmed and Rattazzi. Mr. Miller was
  appointed to the Audit Committee on February 17, 2008. As required by NASDAQ
  rules, the members of the Audit Committee each qualify as "independent" under
  special standards established by the United States Securities and Exchange Commission
  ("SEC") for members of audit committees. The Audit Committee also includes one
  independent member, Dr. Bass, who has been determined by the Board of Directors
  to meet the qualifications of an "audit committee financial expert" in accordance
  with SEC rules. Stockholders should understand that this designation is a disclosure
  required by the SEC relating to Dr. Bass' experience and understanding with
  respect to certain accounting and auditing matters. This designation does not
  impose upon Dr. Bass any duties, obligations or liability that are greater than
  are generally imposed on him as member of the Audit Committee, and his designation
  as an audit committee financial expert pursuant to this SEC requirement does
  not affect the duties, obligations or liability of any other member of the Audit
  Committee or Board of Directors. The Audit Committee met four times by telephone
  during the year ended December 31, 2007 with management and the independent
  auditors to review quarterly and annual financial information and to discuss
  the results of quarterly review procedures performed by the independent auditors
  before quarterly and annual financial reports were issued. The Audit Committee
  is responsible for appointing, compensating and overseeing actions taken by
  the Company's independent auditors and reviews the Company's internal financial
  controls and financial statements. In connection with the completion of the
  annual audit of the Company's financial statements for the year ended December
  31, 2006, the Audit Committee meeting in February 2007 with management and with
  the independent auditors reviewed the financial statements and the annual audit
  results, including an assessment of internal controls and procedures, and discussed
  the matters with the independent auditors denoted as required communications
  by Statement of Auditing Standards 61 (SAS 61). The meeting included a review
  of internal accounting controls, a discussion and review of auditor independence,
  a review with management and discussion with the independent auditors of the
  annual financial statements, the pre-approval of fees, and other matters included
  in required communications with the independent auditors under SAS 61, and a
  recommendation to the Board of Directors to approve the issuance of the financial
  statements for the year ended December 31, 2006. The report of the Audit Committee
  for the year ended December 31, 2007 is included in this Proxy Statement. </font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">5<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp; </p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Nominating Committee consists of the Company's independent directors, Messrs.
  Bass, Malmed, Rattazzi, Sealey and Torresi. The Nominating Committee met separately
  without management or the management directors after each of the four regular
  board meetings held during 2007. The Nominating Committee considers and recommends
  nominations for the Board of Directors and facilitates the self-assessment of
  Board performance by the independent directors. For 2008, the Nominating Committee
  determined that each current director was willing and able to serve as a director
  for the ensuing year. The Nominating Committee, in a meeting held in January
  2008, recommended nomination of the current directors to serve for the ensuing
  year and the nomination of Thomas O. Miller to be appointed as a director effective
  upon approval by the Board of Directors of an increase in the size of the Board
  from seven to eight members, completed on February 17, 2008. For 2009, the Nominating
  Committee will consider nominees recommended by security holders. Such nominations
  should be made in writing to the Company, attention Corporate Secretary, no
  later than November 16, 2008 in order to be considered for inclusion in next
  year's proxy statement. The Nominating Committee Charter is available on the
  Company's website at http://www.mkr-group.com/SCKT/board_committee.html. </p>
<p align="left"> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Compensation Committee, which consists of Messrs. Torresi and Sealey, held ten
  meetings during fiscal year 2007. The Compensation Committee is responsible
  for determining salaries, incentives and other forms of compensation for directors
  and officers of the Company and administering the Company's incentive compensation
  and benefit plans. The report of the Compensation Committee for fiscal year
  2007 is included in this Proxy Statement. The Compensation Committee Charter
  is available on the Company's website at http://www.mkr-group.com/SCKT/board_committee.html.
</p>
<p align="left"> <b><br>
  COMPENSATION OF DIRECTORS</b> <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Directors
  who are not employees of the Company received $3,000 per regular meeting of
  the Board of Directors that they attended in fiscal 2007 and will receive $3,000
  per regular meeting that they attend in fiscal 2008. These outside directors
  are also entitled to participate in the Company's 2004 Equity Incentive Plan.
  Grants of options to directors are made annually during the year of board service,
  commencing at each election of the Board of Directors. Options are awarded for
  board service, committee service and committee and board leadership positions.
  On April 18, 2007, options vesting monthly over a one year period were awarded
  to the outside directors for the service period that commenced on April 18,
  2007, at an exercise price of $0.92 per share, the fair market value of the
  Common Stock on the date of grant, as follows: </p>
<table width="40%" border="0" align="center" cellpadding="0" cellspacing="0">
  <tr valign="bottom">
    <th width="40%" align="LEFT" height="32">
      <div align="left"><font size="3" face="Times New Roman, Times, serif"><b>Name<br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th width="20%" align="LEFT" height="32">&nbsp;</th>
    <th width="20%" align="LEFT" height="32">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Grant<br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3">Charlie Bass</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3">50,000</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3">Leon Malmed</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3">40,000</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3">Gianluca Rattazzi</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3">35,000</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3">Peter Sealey</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3">25,000</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3">Enzo Torresi</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3">30,000</font></div>
    </td>
  </tr>
</table>
<p><br>
  <br>
  <b>VOTE REQUIRED AND RECOMMENDATION OF THE BOARD</b> <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>If
  a quorum is present, the eight nominees receiving the highest number of votes
  will be elected to the Board of Directors. Votes withheld from any nominee are
  counted for purposes of determining the presence or absence of a quorum.<br>
  <b><br>
  THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL
  OF THE COMPANY'S NOMINEES FOR DIRECTORS.</b></p>
<p><font face="Times New Roman, Times, serif" size="3"> <br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">6<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b>PROPOSAL
  TWO</b></font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b>RATIFICATION
  OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS</b><br>
  </font></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Audit Committee has selected Moss Adams LLP, independent public accountants,
  to audit the financial statements and internal controls of the Company for the
  fiscal year ending December 31, 2008, and recommends that stockholders vote
  for ratification of such appointment.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Moss
  Adams LLP has audited the Company's financial statements for the four fiscal
  years ended December 31, 2007, 2006, 2005 and 2004. Representatives of Moss
  Adams LLP are expected to be present at the 2008 Annual Meeting. The representative
  will have the opportunity to make a statement if they desire to do so, and are
  expected to be available to respond to appropriate questions. <br>
  <br>
  <b>FEES BILLED BY MOSS ADAMS LLP DURING FISCAL YEARS 2007 AND 2006</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>Audit
  Fees</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Audit
  fees billed to the Company by Moss Adams LLP for their audit of the Company's
  2007 and 2006 fiscal year financial statements and review of the Company's quarterly
  financial statements for fiscal 2007 and 2006 totaled $238,000 and $240,000,
  respectively. The Company was not deemed an accelerated filer for fiscal years
  2007 and 2006 and an audit of the Company's internal controls at December 31,
  2007 and 2006 was not required.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>Audit-Related
  Fees</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Audit-related
  fees billed to the Company by Moss Adams LLP during the Company's 2007 and 2006
  fiscal years totaled $10,555 and $11,500, respectively. Audit-related fees were
  primarily related to meetings with the Audit Committee, attendance at the annual
  stockholder meeting, the issuance of a consent related to the filing of a Form
  S-8 registration statement and accounting advice.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>Tax
  Fees</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Tax
  fees are for preparation of the prior year's annual tax returns and tax advice.
  Fees billed to the Company by Moss Adams LLP for tax services during the Company's
  2007 and 2006 fiscal years were $20,000 and $19,000, respectively. <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i>All
  Other Fees</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>There
  were no other fees billed to the Company during the Company's 2007 and 2006
  fiscal years by Moss Adams LLP.</p>
<p align="left"><i> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Approval
  Procedures</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Audit Committee's policy is to pre-approve all audit and permissible non-audit
  services provided by the independent accountants. These services may include
  audit services, audit-related services, tax services and other services. Pre-approval
  is generally detailed as to the particular service or category of services and
  is generally subject to a specific budget. The independent accountants and management
  are required to report periodically to the Audit Committee regarding the extent
  of services provided by the independent auditors in accordance with this pre-approval
  process and the fees for the services performed through such date. The Audit
  Committee may also pre-approve particular services on a case-by-case basis.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Audit Committee has considered whether the provision of the services covered
  in this section is compatible with maintaining Moss Adams LLP's independence.
</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><br>
  7 <br>
  </font></p>
<hr NOSHADE>
<br>
&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<b><br>
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD </b><br>
<br>
&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Ratification
of the appointment of Moss Adams LLP as the Company's independent public accountants
for the fiscal year ending December 31, 2008 requires the affirmative vote of
a majority of the Votes Cast on the matter at the 2008 Annual Meeting.<br>
<br>
&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Stockholder
ratification of the appointment of Moss Adams LLP as the Company's independent
public accountants is not required by the Company's bylaws or other applicable
legal requirement. However, the Audit Committee is submitting the appointment
of Moss Adams LLP to the stockholders for ratification as a matter of common corporate
practice. If the stockholders fail to ratify the appointment, the Audit Committee
will reconsider its selection. Even if the appointment is ratified, the Audit
Committee at its discretion may direct the appointment of a different independent
accounting firm at any time during the year, if it determines that such a change
would be in the best interests of the Company and its stockholders.<br>
<b><br>
</b><font face="Times New Roman, Times, serif" size="3"><b>THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF
MOSS ADAMS LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2008.</b><br>
<br>
</font>
<p align="center"><font face="Times New Roman, Times, serif" size="3">8<br>
  </font></p>
<hr NOSHADE>
<br>
<p align="center"><b>PROPOSAL THREE</b></p>
<p align="center"><b>APPROVAL OF THE AMENDMENT TO AMENDED AND RESTATED CERTIFICATE
  OF</b></p>
<p align="center"><b>INCORPORATION TO EFFECT A CORPORATE NAME CHANGE </b></p>
<p align="left"><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>On January
  24, 2008, the Board of Directors approved an amendment of the Company's Amended
  and Restated Certificate of Incorporation, subject to stockholder approval,
  to effect a corporate name change from Socket Communications, Inc. to Socket
  Mobile, Inc.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The management
  of the Company and the Board of Directors believe that the corporate name change
  will better align the corporate name with the Company's mission. The Company
  has been doing business as Socket Mobile, Inc. since January 2007.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  change of the name of the Company will not affect in any way the validity of
  currently outstanding stock certificates or the trading of the Company's securities.
  The Common Stock of the Company will continue to trade on the NASDAQ Global
  Market under the symbol "SCKT."</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Stockholders
  are requested in this Proposal Three to approve the amendment to the Company's
  Amended and Restated Certificate of Incorporation. The affirmative vote of a
  majority of the shares of the outstanding Common Stock entitled to vote as of
  the Record Date will be required to approve the amendment to the Amended and
  Restated Certificate of Incorporation. Abstentions will be counted toward the
  tabulation of votes cast on proposals presented to the stockholders and will
  have the same effect as negative votes. Broker non-votes are counted towards
  a quorum, but are not counted for any purpose in determining whether this matter
  has been approved.</p>
<p align="left"><b> </b><font face="Times New Roman, Times, serif" size="3"><b>THE
  BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO AMEND
  THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A
  CORPORATE NAME CHANGE.</b><br>
  <br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">9<br>
  </font></p>
<hr NOSHADE>
<p align="center"><b>PROPOSAL FOUR</b></p>
<p align="center"><b>APPROVAL OF THE AMENDMENT TO AMENDED AND RESTATED CERTIFICATE
  OF INCORPORATION TO EFFECT REVERSE STOCK SPLIT </b></p>
<p align="left"> <b>GENERAL</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The Board
  of Directors has unanimously approved, subject to stockholder approval, an amendment
  to the Company's Amended and Restated Certificate of Incorporation to effect
  a reverse stock split of the Common Stock, together with a corresponding reduction
  in the number of authorized shares of Common Stock and capital stock. If approved
  by the stockholders, the amendment will become effective upon the filing of
  a Certificate of Amendment with the Delaware Secretary of State. If the stockholders
  approve the proposal, the Board of Directors will have the authority, in its
  sole discretion, to determine whether to file this amendment.<br>
</p>
<p align="left"><b>BACKGROUND</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The Board
  of Directors has unanimously adopted a resolution seeking stockholder approval
  to amend the Amended and Restated Certificate of Incorporation to effect a reverse
  stock split of the Common Stock, together with a corresponding reduction in
  the number of authorized shares of Common Stock and capital stock. If the reverse
  stock split is approved by the stockholders, the Board of Directors may subsequently
  effect the reverse stock split based upon any ratio in the range from one-for-5
  to one-for-10, with the exact ratio to be established within this range by the
  Board of Directors in its sole discretion at the time it elects to effect the
  split, and a corresponding authorized stock reduction. Approval of this reverse
  stock split proposal by the stockholders would give the Board of Directors authority
  to implement the reverse stock split at any time prior to December 31, 2008.
  In addition, notwithstanding approval of this proposal by the stockholders,
  the Board of Directors may in its sole discretion determine not to effect, and
  to abandon, the reverse stock split without further action by the stockholders.
</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If
  the stockholders approve the reverse stock split proposal and the Board of Directors
  decides to implement the reverse stock split, the Company will file a Certificate
  of Amendment with the Secretary of State of the State of Delaware to amend the
  existing Amended and Restated Certificate of Incorporation to effect a reverse
  split of the Common Stock then issued and outstanding at the specific ratio
  determined by the Board of Directors and a corresponding reduction in the number
  of authorized shares of the Common Stock and capital stock. Except for any changes
  as a result of the treatment of fractional shares, each holder of the Common
  Stock will hold the same percentage of Common Stock outstanding immediately
  after the reverse stock split as such stockholder held immediately prior to
  the split.</p>
<p align="left"><b>PURPOSE OF THE REVERSE STOCK SPLIT</b></p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  purpose of authorizing the reverse stock split is to maximize the flexibility
  of the Board of Directors in addressing market-related issues affecting the
  capitalization of the Company. The Board of Directors believes that stockholder
  approval of an exchange ratio range (rather than an exact exchange ratio) provides
  the Board of Directors with maximum flexibility to achieve the purposes of the
  reverse stock split. If the stockholders approve the reverse stock split proposal,
  the reverse stock split would be effected, if at all, only upon a determination
  by the Board of Directors that the split is in the best interests of the Company
  and the stockholders at that time.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><font face="Times New Roman, Times, serif" size="3"><br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">10<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp;</p>
<p align="left">A reverse stock split may have the following beneficial effects:<font face="Times New Roman, Times, serif" size="3"></font></p>
<table width="80%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="312" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="312" colspan="4" valign="top">
      <div align="left">
        <p>The Common Stock is currently quoted on The NASDAQ Global Market under
          the symbol "SCKT." The reverse stock split is being proposed to give
          the Board of Directors the flexibility to maintain the eligibility of
          the Common Stock for listing on The NASDAQ Global Market should the
          market price for the Common Stock remain below $1.00 per share for an
          extended period. </p>
        <p>Previously, on December 11, 2007, the Company received a deficiency
          letter from the Listing Qualifications Department of The NASDAQ Stock
          Market (the "NASDAQ Staff") indicating that the Company had failed to
          comply with the minimum bid price requirement of $1.00 per share over
          the previous 30 consecutive business days as required by Marketplace
          Rule 4450(a)(5) (the "Minimum Bid Price Rule"). </p>
        <p>The Company can regain compliance, if, at any time before June 9, 2008,
          the bid price of the Company's common stock closes at $1.00 per share
          or more for a minimum of 10 consecutive business days. In the interim
          period, the Company's common stock will continue to trade on the NASDAQ
          Global Market Exchange. If compliance with the Marketplace Rule 4450(a)
          cannot be demonstrated by June 9, 2008, the Company would expect the
          staff of the NASDAQ Stock market Listing Qualifications department (the
          "Staff") to deliver a written notification that the Company's securities
          will be delisted from the NASDAQ Global Market Exchange (a "Delisting
          Notice"). If the Company receives a Delisting Notice, the Company may
          appeal the Staff's determination to delist its securities to a Listing
          Qualifications Panel. Alternatively, the Company may apply to transfer
          its securities to The NASDAQ Capital Market, if the Company satisfies
          the requirements for initial inclusion set forth in Marketplace Rule
          4310(Kc), other than the minimum bid price requirement. If the Company
          meets the initial listing criteria and its application is approved,
          the Staff will notify the Company that it has been granted an additional
          180-calendar day compliance period in order to regain compliance with
          the minimum bid price requirement while on The NASDAQ Capital Market.</p>
        <p>The delisting of the Company's Common Stock from the NASDAQ Global
          Market, or subsequently from the NASDAQ Capital Market, would significantly
          and adversely affect the trading in and liquidity of the Common Stock.
          Reverse splits are viewed by The NASDAQ Stock Market as an acceptable
          way for companies to gain compliance with the minimum $1.00 per share
          requirement. Accordingly, the Board of Directors concluded that reducing
          the number of outstanding shares of the Common Stock might be desirable
          in order to attempt to support a higher stock price per share based
          on the Company's current market capitalization.<br>
          <br>
        </p>
      </div>
    </td>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="66" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="66" colspan="4" valign="top">
      <div align="left">A higher stock price, which the Company would expect as
        a result of the reverse stock split, could increase the interest of the
        financial community in the Common Stock and broaden the pool of investors
        that may consider investing in the Common Stock, potentially increasing
        the trading volume and liquidity of the Common Stock. As a matter of policy,
        many institutional investors are prohibited from purchasing stocks below
        certain minimum price levels. For the same reason, brokers often discourage
        their customers from purchasing such stocks. To the extent that the price
        per share of the Common Stock remains at a higher per share price as a
        result of the reverse stock split, some of these concerns may be ameliorated.
        <br>
        <br>
      </div>
    </td>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="46" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="46" colspan="4" valign="top">
      <div align="left">A higher stock price may help us attract and retain employees
        and other service providers. Some potential employees and service providers
        may be less likely to work for a company with a low stock price, regardless
        of the size of the company's market capitalization. If the reverse stock
        split successfully increases the per share price of the Common Stock,
        this increase may enhance the ability to attract and retain employees
        and service providers.<br>
      </div>
    </td>
  </tr>
</table>
<div align="left"></div>
<p>&nbsp; </p>
<p><font face="Times New Roman, Times, serif" size="3"><br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">11<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp;</p>
<p><b>RISKS ASSOCIATED WITH THE REVERSE STOCK SPLIT</b></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If the
  reverse stock split is approved by the stockholders and the Board of Directors
  were to proceed with the reverse stock split, the Company may be subject to
  the following risks: </p>
<table width="80%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="66" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="66" colspan="4" valign="top">
      <div align="left">
        <p>While the Board of Directors believes that the Common Stock would trade
          at higher prices after the consummation of the reverse stock split,
          there can be no assurance that the increase in the trading price will
          occur, or, if it does occur, that it will equal or exceed the price
          that is the product of the market price per share of the Common Stock
          prior to the reverse stock split times the selected reverse stock split
          ratio. In some cases, the total market capitalization of a company following
          a reverse stock split is lower, and may be substantially lower, than
          the total market capitalization before the reverse stock split.<br>
          <br>
        </p>
        </div>
    </td>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="68" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="68" colspan="4" valign="top">
      <div align="left">The fewer number of shares that will be available to trade
        might cause the trading market of the Common Stock to become less liquid,
        which could have an adverse effect on the price of the Common Stock. The
        liquidity of the Common Stock may also be adversely affected by the increase
        in the number of stockholders who own "odd lots," which consist of blocks
        of fewer than 100 shares. Stockholders who hold odd lots may be required
        to pay higher brokerage commissions when they sell their shares and may
        have greater difficulty in making sales.<br>
        <br>
      </div>
    </td>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="67" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="67" colspan="4" valign="top">
      <div align="left">The Company cannot offer any assurance that the Common
        Stock will continue to meet The NASDAQ Global Market continued listing
        requirements following the reverse stock split. Even if the Company regains
        compliance with the Minimum Bid Price Rule, the Company must maintain
        compliance, and the Company must also continue to satisfy other NASDAQ
        maintenance standards to remain on The NASDAQ Global Market. In order
        for the Common Stock to continue to be quoted on The NASDAQ Global Market,
        it must also satisfy various listing maintenance standards established
        by NASDAQ, such as (i) having at least 750,000 shares publicly held by
        persons other than officers, directors and beneficial owners of greater
        than 10% of the total outstanding shares, (ii) a market value of publicly
        held shares of at least $5 million, (iii) at least 400 stockholders who
        own at least 100 shares, and (iv) stockholder's equity of at least $10
        million.<br>
      </div>
    </td>
  </tr>
</table>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The market
  price of the Common Stock will also be based on the business and results of
  operations, which are unrelated to the number of shares of the Common Stock
  outstanding. The business and results of operations are subject to the risks
  and uncertainties described from time-to-time in the periodic reports filed
  with the SEC.</p>
<p><font face="Times New Roman, Times, serif" size="3"> </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">12<br>
  </font></p>
<hr NOSHADE>
<p align="left"><b><br>
  EFFECTIVE DATE OF THE REVERSE STOCK SPLIT </b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If this
  proposal is approved by the stockholders, the reverse stock split will become
  effective at such time as the Company files a Certificate of Amendment to the
  Amended and Restated Certificate of Incorporation with the Delaware Secretary
  of State (or at such later time as may be set forth in the Certificate of Amendment),
  which may take place at any time on or before December 31, 2008. Before the
  Company files the Certificate of Amendment, the Board of Directors must approve
  the final reverse stock split ratio. Even if the reverse stock split is approved
  by the stockholders, the Board of Directors has discretion to decline to carry
  out the reverse stock split if it determines that the reverse stock split is
  no longer in the best interests of the Company and the stockholders. </p>
<p align="left"><b>EXCHANGE OF STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
  </b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If the
  proposal is approved by the stockholders and the Board of Directors believes
  that the reverse stock split is in the best interests of the Company and the
  stockholders, the exchange of shares of the Common Stock will occur at the effective
  time of the Certificate of Amendment without any further action on the part
  of the stockholders and without regard to the date that any stockholder physically
  surrenders the stockholder's certificates representing pre-split shares of Common
  Stock for certificates representing post-split shares. Each certificate representing
  pre-split shares of Common Stock will, until surrendered and exchanged as described
  below, be deemed cancelled and, for all corporate purposes, will be deemed to
  represent only the number of post-split shares of Common Stock and the right
  to receive the amount of cash for any fractional shares as a result of the reverse
  stock split. However, a stockholder will not be entitled to receive any dividends
  or other distributions payable by us after the Certificate of Amendment is effective
  until that stockholder surrenders and exchanges the stockholder's certificates.
  If there are any dividends or distributions, they will be withheld, accumulate
  and be paid to each stockholder, without interest, once that stockholder surrenders
  in exchange his, her or its certificates. </p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>As
  soon as practicable after the effective date of the Certificate of Amendment,
  the transfer agent, American Stock Transfer & Trust Company, will mail transmittal
  forms to each holder of record of certificates formerly representing shares
  of Common Stock that will be used in forwarding certificates for surrender and
  exchange for certificates representing the number of shares of Common Stock
  the holder is entitled to receive as a consequence of the reverse stock split.
  The transmittal form will be accompanied by instructions specifying other details
  of the exchange.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>After
  receipt of a transmittal form, each holder should surrender the certificates
  formerly representing shares of Common Stock and will receive in exchange therefor
  certificates representing the number of shares of Common Stock to which the
  holder is entitled. No stockholder will be required to pay a transfer or other
  fee to exchange his, her or its certificates. Stockholders should not send in
  certificates until they receive a transmittal form from the transfer agent.
  In connection with the reverse stock split, the Common Stock will change its
  current CUSIP number. This new CUSIP number will appear on any new stock certificates
  issued representing shares of the post-split Common Stock.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>In
  the event that the number of shares of post-split Common Stock for any stockholder
  includes a fraction, the Company will pay that stockholder, in lieu of issuing
  fractional shares, a cash amount (without interest) equal to the fair market
  value of such fraction of a share which would otherwise result from the reverse
  stock split, based upon the average of the closing bid prices of the Common
  Stock as reported on The NASDAQ Global Market or other principal market of the
  Common Stock during each of the five trading days immediately preceding the
  effective date of the Certificate of Amendment. This cash payment represents
  merely a mechanical rounding off of the fractions in the exchange, and is not
  a separately bargained-for consideration. Similarly, no fractional shares will
  be issued on the exercise of outstanding warrants and options, except as otherwise
  expressly specified in the documents governing such warrants and options.</p>
<p align="left"><b> </b><font face="Times New Roman, Times, serif" size="3"><br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">13<br>
  </font></p>
<hr NOSHADE>
<p align="left"><b>EFFECT ON REGISTERED "BOOK-ENTRY" HOLDERS OF COMMON STOCK </b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The registered
  holders of common stock may hold some or all of their shares electronically
  in book-entry form under the direct registration system for securities. These
  stockholders will not have stock certificates evidencing their ownership of
  the Common Stock. They are, however, provided with a statement reflecting the
  number of shares registered in their accounts.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If
  a stockholder holds registered shares in book-entry form, such stockholder does
  not need to take any action to receive its post-reverse stock split shares or
  its cash payment in lieu of any fractional share interest, if applicable. If
  the stockholder is entitled to post-reverse stock split shares, a transaction
  statement will automatically be sent to its address of record indicating the
  number of shares it holds following the reverse stock split.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If
  a stockholder is entitled to a payment in lieu of any fractional share interest,
  a check will be mailed to it at its registered address as soon as practicable
  after the effective date of the Certificate of Amendment. By signing and cashing
  this check, the stockholder will warrant that it owned the shares for which
  it received a cash payment.</p>
<p align="left"><b>FEDERAL INCOME TAX CONSEQUENCES </b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The following
  is a summary of certain material United States federal income tax consequences
  of the reverse stock split to the Company's stockholders, does not purport to
  be a complete discussion of all of the possible federal income tax consequences
  of the reverse stock split and is included for general information only. Further,
  it does not address any state, local or foreign income or other tax consequences.
  Also, it does not address the tax consequences to stockholders that are subject
  to special tax rules, such as banks, insurance companies, regulated investment
  companies, personal holding companies, foreign entities, nonresident alien individuals,
  broker-dealers and tax-exempt entities. Other stockholders may also be subject
  to special tax rules, including but not limited to: stockholders who received
  Common Stock as compensation for services or pursuant to the exercise of an
  employee stock option, or stockholders who have held, or will hold, stock as
  part of a straddle, hedging, or conversion transaction for federal income tax
  purposes. This summary also assumes you are a United States holder (defined
  below) who has held, and will hold, shares of Common Stock as a "capital asset,"
  as defined in the Internal Revenue Code of 1986, as amended (i.e., generally,
  property held for investment). Finally, the following discussion does not address
  the tax consequences of transactions occurring prior to or after the reverse
  stock split (whether or not such transactions are in connection with the reverse
  stock split) including, without limitation, the exercise of options or rights
  to purchase Common Stock in anticipation of the reverse stock split. </p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  tax treatment of a stockholder may vary depending upon the particular facts
  and circumstances of such stockholder. You should consult with your own tax
  advisor with respect to the tax consequences of the reverse stock split. As
  used herein, the term United States holder means a stockholder that is, for
  federal income tax purposes: a citizen or resident of the United States; a corporation
  or other entity taxed as a corporation created or organized in or under the
  laws of the United States or any state, including the District of Columbia;
  an estate the income of which is subject to federal income tax regardless of
  its source; or a trust that (i) is subject to the primary supervision of a U.S.
  court and the control of one of more U.S. persons or (ii) has a valid election
  in effect under applicable U.S. Treasury regulations to be treated as a U.S.
  person. </p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  following discussion is based on the Code, applicable Treasury Regulations,
  judicial authority and administrative rulings and practice, all as of the date
  hereof. The Internal Revenue Service could adopt a contrary position. In addition,
  future legislative, judicial or administrative changes or interpretations could
  adversely affect the accuracy of the statements and conclusions set forth herein.
  Any such changes or interpretations could be applied retroactively and could
  affect the tax consequences described herein. No ruling from the Internal Revenue
  Service or opinion of counsel has been obtained in connection with the reverse
  stock split.&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp</i></p>
<p align="left"><b> </b><font face="Times New Roman, Times, serif" size="3"><br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">14<br>
  </font></p>
<hr NOSHADE>
<p align="left"><br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Other than
  the cash payments for fractional shares discussed below, no gain or loss should
  be recognized by a stockholder upon such stockholder's exchange of pre-reverse
  stock split shares of Common Stock for post-reverse stock split shares of Common
  Stock pursuant to the reverse stock split. The aggregate tax basis of the post-reverse
  stock split shares received in the reverse stock split (including any fraction
  of a post-reverse stock split share deemed to have been received) will be the
  same as the stockholder's aggregate tax basis in the pre-reverse stock split
  shares exchanged therefor. The stockholder's holding period for the post-reverse
  stock split shares will include the period during which the stockholder held
  the pre-reverse stock split shares surrendered in the reverse stock split. </p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>In
  general, stockholders who receive cash in exchange for their fractional share
  interests in the post-reverse stock split shares as a result of the reverse
  stock split will recognize gain or loss based on their adjusted basis in the
  fractional share interests repurchased. The receipt of cash instead of a fractional
  share of Common Stock by a United States holder of Common Stock will result
  in a taxable gain or loss to such holder for federal income tax purposes based
  upon the difference between the amount of cash received by such holder and the
  adjusted tax basis in the fractional shares as set forth above. The gain or
  loss will constitute a capital gain or loss and will constitute long-term capital
  gain or loss if the holder's holding period is greater than one year as of the
  effective date.</p>
<p align="left"><i>Information Reporting and Backup Withholding </i><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>You may
  be subject to information reporting with respect to any cash received in exchange
  for a fractional share of Common Stock in the reverse stock split. Holders who
  are subject to information reporting and who do not provide appropriate information
  when requested may also be subject to backup withholding at a rate of 28%. Any
  amount withheld under such rules is not an additional tax and may be refunded
  or credited against your United States federal income tax liability, provided
  that the required information is properly furnished in a timely manner to the
  Internal Revenue Service.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>THE
  PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME
  TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT AND DOES NOT PURPORT TO BE A COMPLETE
  ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT THERETO. YOU SHOULD
  CONSULT YOUR OWN TAX ADVISORS AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN,
  AND OTHER TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, IN LIGHT OF YOUR SPECIFIC
  CIRCUMSTANCES.</p>
<p align="left"><b>ACCOUNTING EFFECTS OF THE REVERSE STOCK SPLIT </b></p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbspFollowing
  the effective date of the reverse stock split, the par value of the Common Stock
  and Preferred Stock will remain at $0.001 per share. As a result of the corresponding
  authorized stock reduction, however, at the effective time of the reverse stock
  split, the stated capital attributable to Common Stock on the balance sheet
  will be reduced proportionately, and the additional paid-in capital account
  will be credited with the amount by which the stated capital is reduced. In
  addition, the number of outstanding shares of the Common Stock and the number
  of shares of the Common Stock issuable upon exercise or conversion of options
  and warrants will be reduced by the reverse stock split ratio selected by the
  Board of Directors, taking into account such additional decrease resulting from
  the repurchase of fractional shares that otherwise would result from the reverse
  stock split. Accordingly, the aggregate par value of the issued and outstanding
  shares of the Common Stock, and therefore the stated capital associated with
  the Common Stock, will be reduced, and the additional paid-in capital (capital
  paid in excess of the par value) will be increased in a corresponding amount
  for statutory and accounting purposes. If the reverse stock split is effected,
  all share and per share information in the financial statements will be restated
  to reflect the reverse stock split for all periods presented in the future filings
  after the effective date of the Certificate Amendment with the SEC and The NASDAQ
  Global Market. Total stockholders' equity will remain unchanged.&nbsp</p>
<p align="left"><b> </b><font face="Times New Roman, Times, serif" size="3"><br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">15<br>
  </font></p>
<hr NOSHADE>
<p><b>NO APPRAISAL RIGHTS</b></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Under
  the Delaware General Corporation Law, the stockholders are not entitled to appraisal
  rights with respect to the reverse stock split, and the Company will not independently
  provide stockholders with any such right.</p>
<p><b>EFFECTS OF THE REVERSE STOCK SPLIT</b></p>
<p><i><b>Corporate Matters</b></i></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If approved
  and effected, the reverse stock split would have the following effects: </p>
<table width="80%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="15" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="15" colspan="4" valign="top">
      <div align="left">
        <p>Depending on the exact reverse stock split ratio selected by the Board
          of Directors, between 5 and 10 shares of the Common Stock owned by a
          stockholder before the reverse stock split would be exchanged for one
          share of the Common Stock.<br>
          <br>
        </p>
      </div>
    </td>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="43" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="43" colspan="4" valign="top">
      <div align="left">Based on the reverse stock split ratio selected by the
        Board of Directors, proportionate adjustments will be made to the per
        share exercise price and the number of shares issuable upon the exercise
        of all outstanding options and warrants entitling the holders thereof
        to purchase shares of the Common Stock, which will result in approximately
        the same aggregate price being required to be paid for such options or
        warrants upon exercise of such options or warrants immediately preceding
        the reverse stock split.<br>
        <br>
      </div>
    </td>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="55" width="30" valign="top">
      <div align="right">
        <ul>
          <li></li>
        </ul>
      </div>
    </th>
    <td align="CENTER" height="55" colspan="4" valign="top">
      <div align="left">With respect to the Company's existing equity incentive
        plans, the number of shares reserved for issuance under the plans, the
        number of shares by which the share reserve may increase annually, the
        number of shares for which awards may be granted to any one individual
        will be reduced proportionately based on the reverse stock split ratio
        selected by the Board of Directors. In addition, the number of shares
        issuable upon the exercise of outstanding options and the exercise price
        for such options will be adjusted based on the reverse stock split ratio
        selected by the Board of Directors. <br>
      </div>
    </td>
  </tr>
</table>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>If approved
  and effected, the reverse stock split will be effected simultaneously for all
  of the Common Stock and the ratio will be the same for all of the Common Stock.
  The reverse stock split will affect all of the stockholders uniformly. The reverse
  stock split will not change the terms of the Common Stock. The Common Stock
  will have the same voting rights and rights to dividends and distributions and
  will be identical in all other respects after the reverse stock split. No stockholder's
  percentage ownership of the Common Stock will be altered except for the effect
  of the elimination of fractional shares.</p>
<p><b><i>Number of Stockholders; Exchange Act Registration</i></b></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The Common
  Stock is currently registered under Section 12(g) of the Exchange Act, and as
  a result, the Company is subject to the periodic reporting and other requirements
  of the Exchange Act. Depending on the reverse stock split ratio selected by
  the Board of Directors, certain holders of the Common Stock may no longer hold
  any whole shares of the Common Stock. These holders, to whom the Company will
  pay a cash amount in lieu of issuing fractional shares, will cease to be stockholders
  of the Company. Notwithstanding the fact that the total number of record holders
  of the Common Stock would be reduced by a reverse stock split, the purpose of
  the proposed stock split is not to reduce the number of record holders. The
  reverse stock split is not part of a contemplated "going private" transaction
  under Rule 13e-3 of the Exchange Act, and the Company will continue to be subject
  to the periodic reporting requirements of the Exchange Act.</p>
<p><font face="Times New Roman, Times, serif" size="3"> </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">16<br>
  </font></p>
<hr NOSHADE>
<p align="left"><b><i><br>
  Authorized Shares</i></b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>If
  the reverse stock split is implemented, the Board of Directors will reduce proportionately
  the number of shares of the Common Stock and capital stock authorized under
  the Amended and Restated Certificate of Incorporation. The number of shares
  of the Preferred Stock authorized under the Amended and Restated Certificate
  of Incorporation would not be reduced and will remain at 3,000,000 shares.<br>
  <br>
  <b>Required Vote&nbsp&nbsp&nbsp&nbsp</b>&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i></p>
<p align="left"><i></i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  affirmative vote of a majority of the shares of the outstanding Common Stock
  entitled to vote as of the Record Date will be required to approve this proposal.
  <br>
  <b><br>
  <font face="Times New Roman, Times, serif" size="3">THE BOARD OF DIRECTORS ANONYMOUSLY
  RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED
  CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY'S
  COMMON STOCK AT A RATIO WITHIN THE RANGE FROM ONE-FOR-5 TO ONE-FOR-10 AT ANY
  TIME PRIOR TO DECEMBER 31, 2008, TOGETHER WITH A CORRESPONDING REDUCTION IN
  THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND CAPITAL STOCK.</font></b></p>
<p align="left"><font face="Times New Roman, Times, serif" size="3"><br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">17<br>
  </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><b>OTHER INFORMATION</b></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b>SECURITY
  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</b><br>
  </font></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  following table sets forth, as of the Record Date, certain information with
  respect to the beneficial ownership of the Company's Common Stock, including
  on an as-exercised basis, options and warrants exercisable within 60 days of
  the Record Date, as to (i) each person known by the Company to own beneficially
  more than 5 percent of the outstanding shares of Common Stock; (ii) each director
  of the Company; (iii) each executive officer of the Company; and (iv) all directors
  and executive officers of the Company as a group. Except as set forth below,
  the address of record for each of the individuals listed in this table is: c/o
  Socket Communications, Inc. dba Socket Mobile, Inc., 39700 Eureka Drive, Newark,
  California 94560.<br>
  </font></p>
<table width="100%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="240" align="LEFT"><font size="3" face="Times New Roman, Times, serif"><b>Name
      of Beneficial Owner (1)<br>
      </b></font>
      <hr NOSHADE>
    </th>
    <th width="10" align="CENTER"><font size="3"></font></th>
    <th width="107" align="CENTER">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Number
        of Shares of<br>
        Common Stock Beneficially Owned</font> </div>
      <hr NOSHADE>
    </th>
    <th width="9" align="CENTER"><font size="3"></font></th>
    <th width="110" align="CENTER">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Percentage
        of<br>
        Shares of<br>
        Common Stock<br>
        Beneficially Owned (2)</font></div>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Charlie
      Bass(3)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2,025,459</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">6.3%</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills(4)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">907,161</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2.8</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford(5)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">730,570</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2.2</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240" height="16"><font size="3" face="Times New Roman, Times, serif">David
      W. Dunlap(6)</font></td>
    <td width="10" align="RIGHT" height="16"><font size="3"></font></td>
    <td width="107" align="RIGHT" height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">612,655</font></div>
    </td>
    <td width="9" align="RIGHT" height="16"><font size="3"></font></td>
    <td width="110" align="RIGHT" height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.9</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Leonard
      L. Ott(7) </font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">477,618</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.5</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Enzo Torresi(8)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">329,000</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.0</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Leon Malmed(9)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">312,500</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.0</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Gianluca
      Rattazzi(9)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">305,000</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">*</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Tim I.
      Miller(10)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">267,803</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">*</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Lee A.
      Baillif (11)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">236,858</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">*</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Peter
      Sealey(9) </font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">225,000</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">*</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink(9)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">76,042</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">*</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240" height="15"><font size="3" face="Times New Roman, Times, serif">Thomas
      O. Miller(12)</font></td>
    <td width="10" align="RIGHT" height="15"><font size="3"></font></td>
    <td width="107" align="RIGHT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">60,620</font></div>
    </td>
    <td width="9" align="RIGHT" height="15"><font size="3"></font></td>
    <td width="110" align="RIGHT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">*</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240" height="15"><font size="3" face="Times New Roman, Times, serif">Thomas
      L. Noggle(9)</font></td>
    <td width="10" align="RIGHT" height="15"><font size="3"></font></td>
    <td width="107" align="RIGHT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">521</font></div>
    </td>
    <td width="9" align="RIGHT" height="15"><font size="3"></font></td>
    <td width="110" align="RIGHT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">*</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">All Directors
      and Executive Officers as a group (14 persons)(13)</font></td>
    <td width="10" align="RIGHT"><font size="3"></font></td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">6,566,807</font></div>
    </td>
    <td width="9" align="RIGHT"><font size="3"></font></td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">20.2%</font></div>
    </td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0" align="center" height="284">
  <tr>
    <td>
      <hr NOSHADE align="LEFT" width="120">
      <font face="Times New Roman, Times, serif" size="2">*Less than 1%<br>
      (1) To the Company's knowledge, the persons named in the table have sole
      voting and investment power with respect to all shares of Common Stock shown
      as beneficially owned by them, subject to community property laws where
      applicable and the information contained in the footnotes to this table.<br>
      (2) Percentage ownership is based on 32,015,975 shares of Common Stock outstanding,
      each of which is entitled to one vote, on the Record Date and any shares
      issuable pursuant to securities exercisable for shares of Common Stock by
      the person or group in question as of the Record Date or within 60 days
      thereafter.<br>
      (3) Includes 362,500 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (4) Includes 802,063 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (5) Includes 486,696 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (6) Includes 552,188 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (7) Includes 463,208 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (8) Includes 281,250 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (9) Consists of shares of Common Stock subject to options exercisable within
      60 days of February 25, 2008.<br>
      (10) Includes 263,250 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (11) Includes 210,271 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008.<br>
      (12) Includes 55,000 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008<br>
      (13) Includes 4,395,489 shares of Common Stock subject to options exercisable
      within 60 days of February 25, 2008. </font></td>
  </tr>
</table>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">18 </font></p>
<hr NOSHADE>
<p align="center"><b><br>
  SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</b></p>
<p align="left"><br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><font size="3" face="Times New Roman, Times, serif">Section
  16(a) of the Securities and Exchange Act of 1934, as amended, requires the Company's
  executive officers, directors and persons who own more than ten percent of the
  Company's Common Stock to file reports of ownership and changes in ownership
  with the SEC and the National Association of Securities Dealers, Inc. Executive
  officers, directors and greater than 10 percent stockholders are required by
  SEC regulation to furnish the Company with copies of all Section 16(a) forms
  they file. Based solely on its review of the copies of such forms received by
  it, or written representations from certain reporting persons, the Company believes
  that during fiscal 2007, all filing requirements applicable to its executive
  officers and directors were complied with by such executive officers and directors.
  <br>
  <br>
  <br>
  </font></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b>MANAGEMENT</b></font></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><b> <br>
  </b></font><font size="3" face="Times New Roman, Times, serif"> <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>
  </font>The current executive officers of the Company are as follows: </p>
<table width="100%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="28%" align="LEFT">
      <div align="left"><font size="3" face="Times New Roman, Times, serif"><b>Name
        of Officer<br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></th>
    <th width="6%" align="CENTER"><font size="3" face="Times New Roman, Times, serif"><b>Age</b></font>
      <hr NOSHADE>
    </th>
    <th width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></th>
    <th width="62%" align="CENTER"><font size="3" face="Times New Roman, Times, serif"><b>Position
      with the Company</b></font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">47</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%">President and Chief Executive Officer and Director</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3" face="Times New Roman, Times, serif">David
      W. Dunlap</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">65</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%">Vice President of Finance and Administration, Chief Financial
      Officer and Secretary</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">50</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%">Executive Vice President and Director</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3">Lee A. Baillif</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">47</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%">Vice President and Controller</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3">Tim I. Miller</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT">
      <div align="center"><font size="3">53</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%">Vice President of Worldwide Operations</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3">Thomas L. Noggle</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT">
      <div align="center"><font size="3">59</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%">Vice President of Engineering</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%" height="15"><font size="3" face="Times New Roman, Times, serif">Leonard
      L. Ott</font></td>
    <td width="2%" height="15"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">48</font></div>
    </td>
    <td width="2%" height="15"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%" height="15">Vice President and Chief Technical Officer</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%" height="8"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink</font></td>
    <td width="2%" height="8"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="6%" align="RIGHT" height="8">
      <div align="center"><font size="3">50</font></div>
    </td>
    <td width="2%" height="8"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%" height="8">Sr. Vice President of Worldwide Sales and Marketing</td>
  </tr>
</table>
<p><font size="3" face="Times New Roman, Times, serif"> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>For
  information regarding Kevin J. Mills and Micheal L. Gifford, please see "Election
  of Directors" above. <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>David W. Dunlap</i>
  has served as the Company's Vice President of Finance and Administration, Secretary
  and Chief Financial Officer since February 1995 and served in the same role
  as a consultant from November 1994 to February 1995. Mr. Dunlap previously served
  as Vice President of Finance and Administration and Chief Financial Officer
  at several public and private companies, including Appian Technology Inc., a
  semiconductor company from September 1993 to February 1995, and Mountain Network
  Solutions, Inc., a computer peripherals manufacturing company, from March 1992
  to September 1993. He is a certified public accountant, and holds an M.B.A.
  and a B.A. in Business Administration from the University of California at Berkeley.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbspLee A. Baillif</i></i>
  has served as the Company's Controller since January 1, 1999 and was promoted
  to Vice President and Controller on January 24, 2007. Prior to his appointment
  as Controller, Mr. Baillif was a member of the accounting staff from September
  1994. He holds a B.S. in Business and Finance from San Francisco State University.</font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i> </i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Tim
  I. Miller</i> has served as the Company's Vice President of Worldwide Operations
  since March 2003, responsible for the Company's worldwide manufacturing operations.
  Mr. Miller served in the same role as a consultant from January 2003 to March
  2003. Mr. Miller was an independent consultant from June 1991 to December 1992.
  Prior to joining the Company, Mr. Miller was the Vice President of Worldwide
  Operations for Com21, a developer of broadband technology solutions, from August
  1994 to May 2001. Mr. Miller holds a B.S. with an emphasis in Business Administration
  and Political Science from San Jose State University.</font></p>
<p><br>
</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">19<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Thomas L.
  Noggle</i> commenced employment as the Company's Vice President of Engineering
  on November 1, 2007. Mr. Noggle served as the Director of Hardware Engineering
  for Logitech, Inc. from November 1994 to February 1998 and previously served
  as a design engineering manager for Logitech. He has since served in various
  consulting and engineering management roles with private companies designing
  and developing new and advanced electronic products. Mr. Noggle has received
  various patents and awards for products that he has developed, including a U.S.
  patent assigned to Logitech for manipulating area imaging devices and a Technical
  Academy Award for work completed as a senior design engineer at Lucasfilm, Ltd.
  Mr. Noggle holds a B.S. in Electrical Engineering and Computer Sciences from
  the University of Illinois. <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Leonard L.
  Ott</i> has served as the Company's Vice President and Chief Technical Officer
  since October 2000 and previously served as Vice President of Engineering from
  December 1998 to October 2000. Mr. Ott joined the Company in March 1994, serving
  in increasingly responsible engineering positions including Director of Software
  Development and Director of Engineering. Mr. Ott also worked as an engineering
  consultant to the Company, from November 1993 to March 1994. Prior to joining
  the Company, Mr. Ott served in various senior roles at Vision Network Systems
  from March 1988 to November 1993, a networking systems company. Mr. Ott holds
  a B.S. in Computer Science from the University of California at Berkeley.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Robert C. Zink</i>
  commenced employment as the Company's Senior Vice President of Worldwide Sales
  and Marketing on April 2, 2007. Mr. Zink previously served in increasingly responsible
  executive sales positions with Intermec Technologies from 1997 through March
  2007 and with Norand Corporation from 1979 to 1997 prior to its acquisition
  by Intermec. Recent sales positions held by Mr. Zink with Intermec include Vice
  President U.S. Enterprise Sales from April 2006 through March 2007, Vice President
  Eastern U.S. Sales from 2001 through March 2006 and Vice President U.S. Sales
  System & Solutions in 2000 and 2001. Mr. Zink holds a Bachelors degree in Business
  Administration from the University of Iowa.</p>
<p><br>
  <font size="3" face="Times New Roman, Times, serif"><br>
  </font></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif">20<br>
  </font></p>
<hr NOSHADE>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b>DIRECTOR
  COMPENSATION<br>
  </b></font></p>
<p><b>Compensation of Non-Employee Directors</b></p>
<p> <font size="3" face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  following tables set forth the annual compensation paid or accrued by the Company
  to or on behalf of the outside directors of the Company for the fiscal year
  ended December 31, 2007. </font></p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="33%" align="LEFT" height="31">&nbsp;</th>
    <th width="12%" align="LEFT" height="31"><font size="3"></font></th>
    <th width="12%" height="31"><font size="3"></font></th>
    <th width="12%" valign="bottom" align="CENTER" height="31"><font size="3"></font></th>
  </tr>
  <tr valign="BOTTOM">
    <th width="33%" align="LEFT" height="15">
      <div align="left"><font size="3" face="Times New Roman, Times, serif"><b>Name
        <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3">Fees Earned or Paid
      in Cash ($)</font>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3">Option Awards ($)(1)
      </font>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3">Total ($) </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="14"><font size="3" face="Times New Roman, Times, serif">Charlie
      Bass <br>
      </font></td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">12,000</font></div>
    </td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">35,584(2)
        </font></div>
    </td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">47,584
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="0"><font size="3" face="Times New Roman, Times, serif">Leon Malmed<br>
      </font></td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">12,000</font></div>
    </td>
    <td height="0">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">28,984(3)
        </font></div>
    </td>
    <td height="0">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">40,984
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="11">
      <p><font size="3">Gianluca Rattazzi</font></p>
    </td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">12,000</font></div>
    </td>
    <td height="11">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">25,684(4)
        </font></div>
    </td>
    <td height="11">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">37,684
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="2"><font size="3" face="Times New Roman, Times, serif">Peter Sealey<br>
      </font></td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">12,000</font></div>
    </td>
    <td height="2">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">19,084(5)
        </font></div>
    </td>
    <td height="2">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">31,084
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="16">
      <p><font size="3" face="Times New Roman, Times, serif">Enzo Torresi </font></p>
    </td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">12,000</font></div>
    </td>
    <td height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">22,384(6)
        </font></div>
    </td>
    <td height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">34,384
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td height="199" colspan="4">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2">(1) Amounts shown do not reflect compensation actually received
      by the directors. Instead, the amounts shown are the compensation costs
      recognized for option awards vesting in fiscal 2007 for financial statement
      reporting purposes as determined pursuant to Statement of Financial Accounting
      Standards No. 123(R), or FAS 123R.<br>
      (2) Mr. Bass was granted 50,000 options on April 18, 2007 with grant date
      fair values, computed in accordance with FAS 123R of $26,500. The aggregate
      equity awards held by Mr. Bass at December 31, 2007 were options to purchase
      362,500 shares of Common Stock. The valuation for these awards at such date
      determined pursuant to FAS 123R was $440,550.<br>
      (3) Mr. Malmed was granted 40,000 options on April 18, 2007 with grant date
      fair values, computed in accordance with FAS 123R of $21,200. The aggregate
      equity awards held by Mr. Malmed at December 31, 2007 were options to purchase
      312,500 shares of Common Stock. The valuation for these awards at such date
      determined pursuant to FAS 123R was $406,850.<br>
      (4) Mr. Rattazzi was granted 35,000 options on April 18, 2007 with grant
      date fair values, computed in accordance with FAS 123R of $18,550. The aggregate
      equity awards held by Mr. Rattazzi at December 31, 2007 were options to
      purchase 305,000 shares of Common Stock. The valuation for these awards
      at such date determined pursuant to FAS 123R was $401,021.<br>
      (5) Mr. Sealey was granted 25,000 options on April 18, 2007 with grant date
      fair values, computed in accordance with FAS 123R of $13,250. The aggregate
      equity awards held by Mr. Sealey at December 31, 2007 were options to purchase
      225,000 shares of Common Stock. The valuation for these awards at such date
      determined pursuant to FAS 123R was $218,750.<br>
      (6) Mr. Torresi was granted 30,000 options on April 18, 2007 with grant
      date fair values, computed in accordance with FAS 123R of $15,900. The aggregate
      equity awards held by Mr. Torresi at December 31, 2007 were options to purchase
      281,250 shares of Common Stock. The valuation for these awards at such date
      determined pursuant to FAS 123R was $388,175.</font> </td>
  </tr>
</table>
<p>&nbsp;</p><p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Each
  outside director receives meeting attendance fees of $3,000 for each meeting
  attended in person. During 2007, the Board met four times in person and two
  times by telephone, and all directors attended. </p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  outside directors are also entitled to participate in the Company's 2004 Equity
  Incentive Plan. Grants of options to directors are made annually during the
  year of board service, commencing at each election of the Board of Directors.
  25,000 options were awarded to each director for Board and committee service.
  Directors serving as chairpersons of the nominating, audit and compensation
  committees received an additional 5,000 shares, the director serving as the
  Board chairperson received an additional 10,000 shares, and members serving
  on the audit committee received an additional 10,000 shares. On April 18, 2007,
  the outside directors were granted 180,000 options vesting monthly over a one
  year period for the service period that commenced on April 18, 2007, with an
  exercise price of $0.92 per share, which was the fair market value of the Common
  Stock on the date of grant. See also Proposal One - Compensation of Directors.
  Option awards are valued in accordance with the guidelines of Statement of Financial
  Accounting Standard No. 123(R).</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">21<br>
  </font></p>
<hr NOSHADE>
<p align="center"><b><br>
  Compensation Discussion and Analysis </b></p>
<p><i>Overview</i></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i></i>The
  Compensation Committee establishes the general compensation policies of the
  Company, and establishes the compensation plans and specific compensation levels
  for executive officers. The Company strives to ensure that its executive compensation
  programs enable the Company to attract and retain key people and motivate them
  to achieve or exceed key objectives of the Company by making individual compensation
  directly dependent on the Company's achievement of certain financial goals,
  such as revenue attainment and profitability. </p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i></i>As
  a result, we strive to provide a total compensation package that is fair, reasonable,
  and competitive with prevailing practices in our industry, allowing for above
  average total compensation when justified by business results and exceptional
  individual contribution.</p>
<p><i>Compensation Philosophy and Objectives</i></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  Company's fiscal 2007 and 2008 compensation policies, plans and programs are
  intended to achieve the following objectives:</p>
<ul>
  <ul>
    <ul type="disc">
      <li>attract, retain and motivate talented executive officers<br>
        <br>
      </li>
      <li>provide executive officers with cash bonus opportunities linked to achievement
        of business objectives and individual performance goals<br>
        <br>
      </li>
      <li>align the financial interests of executive officers with those of stockholders
        by providing executive officers with an equity stake in the Company</li>
    </ul>
  </ul>
</ul>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i></i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>Our
  approach to executive compensation is to be "middle of the road" for cash compensation
  and to offer equity incentives that maintain acceptable levels of dilution.</p>
<p><i>Elements of Executive Compensation. </i></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>The
  three major components of the Company's executive officer compensation are:
</p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(i)&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbspbase
  salary,</p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(ii)&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbspvariable
  incentive awards, and </p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i>(iii)&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>long-term,
  equity-based incentive awards.</p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i>The components,
  as well as the total direct compensation, of our rewards program for executives
  are compared against other public companies as set forth as summary data in
  the national compensation survey of the American Electronics Association. All
  of our executive officers are also entitled to earn variable incentive awards
  and stock option grants as part of their compensation packages. As a result,
  we continue to remain focused on ensuring that our compensation program is optimized
  to motivate employees to improve the Company's results on a cost-effective basis.</p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbspAnalysis: The national
  compensation survey of the American Electronics Association was chosen to benchmark
  executive and employee salaries as it is a broad based compensation survey with
  an emphasis on companies in the electronics industry and provides information
  on base salary and variable incentive awards based on size of companies and
  geographic location. Offering competitive salary packages to employees is an
  essential element of attracting and retaining key employees in the San Francisco
  Bay Area which has many electronics firms that compete for talent and offer
  employment alternatives.</i><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i></p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">22<br>
  </font></p>
<hr NOSHADE>
<p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></p>
<p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Base Salary</i>.
  The Compensation Committee establishes a competitive base salary designed to
  recognize the skills and experience each individual brings to the Company and
  the performance contributions they make. Overall, total direct compensation
  levels for each position is targeted at the median percentile of similar positions
  in the American Electronics Association surveys for employees participating
  in variable incentive award programs. Some variation in the competitive mean
  is allowed when, in the judgment of management and/or the Compensation Committee,
  as appropriate, the value of an individual's experience, performance and specific
  skill set justifies upward or downward variation. Base salary recognizes an
  employee's role, responsibilities, skills, experience and performance. Currently,
  the base salaries of the Named Executive Officers, except for Mr. Zink, are
  below the median percentile, reflecting decisions by the Compensation Committee
  in past years and supported by management to limit salary increases based on
  the financial condition of the Company. Mr. Zink joined the Company in April
  2007 and his base compensation levels were set at about the 75th percentile,
  consistent with his compensation levels at his previous employer.</p>
<p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Analysis:
  The Compensation Committee believes that setting cash compensation targets at
  median levels meets the objective of providing competitive salaries when considered
  in combination with variable incentive awards and long term incentive stock
  option grants. Variable incentive awards provide for above average compensation
  for superior performance as they allow participants to exceed financial compensation
  targets when results exceed financial Plan targets. Participants also have the
  risk of realizing below average compensation for failure to achieve target financial
  results. Long term incentive stock option grants reward the participant for
  performance levels that increase the value of the Company's common stock above
  the fair market value at the date of grant.</i></p>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp</i>The Compensation Committee
  determines both the amount and timing of base salary increases. Factors affecting
  the level of base pay increases each year include the overall financial performance
  of the Company, changes in the base salary compensation levels reported in the
  American Electronics Association surveys for executive positions in similarly
  sized companies, and the individual performance of each executive. The performance
  of each executive officer of the Company is formally evaluated by his or her
  supervisor at least one time per year. During 2006, the base salary levels for
  executive officers were unchanged primarily due to the overall financial performance
  of the Company. In July 2007, the base salary levels for the four continuing
  named executive officers were increased by $10,000 for Messrs. Mills, Gifford
  and Dunlap and $15,000 for Mr. Miller representing an average increase in base
  salary of 7%. The increase covered a 24 month period since the previous increase
  in July 2005 and was primarily a cost of living adjustment except for the base
  salary increase for Mr. Miller that included a merit increase reflecting his
  assumption of increased levels of responsibility.</p>
<p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Analysis:
  In 2006, the Company embarked on a major product development program to develop
  and market its own handheld computer, thus increasing the size of the markets
  it serves and reducing dependencies on other handheld computer manufacturers
  whose computers are used in conjunction with the Company's peripheral data collection
  and peripheral products. The handheld computer development program along with
  other expense increases have increased operating losses and put pressures on
  cash as revenue growth has been below the rate of expense increases over the
  past three years. As a result, and with the concurrence of the Company's management
  team, the Compensation Committee has been judicious about increasing salaries
  until the Company is able to improve its bottom line results. </i></p>
<p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i>Variable
  Incentive Awards</i>. To reinforce the importance of meeting the Company's financial
  goals, and to reward significant individual contribution to that effort, the
  Company believes that a meaningful portion of the quarterly compensation of
  each executive officer should be in the form of variable incentive pay. Variable
  incentive target awards are established by the Compensation Committee under
  the same criteria used for establishing base salaries, and base salary and variable
  incentive targets are considered together in establishing appropriate compensation
  levels for each executive officer. Each executive officer participates in a
  Management Variable Incentive Compensation Plan (the "Plan"), which is approved
  by the Compensation Committee, and performance is measured quarterly. The Plan
  measures four components:&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></p>
<ul>
  <ul>
    <ul type="disc">
      <li>Actual quarterly revenue compared to a Board-approved financial plan
        ("Financial Plan")&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i></i><i>&nbsp</i><br>
        <br>
      </li>
      <li><i></i> Actual quarterly gross margins compared to the Financial Plan<br>
        <br>
      </li>
      <li> Actual expenses compared to the Financial Plan<br>
        <br>
      </li>
      <li>Achievement of quarterly management objectives</li>
    </ul>
  </ul>
</ul>
<div align="left">
  <p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></p>
  <p>&nbsp;</p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">23<br>
    </font></p>
  <hr NOSHADE>
  <p align="center">&nbsp; </p>
  <p><br>
    <i><i></i></i>The Financial Plan is approved each year by the Company's Board
    of Directors and actual results are measured against that Financial Plan.
    Management objectives are set quarterly by each executive officer's supervisor.
    Each component is weighted equally, and awards are paid based on the percentage
    attainment achieved of each component, respectively. Awards are capped at
    twice the target award levels for each financial component and executive officers
    earn zero for such component if attainment of such component is less than
    80 percent. Variable incentive targets for executives during 2007 were unchanged
    and ranged from 9 percent to 35 percent of total cash compensation, averaging
    24 percent among all executives in fiscal 2007. The Compensation Committee
    believes that setting variable incentive targets at these levels provides
    compensation incentives that are meaningful in recognizing successful performance
    without causing severe financial hardships should the variable targets not
    be reached. </p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Analysis:
    The Company's ratios of variable compensation to total compensation are generally
    at or above median levels for similar executives as reported in the salary
    survey of the American Electronics Association, elevating the importance of
    reaching or exceeding financial goals as set in the Company's annual Financial
    Plan. The Company's annual Financial Plan has historically been aggressive
    in forecasting revenue growth, the level of product margins, and the management
    of operating expenses. As a result, although the Company's management has
    performed well relative to achieving operating expense and working capital
    targets, it has also underperformed in achieving revenue results relative
    to the annual Financial Plan by underestimating the time required to develop
    products and bring them to market and by failing to adequately estimate the
    impact on revenue of delays in product availability by third parties, including
    handheld computer manufacturers whose products work with the Company's peripheral
    data collection and connectivity products and third party software vendors
    supplying mobile business applications. The Variable Incentive Awards plan
    has three quantitative components that measure actual revenue, gross margins
    and expense (all elements of profitability) against targets set in the annual
    Financial Plan and one component, management objectives, that is both quantitative
    and qualitative. As all components carry equal weight, and because gross margins
    generally follow revenue (if one is missed, so is the other), revenue shortfalls
    in combination with a financial cliff at 80% of Plan have historically caused
    Socket's executives to be compensated below variable target levels as provided
    for in the Plan. On the upside, the Variable quantitative profitability-based
    portions of the awards (revenue, gross margins and expenses) can earn up to
    200% of the individual's target, providing strong financial incentives to
    meet or exceed financial Plan objectives.</i></p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>Actual
    variable compensation payments as a percentage of variable compensation targets
    during 2007 and 2006 are shown in the table below for the Named Executive
    Officers. The primary shortfalls were due to achievement of revenue and margin
    totals below Financial Plan levels.<br>
    <br>
  </p>
  <table width="40%" border=1 cellspacing=0 cellpadding=0 align="center">
    <tr valign="BOTTOM">
      <td align="LEFT" height="43">
        <div align="center"><b>Named Executive Officer </b></div>
      </td>
      <td align="CENTER" height="43" width="20%"><b>2007</b></td>
      <td align="CENTER" height="43" width="20%"><b>2006</b></td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="top">
      <td height="17"><font size="3" face="Times New Roman, Times, serif">Kevin
        J. Mills<br>
        <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>President
        and Chief Executive Officer and Director</font></td>
      <td align="RIGHT" height="17" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">81%
          </font></div>
      </td>
      <td align="RIGHT" height="17" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">70%
          </font></div>
      </td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="top">
      <td height="15"><font size="3" face="Times New Roman, Times, serif">Micheal
        L. Gifford<br>
        <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>Executive
        Vice President and Director</font></td>
      <td align="RIGHT" height="15" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">82%
          </font></div>
      </td>
      <td align="RIGHT" height="17" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">64%
          </font></div>
      </td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="top">
      <td height="18"><font size="3" face="Times New Roman, Times, serif">Robert
        C. Zink (1)<br>
        <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>Sr.
        Vice President Worldwide Sales and Marketing</font></td>
      <td height="18" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">82%
          </font></div>
      </td>
      <td height="18" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">70%
          </font></div>
      </td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="top">
      <td height="35">
        <p><font size="3" face="Times New Roman, Times, serif">David W. Dunlap<br>
          </font><font size="3"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>Vice
          President of Finance and Administration, <br>
          <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>Chief
          Financial Officer and Secretary</font></p>
      </td>
      <td align="RIGHT" height="35" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">100%
          </font></div>
      </td>
      <td align="RIGHT" height="35" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">
          -- </font></div>
      </td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="top">
      <td height="17">
        <p><font size="3" face="Times New Roman, Times, serif">Timothy I. Miller<br>
          <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>Vice
          President of Worldwide Operations</font></p>
      </td>
      <td align="RIGHT" height="17" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">81%
          </font></div>
      </td>
      <td align="RIGHT" height="17" width="20%" valign="bottom">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">68%
          </font></div>
      </td>
    </tr>
  </table>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>Note
    1: Mr. Zink commenced employment on April 2, 2007 and his variable target
    attainment was guaranteed for 2007 as part of his employment offer. </p>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">24<br>
    </font></p>
  <hr NOSHADE>
  <p>&nbsp;</p>
  <p><i><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i>Long-Term,
    Equity-Based Incentive Awards</i></i>. The goal of the Company's long-term,
    equity-based incentive awards is to align the interests of executive officers
    with those of stockholders and to provide each executive officer with a significant
    incentive to manage the Company from the perspective of an owner with an equity
    stake in the business. All equity incentives are subject to vesting provisions
    to encourage executive officers to remain employed with the Company. Such
    awards to date have been in the form of stock option grants. The Compensation
    Committee determines the size of awards according to each executive officer's
    position at the Company and sets a level that it considers appropriate to
    create a meaningful opportunity for equity participation. In addition, the
    Compensation Committee, in consultation with management, takes into account
    an individual's recent performance, his or her potential for future responsibility
    and promotion, the number of unvested options held by each individual at the
    time of the new grant and the size of the available stock award pool. </p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>In
    June 2004, the Company's stockholders approved the 2004 Equity Incentive Plan
    and initially transferred shares available for grant from the Company's 1995
    stock plan which was scheduled to expire in 2005. The 2004 Equity Incentive
    Plan provides for an automatic increase each January 1st in the available
    stock award pool equal to the lesser of (a) 2,000,000 shares, (b) four percent
    of the outstanding shares on that date, or (c) a lesser amount as determined
    by the Board of Directors. Options are granted at the discretion of the Compensation
    Committee to all employees of the Company based on recommendations from management
    regarding employee responsibilities and performance. </p>
  <p align="left"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>The
    Compensation Committee, in consultation with management, prepares an annual
    allocation plan dividing available stock in the grant pool among employee
    refresher grants, new employee grants, director grants and reserves. The timing,
    award criteria, and award procedures are discussed more fully under Equity
    Incentive Grant Policies in the next section. New employee grants are made
    at or shortly after the date of hire. Refresher grants were made on February
    26, 2007. Refresher grants are made annually, typically during the first quarter
    of the year on the first open trading day of the quarter two days after the
    release of earnings. The 2007 refresher grants had a vesting start date of
    March 1, 2007 and vest monthly over 48 months, contingent upon the executive
    officer's continued employment with the Company. All grants expire ten years
    after the date of grant. Fully vested grants, or grants vesting over a shorter
    or longer term than four years, may be awarded at the discretion of the Compensation
    Committee. Stock options will provide a return only if the employee remains
    with the Company and only if the market price appreciates during the option
    term. </p>
  <p align="left"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Analysis:
    The Compensation Committee believes that stock option grants are the Company's
    most effective differentiator in attracting and retaining key employees and
    it provides initial grants to all new employees and annual refresher grants
    to all continuing employees with a weighting reflecting the level of responsibility
    and performance of the employee. Many of the senior executives have been employed
    by the company more than ten years and have amassed a number of annual stock
    option grants (grants expire 10 years after the date of grant) with substantial
    wealth accumulation potential as stock prices increase that are fully aligned
    with the interests of stockholders. Stock options are effective because the
    Company's shares are publicly traded which provides a market for the exercise
    and sale of vested options and because of the expectations of the management
    team that the Company's products and the markets it addresses provide opportunities
    for growth that will result in share price appreciation. </i></p>
  <p><i>Equity Incentive Grant Policies.</i></p>
  </div>
<div align="left">
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i>General
    option grant practices</i>. All stock options grants are awarded by the Compensation
    Committee, or the full Board in the case of director stock option grants.
    All stock options are priced at the closing market price of the Company's
    common stock on the date of grant and the actions of the Compensation Committee
    are documented in minutes that are retained in the minute book of the Company.
    During 2007, the Compensation Committee met ten times during the year and
    stock option grants were awarded at nine of those meetings. </p>
  <p>&nbsp;</p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">25<br>
    </font></p>
  <hr NOSHADE>
  <p>&nbsp;</p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i>Initial
    stock option grants</i>. The Company awards initial stock option grants to
    each new employee of the Company at the first meeting of the Compensation
    Committee following employment. The size of the grant is based on the responsibilities
    of each employee and as agreed to in the employee's employment offer. Grants
    for executive officers are approved by the Compensation Committee in advance
    of offers being made to the individual. During 2007, initial stock option
    grants were made to Messrs. Zink and Noggle who joined the Executive Staff
    during the year. Grants to rank and file employees are made by management
    within general guidelines reviewed and approved by the Compensation Committee
    and the actual grant requires the approval of the Compensation Committee at
    the time of grant. New employee grants during fiscal 2007 were awarded to
    new employees by the Compensation Committee on the first business day of each
    month following an employee's date of initial employment. Initial grants generally
    vest 25% on the one year anniversary of employment and 1/48th per month thereafter
    for a total vesting period of 48 months. The delay in initial vesting for
    the first twelve months of employment provides an incentive for employee retention
    and insures that the employee is familiar with the Company and its goals and
    objectives prior to shares vesting. During 2007, the Company granted a total
    of 977,900 options to 18 new employees, representing 51 percent of all stock
    options granted during the year. </p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i>Refresher
    stock option grants</i>. The Compensation Committee awards refresher stock
    option grants annually, generally to all employees of the Company, based on
    the recommendations of management about the responsibilities and performance
    of each employee. Such refresher grants are typically made during the first
    quarter of the year during open trading windows as defined in the Company's
    Code of Business Conduct and Ethics including its Insider Trading Policy contained
    therein. Over the past several years, the executive officers of the Company
    have received from 40 percent to 50 percent of the total of refresher grants
    awarded because of the relative importance of their positions in achieving
    the Company's goals and objectives, managers and senior contributors have
    received approximately 25 to 30 percent, while other employees have received
    the balance of 25 to 30 percent. Options to acquire 303,000 common shares
    were awarded to the eight executive officers of the Company in 2007 ranging
    from a low of 20,000 shares to a high of 55,000 shares. The Company awards
    grants to each of its employees in recognition of each employee's critical
    contribution to meeting the Company's goals and objectives. Refresher grants
    generally vest monthly over a 48 month period. During 2007, the Company granted
    a total of 977,900 stock options to 69 employees, representing 38 percent
    of all stock options granted during the year. In addition, the Company granted
    45,000 stock options to the members of the Company's Technical Advisory Board
    as their sole compensation for serving on the Board, representing 2 percent
    of all stock options granted during the year.<i><i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i>
  </p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i><i>Director
    stock option grants</i>. A portion of the compensation of the Company's outside
    directors is an annual stock option grant. Director grants are awarded by
    the full Board of Directors at the first regularly scheduled board meeting
    following the annual election of directors and vest over the ensuing year
    of service. Options are awarded equally to all directors for Board and committee
    service. Additional options are awarded for committee and Board leadership
    positions and audit committee service, as discussed on page 21 under "Director
    Compensation". During 2007, the Company granted a total of 180,000 stock options
    to the 5 independent directors of the Company, representing 9 percent of all
    stock options granted during the year. </p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><i></i><i></i><i></i>Other
    Compensation</i>. Executive officers are entitled to participate in the same
    health and benefit programs and 401(K) program as are available to all employees
    of the Company and do not receive any perquisites from the Company.</p>
  <p><i>Accounting and Tax Implications</i></p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i><i></i><i>Accounting
    for Stock-Based Compensation</i> On January 1, 2006, we adopted Financial
    Accounting Standard SFAS 123R, "Share-Based Payment," for the fiscal year
    ended December 31, 2006. Under SFAS 123R, the Company uses a binomial lattice
    valuation model to estimate fair value of stock option grants made on or after
    January 1, 2006. The binomial lattice model incorporates estimates for expected
    volatility, risk-free interest rates, employee exercise patterns and post-vesting
    employment termination behavior, and these estimates will affect the calculation
    of the fair value of the Company's stock option grants. The fair value of
    stock option grants outstanding prior to January 1, 2006 is estimated using
    the Black-Scholes option pricing model used under SFAS 123. The Company adopted
    the modified prospective recognition method and implemented the provisions
    of SFAS 123R beginning with the first quarter of 2006.<i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></p>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">26<br>
    </font></p>
  <hr NOSHADE>
  <p><br>
    <i><br>
    &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i><i></i></i><i></i><i></i><i>Income
    taxes</i>. The Company has not provided any executive officer or director
    with a gross-up or other reimbursement for tax amounts the executive might
    pay pursuant to Section 280G or Section 409A of the Internal Revenue Code.
    The 2004 Equity Incentive Plan also allows for the issue of qualifying grants
    as "performance-based compensation" under Section 162(m) of the Internal Revenue
    Code. No grants deemed performance-based compensation grants have been awarded
    to the executive officers of the Company.</p>
  <p><i>Compensation of the Chief Executive Officer</i></p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
    factors considered by the Company in determining the compensation of Mr. Mills,
    the Chief Executive Officer, are the same factors applied to the other executive
    officers of the Company as described under Elements of Executive Compensation,
    and he participates in the same compensation programs as do the other executive
    officers. Mr. Mills' total target compensation is based on survey data prepared
    by the American Electronics Association for public companies, his responsibility
    and leadership in establishing and implementing the strategic direction of
    the Company, and the financial performance of the Company. In 2007, Mr. Mills
    received a base salary increase of $10,000 or 5.6 percent of his previous
    base salary. The increase was intended to be primarily a cost of living increase
    covering a period of 18 months since the last increase was awarded. During
    fiscal year 2006, the Company did not increase the base salary or variable
    salary targets of any of its executive officers, including Mr. Mills. </p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Mr.
    Mills as Chief Executive Officer was the highest paid executive in the Company
    during fiscal year 2007. His total base salary during 2007 was $190,000, and
    his total target variable compensation was $100,000 for a total compensation
    target of $290,000. Mr. Mills earned 81% of his total target variable compensation
    during fiscal year 2007, due primarily to the Company underachieving its revenue
    and gross margin targets under the Management Variable Incentive Compensation
    Plan in which all executive officers participate. Mr. Mills' total compensation
    is consistent with the median compensation for Chief Executive Officers of
    public companies as reported in the national compensation survey of the American
    Electronics Association. <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Mr.
    Mills also received an annual refresher stock option grant of 55,000 shares
    on February 26, 2007 at the same time that refresher grants were awarded to
    all employees of the Company. This option commenced vesting on March 1, 2007
    and will vest in equal monthly installments over a 48 month period. The reliance
    on stock option grants as a significant element of the Chief Executive Officer's
    compensation is intended to align his total compensation package with those
    of stockholders and to provide the Chief Executive Officer with a significant
    incentive to manage the Company from the perspective of an owner with an equity
    stake in the business, including attaining long-term growth and profitability.
  </p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
    Chief Executive Officer is entitled to participate in the same health and
    benefit programs as are available to all employees of the Company. Mr. Mills
    does not receive any perquisites from the Company.</p>
  <p><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Analysis:
    The Company has historically compensated all of its executives including its
    Chief Executive Officer under the same programs including cash compensation,
    stock option grant awards, benefit programs, employment contract and the absence
    of perquisites using the same processes as defined elsewhere within this Compensation
    Discussion and Analysis.</i></p>
  <p>&nbsp;</p>
  <p>&nbsp;</p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">27<br>
    </font></p>
  <hr NOSHADE>
  <p align="center"><b><br>
    <br>
    SUMMARY COMPENSATION TABLE</b><font size="3" face="Times New Roman, Times, serif"><br>
    <b>For Fiscal Year Ended December 31, 2007</b></font></p>
  <p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
    following table provides fiscal 2007 compensation information for the Chief
    Executive Officer, Chief Financial Officer, and three other executive officers
    of the Company who were the most highly compensated in fiscal year 2007 (the
    "<b>Named Executive Officers</b>"). <br>
    <br>
    </font></p>
  </div>

<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="33%" align="LEFT" height="42">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Name
        and Principal Position<br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th width="5%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif"><b>Year</b></font>
      <hr NOSHADE>
    </th>
    <th width="10%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif"><b>Salary<br>
      ($)</b></font><font size="3">(1)</font>
      <hr NOSHADE>
    </th>
    <th width="10%" align="CENTER" height="42"><font size="3">Option Awards<br>
      ($)(3) </font>
      <hr NOSHADE>
    </th>
    <th width="10%" align="CENTER" height="42"><font size="3">Non-Equity Incentive
      Plan Compensation ($)(2)</font>
      <hr NOSHADE>
    </th>
    <th width="10%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif"><b>Total<br>
      ($)</b></font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills<br>
      <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>President
      and Chief Executive Officer and Director</font></td>
    <td align="RIGHT" height="17" width="5%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2007
        <br>
        2006 </font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">190,000<br>
        180,000</font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">68,844<br>
        72,227</font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">80,588<br>
        69,974</font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">339,432<br>
        322,201</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="15">&nbsp;</td>
    <td align="RIGHT" height="17" width="5%">&nbsp;</td>
    <td align="RIGHT" height="15" width="10%">&nbsp;</td>
    <td align="RIGHT" height="15" width="10%">&nbsp;</td>
    <td align="RIGHT" height="15" width="10%">&nbsp;</td>
    <td align="RIGHT" height="15" width="10%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="15"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford<br>
      <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Executive
      Vice President and Director</font></td>
    <td align="RIGHT" height="17" width="5%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2007
        <br>
        2006 </font></div>
    </td>
    <td align="RIGHT" height="15" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">175,000<br>
        165,000</font></div>
    </td>
    <td align="RIGHT" height="15" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">63,547<br>
        63,230</font></div>
    </td>
    <td align="RIGHT" height="15" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">40,768<br>
        31,963</font></div>
    </td>
    <td align="RIGHT" height="15" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">279,315<br>
        260,193</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="18">&nbsp;</td>
    <td align="RIGHT" height="17" width="5%">&nbsp;</td>
    <td height="18" width="10%">&nbsp;</td>
    <td height="18" width="10%">&nbsp;</td>
    <td height="18" width="10%">&nbsp;</td>
    <td height="18" width="10%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="18"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink (4)<br>
      <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Sr.
      Vice President Worldwide Sales and Marketing</font></td>
    <td align="RIGHT" height="17" width="5%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2007
        </font></div>
    </td>
    <td height="18" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        131,250</font></div>
    </td>
    <td height="18" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        29,813</font></div>
    </td>
    <td height="18" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">118,250
        </font></div>
    </td>
    <td height="18" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">279,313</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="13">&nbsp;</td>
    <td align="RIGHT" height="13" width="5%">&nbsp;</td>
    <td align="RIGHT" height="13" width="10%">&nbsp;</td>
    <td align="RIGHT" height="13" width="10%">&nbsp;</td>
    <td align="RIGHT" height="13" width="10%" valign="top">&nbsp;</td>
    <td align="RIGHT" height="13" width="10%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="30">
      <p><font size="3" face="Times New Roman, Times, serif">David W. Dunlap<br>
        </font><font size="3"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Vice
        President of Finance and Administration, <br>
        <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Chief
        Financial Officer and Secretary</font></p>
    </td>
    <td align="RIGHT" height="30" width="5%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2007
        <br>
        2006 </font></div>
    </td>
    <td align="RIGHT" height="30" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        170,000<br>
        160,000</font></div>
    </td>
    <td align="RIGHT" height="30" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">60,411<br>
        60,674</font></div>
    </td>
    <td align="RIGHT" height="30" width="10%" valign="top">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">40,962<br>
        34,906</font></div>
    </td>
    <td align="RIGHT" height="30" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">271,373<br>
        255,580</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17">&nbsp;</td>
    <td align="RIGHT" height="17" width="5%">&nbsp;</td>
    <td align="RIGHT" height="17" width="10%">&nbsp;</td>
    <td align="RIGHT" height="17" width="10%">&nbsp;</td>
    <td align="RIGHT" height="17" width="10%">&nbsp;</td>
    <td align="RIGHT" height="17" width="10%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17">
      <p><font size="3" face="Times New Roman, Times, serif">Timothy I. Miller<br>
        <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Vice
        President of Worldwide Operations</font></p>
    </td>
    <td align="RIGHT" height="17" width="5%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2007
        <br>
        2006 </font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">155,000<br>
        140,000</font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">59,800<br>
        63,318</font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">28,273<br>
        23,710</font></div>
    </td>
    <td align="RIGHT" height="17" width="10%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">243,073<br>
        227,028</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="6" height="35">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2">(1) Represents base salary as described under <i>Compensation
      Summary and Analysis - Elements of Executive Compensation</i>.<br>
      (2) Represents Variable Incentive Awards as described under <i>Compensation
      Summary and Analysis </i>-<i> Elements of Executive Compensation</i>.<br>
      </font><font size="2" face="Times New Roman, Times, serif">(3) Amounts shown
      do not reflect compensation actually received by the executive officer.
      Instead, the amounts shown are the compensation costs recognized for option
      awards vesting during fiscal 2007 for financial statement reporting purposes
      as determined pursuant to Statement of Financial Accounting Standards No.
      123(R), or FAS 123R.<br>
      (4) Mr. Zink's employment commenced on April 2, 2007. His non-equity incentive
      plan compensation includes $66,250 to defray moving, relocation and other
      costs associated with commencement of employment.</font></td>
  </tr>
</table>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">28<br>
  </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b>GRANTS
  OF PLAN-BASED AWARDS<br>
  For Fiscal Year Ended December 31, 2007 </b></font></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  following table shows for the fiscal year ended December 31, 2007 certain information
  regarding options granted to the Named Executive Officers. Options were granted
  as described under <i>Compensation Summary and Analysis</i> - <i>Elements of
  Executive Compensation</i> - <i>Long-term</i>, <i>Equity-Based Incentive Awards</i>
  and - <i>Equity Incentive Grant Policies</i>.<br>
</p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="59">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Name
        <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3">Grant<br>
      Date</font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3">All Other Option Awards: Number
      of Securities Underlying Options (#) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3">Exercise or Base Price of<br>
      Option Awards ($/share)</font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3">Grant Date Fair Value of Stock
      and Option Awards<br>
      ($)(1) </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills </font></td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2/26/2007
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">55,000
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.00
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">31,350
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="19"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford </font></td>
    <td align="RIGHT" height="19" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2/26/2007
        </font></div>
    </td>
    <td align="RIGHT" height="19" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">50,000
        </font></div>
    </td>
    <td align="RIGHT" height="19" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.00
        </font></div>
    </td>
    <td align="RIGHT" height="19" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">28,500
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="18"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink (2)</font></td>
    <td height="18" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">4/2/2007
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">300,000
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">0.93
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">159,000</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17">
      <p><font size="3" face="Times New Roman, Times, serif">David W. Dunlap </font></p>
    </td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2/26/2007
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">48,000
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.00
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">27,360
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="20">
      <p><font size="3" face="Times New Roman, Times, serif">Timothy I. Miller
        </font></p>
    </td>
    <td align="RIGHT" height="20" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2/26/2007
        </font></div>
    </td>
    <td align="RIGHT" height="20" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">40,000
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.00
        </font></div>
    </td>
    <td align="RIGHT" height="20" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">22,800
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="6" height="46">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2">(1) The value of option awards is based on the fair value
      as of the grant date of such award determined pursuant to FAS 123R, which
      was $0.57 per share for grants awarded on February 26, 2007 and $0.53 for
      the grant awarded on April 2, 2007. The exercise price for all options granted
      to the Named Executive Officers is 100% of the fair market value of the
      shares based on the closing market price for the Company's stock on the
      grant date. Regardless of whatever value is placed on a stock option on
      the grant date, the actual value of the option will depend on the market
      value of the Company's Common Stock at such date in the future when the
      option is exercised. <br>
      (2) Mr. Zink's employment commenced on April 2, 2007.</font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="center"><b>OUTSTANDING EQUITY AWARDS AT FISCAL 2007 YEAR-END</b></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  following table set forth certain information concerning outstanding equity
  awards held by the Named Executive Officers at the end of the fiscal year ended
  December 31, 2007:</p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="59"><font size="3"></font></th>
    <th align="CENTER" height="59" colspan="4"> <font size="3">Option Awards </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="100">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Name
        <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Number of Securities Underlying
      Unexercised Options Exercisable (#)(1) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Number of Securities Underlying
      Unexercised Options Unexercisable (#)(1)(2) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Option Exercise Price ($)(3)
      </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Option Expiration Date(4) </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills </font></td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">25,000<br>
        67,667<br>
        300,000<br>
        90,000<br>
        67,000<br>
        50,000<br>
        45,000<br>
        48,958 <br>
        68,750 <br>
        12,604 <br>
        10,313 </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        1,042<br>
        31,250<br>
        42,396<br>
        44,688</font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">0.69<br>
        0.56<br>
        3.375<br>
        1.06<br>
        1.29<br>
        0.76<br>
        0.73<br>
        3.20<br>
        1.50<br>
        1.17<br>
        1.00 </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">6/10/2008<br>
        6/16/2009<br>
        12/20/2010<br>
        9/27/2011<br>
        4/3/2012<br>
        11/27/2012<br>
        3/21/2013<br>
        2/3/2014<br>
        1/28/2015<br>
        2/17/2016<br>
        2/26/2017</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="7%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford </font></td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="3">8,333<br>
        39,967<br>
        100,000<br>
        75,000<br>
        50,000<br>
        34,000<br>
        35,000<br>
        46,510<br>
        61,875<br>
        11,458<br>
        9,375 </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3">0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        990<br>
        28,125<br>
        38,542<br>
        40,625</font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3">0.69<br>
        0.56<br>
        3.38<br>
        1.06<br>
        1.29<br>
        0.76<br>
        0.73<br>
        3.20<br>
        1.50<br>
        1.17<br>
        1.00</font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3">6/10/2008<br>
        6/16/2009<br>
        12/20/2010<br>
        9/27/2011<br>
        4/3/2012<br>
        11/27/2012<br>
        3/21/2013<br>
        2/3/2014<br>
        1/28/2015<br>
        2/17/2016<br>
        2/26/2017</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="7%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p><br>
</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">29<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp;</p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="59"><font size="3"></font></th>
    <th align="CENTER" height="59" colspan="4"> <font size="3">Option Awards </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="100">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Name
        <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Number of Securities Underlying
      Unexercised Options Exercisable (#)(1) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Number of Securities Underlying
      Unexercised Options Unexercisable (#)(1)(2) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Option Exercise Price ($)(3)
      </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3">Option Expiration Date(4) </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="28"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink (5)</font></td>
    <td align="RIGHT" height="28" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        0 </font></div>
    </td>
    <td align="RIGHT" height="28" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">300,000</font></div>
    </td>
    <td align="RIGHT" height="28" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">0.93
        </font></div>
    </td>
    <td align="RIGHT" height="28" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">4/2/2017
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="7%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3" face="Times New Roman, Times, serif">David
      W. Dunlap </font></td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">17,500<br>
        25,000<br>
        131,250<br>
        75,000<br>
        65,000<br>
        50,000<br>
        34,000<br>
        35,000<br>
        44,063<br>
        58,438<br>
        11,000<br>
        9,000</font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        0<br>
        937<br>
        26,563<br>
        37,000<br>
        39,000</font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">0.46<br>
        0.69<br>
        0.56<br>
        3.38<br>
        1.06<br>
        1.29<br>
        0.76<br>
        0.73<br>
        3.20<br>
        1.50<br>
        1.17<br>
        1.00</font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1/14/2008<br>
        6/10/2008<br>
        6/16/2009<br>
        12/20/2010<br>
        9/27/2011<br>
        4/3/2012<br>
        11/27/2012<br>
        3/21/2013<br>
        2/3/2014<br>
        1/28/2015<br>
        2/17/2016<br>
        2/26/2017</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="7%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
    <td align="RIGHT" height="17" width="16%"><font size="3"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="101"><font size="3" face="Times New Roman, Times, serif">Timothy
      I. Miller </font></td>
    <td align="RIGHT" height="101" width="7%">
      <div align="center"><font size="3">142,000<br>
        39,167<br>
        51,563<br>
        10,313<br>
        7,500 </font> </div>
    </td>
    <td align="RIGHT" height="101" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">0<br>
        833<br>
        23,438<br>
        34,688<br>
        32,500</font></div>
    </td>
    <td align="RIGHT" height="101" width="16%">
      <div align="center"><font size="3">0.73<br>
        3.20<br>
        1.50<br>
        1.17<br>
        1.00</font></div>
    </td>
    <td align="RIGHT" height="101" width="16%">
      <div align="center"><font size="3">3/21/2013<br>
        2/3/2014<br>
        1/28/2015<br>
        2/17/2016<br>
        2/26/2017</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="6" height="46">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2">(1) Options were granted as described under Compensation
      Summary and Analysis - Elements of Executive Compensation - Long-term, Equity-Based
      Incentive Awards and - Equity Incentive Grant Policies. The vesting period
      and vesting start date were established by the Compensation Committee. Shares
      unexercisable were not vested as December 31, 2007.<br>
      (2) Grant dates and vesting period information for all grants not fully
      vested as of December 31, 2007 are as follows:</font></td>
  </tr>
</table>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <td width="31%" align="LEFT" height="19"><font size="2"></font></td>
    <td width="27%" align="CENTER" height="19"><font size="2"></font></td>
    <td width="21%" align="CENTER" height="19"><font size="2"></font></td>
    <td width="21%" align="CENTER" height="19"><font size="2"></font></td>
  </tr>
  <tr valign="BOTTOM">
    <td width="31%" align="LEFT" height="19">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">Grant
        Date </font> </div>
    </td>
    <td width="27%" align="CENTER" height="19">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">Expiration
        Date </font> </div>
    </td>
    <td width="21%" align="CENTER" height="19">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">Vesting
        Start Date </font> </div>
    </td>
    <td width="21%" align="CENTER" height="19">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">Months
        to fully vest </font> </div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="31%" height="16"><font size="2">2/3/2004</font></td>
    <td align="RIGHT" height="16" width="27%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">2/3/2014
        </font></div>
    </td>
    <td align="RIGHT" height="16" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">1/1/2004
        </font></div>
    </td>
    <td align="RIGHT" height="16" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="31%"><font size="2" face="Times New Roman, Times, serif">1/28/2005
      </font></td>
    <td align="RIGHT" height="17" width="27%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">1/28/2015
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">1/1/2006
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="31%" height="11">
      <p><font size="2">2/17/2006</font></p>
    </td>
    <td align="RIGHT" height="11" width="27%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">2/17/2016
        </font></div>
    </td>
    <td align="RIGHT" height="11" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">1/1/2007</font></div>
    </td>
    <td align="RIGHT" height="11" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="31%"><font size="2" face="Times New Roman, Times, serif">2/26/2007
      </font></td>
    <td height="18" width="27%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">2/26/2017
        </font></div>
    </td>
    <td height="18" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">3/1/2007
        </font></div>
    </td>
    <td height="18" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="31%"><font size="2" face="Times New Roman, Times, serif">4/2/2007
      </font></td>
    <td height="18" width="27%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">4/2/2017
        </font></div>
    </td>
    <td height="18" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">4/2/2007
        </font></div>
    </td>
    <td height="18" width="21%">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="7" height="52"> <font size="2"><br>
      (3) Exercise price is the closing price of the Company's Common Stock on
      the date of grant as reported on the NASDAQ Global Markets. <br>
      (4) Options expire ten years from the date of grant provided that the executive
      continues employment with the Company. <br>
      (5) Mr. Zink commenced employment on April 2, 2007.</font></td>
  </tr>
</table>
<br>
<br>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">30<br>
  </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><b>OPTION EXERCISES AND STOCK VESTED</b><br>
  <b>For Fiscal Year Ended December 31, 2007 </b></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  following tables show for the fiscal year ended December 31, 2007 certain information
  regarding options exercised by the Named Executive Officers:</p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="33%" align="LEFT" height="31"><font size="3"></font></th>
    <th colspan="2" align="CENTER" height="15"><font size="3">Option Awards</font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr valign="BOTTOM">
    <th width="33%" align="LEFT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Name
        <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3">Number of Shares<br>
      Acquired on Exercise <br>
      (#) </font>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3">Value Realized on
      <br>
      Exercise<br>
      ($)(1) </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="14"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills <br>
      </font></td>
    <td height="14">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
    <td height="14">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="0"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford<br>
      </font></td>
    <td height="0">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
    <td height="0">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="2"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink<br>
      </font></td>
    <td height="2">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">-
        </font></div>
    </td>
    <td height="2">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">-
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="12">
      <p><font size="3">David W. Dunlap</font></p>
    </td>
    <td height="12">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
    <td height="12">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="14">
      <p><font size="3">Timothy I. Miller</font></p>
    </td>
    <td height="14">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
    <td height="14">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td height="61" colspan="3">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2">(1) The value realized equals the difference between the
      option exercise price and the fair market value of the Company's Common
      Stock on the date of exercise, multiplied by the number of shares for which
      the option was exercised.</font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="center"><b>Equity Compensation Plan Information</b></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  following table provides information as of December 31, 2007 about the Common
  Stock that may be issued under all equity compensation plans of the Company.</p>
<p align="left">&nbsp;</p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b><br>
        </b></font> </div>
    </th>
    <th align="CENTER"><font size="3">Number of securities to be issued upon exercise
      of outstanding options </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER"><font size="3">Weighted-average<br>
      exercise price of<br>
      outstanding options </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER"><font size="3">Number of securities<br>
      remaining available for<br>
      future issuance under<br>
      equity compensation plans</font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td width="33%"><font size="3" face="Times New Roman, Times, serif">Equity
      compensation plans approved by security holders (1) </font></td>
    <td align="RIGHT" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">8,922,490
        </font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$1.49
        </font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">839,721
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td width="33%"><font size="3" face="Times New Roman, Times, serif">Equity
      compensation plans not approved by security holders (2)</font></td>
    <td align="RIGHT" width="7%">
      <div align="center"><font size="3">1,072,751 </font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3">$2.78 </font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font><font size="3">
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td width="33%"><font size="3" face="Times New Roman, Times, serif">Total
      </font></td>
    <td align="RIGHT" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">9,995,241
        </font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$1.63
        </font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">839,721
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td height="46" colspan="4">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2">(1) Includes the 1995 Stock Plan and its successor, the 2004
      Equity Incentive Plan. Pursuant to an affirmative vote by security holders
      in June 2004, an annual increase in the number of shares authorized under
      the 2004 Equity Incentive Plan is added on the first day of each fiscal
      year equal to the lesser of (a) 2,000,000 shares, (b) four percent of the
      outstanding shares on that date, or (c) a lesser amount as determined by
      the Board of Directors. A total of 1,279,584 shares became available for
      grant from the 2004 Equity Incentive Plan on January 1, 2008, in addition
      to those set forth in the table above.<br>
      (2) Consists of the 1999 Stock Plan.</font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">31<br>
  </font></p>
<hr NOSHADE>
<p align="center"><br>
  <b>Post Employment and Change-In-Control Compensation </b></p>
<p align="left"><b><br>
  Change of Control and Severance Agreements </b></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>In
  February 1998, the Company adopted a bonus plan pursuant to which a bonus pool
  in the amount of up to 10 percent of any consideration payable by a buyer in
  any acquisition of the Company is to be allocated to the executive officers
  and such other employees as the Board of Directors determines in its discretion.</p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>In
  December 2005, the Company renewed separate employment agreements with Messrs.
  Kevin J. Mills, David W. Dunlap, Micheal L. Gifford, Robert J. Miller, Tim I.
  Miller, and Leonard L. Ott (each an "Executive"). Similar agreements were made
  with Messrs. Robert C. Zink and Thomas L. Noggle when they commenced employment
  during 2007. The agreements expire on December 31, 2008 and are expected to
  be renewed. The agreements set forth the base salaries for each Executive and
  provide that if the Company terminates the Executive's employment without cause,
  the Company will pay the Executive (i) six months' base salary regardless of
  whether he secures other employment during those six months, (ii) health insurance
  until the earlier of the date of the Executive's eligibility for the health
  insurance benefits provided by another employer or the expiration of six months,
  (iii) the full bonus amount to which he would have been entitled for the first
  quarter following termination and one-half of such bonus amount for the second
  quarter following termination, and (iv) certain other benefits including the
  ability to purchase at book value certain items of the Company's property purchased
  by the Company for the Executive's use, which may include a personal computer,
  a cellular phone and other similar items. The exercise period for vested stock
  options may also be extended up to a period not to exceed one year based on
  formulas in the employment agreements.</p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>Additionally,
  under the1999 Stock Plan and the 2004 Equity Incentive Plan (the "Stock Option
  Plans"), the rights of all optionees (including executive officers) to purchase
  stock immediately vest, upon a change of control of the Company, become immediately
  vested and be fully exercisable if such options are not assumed by the acquiring
  entity.</p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>Payments
  to be made to each of the Named Executive Officers following severance are estimated
  as follows:</p>
<table width="100%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="176" align="LEFT">
      <div align="center"><font size="2" face="Times New Roman, Times, serif"><b>Compensation
        and Benefits <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th width="2%"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></th>
    <th width="12%" align="CENTER">
      <div align="center"><font size="2">Voluntary Resignation </font></div>
      <hr NOSHADE align="center">
    </th>
    <th width="2%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </th>
    <th width="12%" align="CENTER">
      <div align="center"><font size="2">For Cause (1) </font></div>
      <hr NOSHADE align="center">
    </th>
    <th width="2%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </th>
    <th width="12%" align="CENTER">
      <div align="center"><font size="2">For Good Reason(2) </font></div>
      <hr NOSHADE align="center">
    </th>
    <th width="2%" align="CENTER">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </th>
    <th width="12%" align="CENTER">
      <div align="center"><font size="2" face="Times New Roman, Times, serif"><b>Involuntary
        Without Cause(2)</b></font> </div>
      <hr NOSHADE align="center">
    </th>
    <th width="2%">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </th>
    <th width="12%" align="CENTER">
      <div align="center"><font size="2" face="Times New Roman, Times, serif"><b>Involuntary
        or For Good Reason After<br>
        Change-in- Control(2) </b></font> </div>
      <hr NOSHADE align="center">
    </th>
    <th width="2%" align="CENTER">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </th>
    <th width="12%" align="CENTER">
      <div align="center"><font size="2">Due to Death or<br>
        Disability(2) </font></div>
      <hr NOSHADE align="center">
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif">Kevin
      J. Mills</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td width="12%" align="RIGHT" height="0"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td width="12%" align="RIGHT" height="0"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td width="12%" align="RIGHT" height="0"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Base
      Salary (3)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$95,000</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$95,000</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$95,000</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$95,000</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Variable
      Incentive(4)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$37,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$37,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$37,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$37,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Stock
      Options (5)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">HealthCare
      Benefits(6)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Other
      Perquisites (7)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif">Micheal
      L. Gifford</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Base
      Salary (3)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Variable
      Incentive(4)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Stock
      Options (5)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">HealthCare
      Benefits(6)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Other
      Perquisites (7)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif">Robert
      C. Zink</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Base
      Salary (3)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$87,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Variable
      Incentive(4)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$24,375</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$24,375</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$24,375</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$24,375</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Stock
      Options (5)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">HealthCare
      Benefits(6)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Other
      Perquisites (7)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif">David
      W. Dunlap</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td height="0" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Base
      Salary (3)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$85,000</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$85,000</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$85,000</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$85,000</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Variable
      Incentive(4)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$18,750</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Stock
      Options (5)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">HealthCare
      Benefits(6)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Other
      Perquisites (7)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="18"><font size="2"></font></td>
    <td width="2%" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td height="18" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td height="18" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td width="2%" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="18"><font size="2" face="Times New Roman, Times, serif">Timothy
      I. Miller</font></td>
    <td width="2%" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td height="18" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td height="18" width="2%"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td width="2%" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
    <td width="2%" align="RIGHT" height="18"><font size="2"></font></td>
    <td align="RIGHT" height="18" width="12%"><font size="2"></font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Base
      Salary (3)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$77,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$77,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$77,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$77,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Variable
      Incentive(4)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$13,125</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$13,125</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$13,125</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2">$13,125</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Stock
      Options (5)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">HealthCare
      Benefits(6)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font size="2"> $2,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="176" height="0"><font size="2" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font size="2">Other
      Perquisites (7)</font></td>
    <td width="2%" height="0"><font size="2"></font></td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td height="0" width="2%">
      <div align="center"><font size="3"><font size="2"></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
    <td width="2%" align="RIGHT" height="0">
      <div align="center"><font size="2"><font size="3"><font size="2"></font></font></font></div>
    </td>
    <td align="RIGHT" height="0" width="12%">
      <div align="center"><font face="Times New Roman, Times, serif" size="2">-</font></div>
    </td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td height="175">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2">(1) Cause is defined in each Executive's Employment Contract
      as gross misconduct or fraud, misappropriation of the Company's proprietary
      information, or willful and continuing breach of duties following notice
      and a cure period. <br>
      (2) All other reasons for termination except for cause are considered covered
      under the terms of the Employment Contract.<br>
      (3) Base salary is continued for six months from the date of termination
      for reasons other than for cause or voluntary resignation.<br>
      (4) Except in the cases of termination for cause or voluntary resignation,
      scheduled variable incentive payments are paid equal to 100% of entitlement
      in the quarter of termination and 50% of entitlement in the following quarter.
      <br>
      (5) Except in the cases of termination for cause or voluntary resignation,
      stock options vested as of the date of termination may be exercised for
      a period of up to one year based on formulas in the employment contract.
      In the event of a change in control where stock options are not assumed
      by an acquiring entity, all options granted and outstanding become vested
      and exercisable. In the event of termination for cause or voluntary resignation,
      stock options vested as of the date of termination may be exercised for
      a period of 90 days following the termination date.<br>
      (6) Except in the cases of termination for cause or voluntary resignation,
      healthcare benefits are continued up to the earlier of six months or the
      Executive securing other employment that includes benefits.<br>
      (7) There are no perquisites in the compensation packages of any of our
      executive officers.</font> </td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">32<br>
  </font></p>
<hr NOSHADE>
<p align="left"><b>Limitation of Liability and Indemnification Matters </b></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>Pursuant
  to the Delaware General Corporation Law, the Company has adopted provisions
  in its Amended and Restated Certificate of Incorporation that eliminate the
  personal liability of the directors to the Company or the stockholders for monetary
  damages for breach of the directors' fiduciary duties in certain circumstances.
  The Company's bylaws require the Company to indemnify the Company's directors
  and officers and authorize the Company to indemnify its employees and other
  agents, to the fullest extent permitted by law.</p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  Company has entered into indemnification agreements with each of its current
  directors and officers that provide for indemnification to the fullest extent
  permitted by Delaware law, including circumstances in which indemnification
  and the advancement of expenses are discretionary under Delaware law. </p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  Company believes that the limitation of liability provisions in its Amended
  and Restated Certificate of Incorporation and the indemnification agreements
  will enhance its ability to continue to attract and retain qualified individuals
  to serve as directors and officers. There is no pending litigation or proceeding
  involving a director, officer or employee to which the indemnification agreements
  would apply.</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">33<br>
  </font></p>
<hr NOSHADE>
<p align="left"><br>
</p>
<p align="center"> <font size="3" face="Times New Roman, Times, serif"><b>CORPORATE
  GOVERNANCE</b><br>
  </font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  Company and its Board of Directors are committed to high standards of corporate
  governance as an important component in building and maintaining stockholder
  value. To this end, the Company regularly reviews its corporate governance policies
  and practices to ensure that its policies are consistent with such standards.
  The Company closely monitors guidance issued or proposed by the SEC, the PCAOB,
  listing standards of NASDAQ and provisions of the Sarbanes-Oxley Act. As a result
  of review of these matters, as well as the emerging best practices of other
  companies, the Company has implemented the following:</p>
<p><i>Executive Compensation Authority</i> </p>
<ul>
  <ul>
    <ul type="disc">
      <li>
        <p>The Compensation Committee of the Board of Directors approves all compensation
          plans and amounts for the executive officers of the Company following
          consultation with management;<br>
        </p>
        <ul>
        </ul>
      </li>
      <li> The Compensation Committee reviews and approves annual salary increases
        for all other employees of the Company upon the recommendation of management;<br>
        <br>
      </li>
      <li>The Compensation Committee approves all stock option grants upon the
        recommendation of management except director grants, which are approved
        by the full Board of Directors. </li>
    </ul>
  </ul>
</ul>
<p><font size="3" face="Times New Roman, Times, serif"><i>Director Independence</i></font></p>
<ul>
  <ul>
    <ul type="disc">
      <li>The Board of Directors has confirmed that a majority of the Company's
        directors are independent as defined by current SEC and NASDAQ regulations.<br>
        <br>
      </li>
      <li>The Company's independent directors hold formal meetings convened separately
        from management and chaired by an independent director.<br>
        <br>
      </li>
      <li>The Audit, Compensation and Nominating Committees consist solely of
        independent directors.</li>
    </ul>
  </ul>
</ul>
<p><i>Audit Committee</i> </p>
<ul>
  <ul>
    <ul type="disc">
      <li>All Audit Committee members possess the required level of financial
        literacy.<br>
        <br>
      </li>
      <li>Mr. Bass, a member of the Audit Committee, possesses the qualifications
        of an "audit committee financial expert."<br>
        <br>
      </li>
      <li>The Audit Committee charter formalizes and makes explicit the following:<br>
        <br>
        <ul type="circle">
          <li>The Audit Committee's ability to retain independent consultants
            and experts as it sees fit, at Company expense;<br>
            <br>
          </li>
          <li>The Audit Committee's authority to appoint, review and assess the
            performance of the Company's independent auditors;<br>
            <br>
          </li>
          <li>The Audit Committee's ability to hold regular executive sessions
            with the Company's independent auditors, the Company's Chief Financial
            Officer and Controller, and other Company officers directly, as it
            considers appropriate;<br>
            <br>
          </li>
          <li>The requirement that the Audit Committee review and approve in advance
            non-audit services by the Company's independent auditors, as well
            as related party transactions;<br>
            <br>
          </li>
          <li>The Audit Committee's duty to maintain a formal complaint monitoring
            procedure ("whistleblower" policy) to enable confidential and anonymous
            reporting to the Audit Committee; and<br>
            <br>
          </li>
          <li>The Audit Committee's authority over the independent auditors' rotation
            policy.</li>
        </ul>
      </li>
    </ul>
  </ul>
  <p>&nbsp;</p>
</ul>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">34<br>
  </font></p>
<hr NOSHADE>
<p><br>
  <i>Other Governance Matters</i> </p>
<ul>
  <ul>
    <ul type="disc">
      <li>The Company has a formal Code of Business Conduct and Ethics that applies
        to all officers, directors and employees.<br>
        <br>
      </li>
      <li>The Company has a requirement that any waiver or amendment to the Code
        of Business Conduct and Ethics involving a director or officer be reviewed
        by the Nominating Committee and disclosed to the Company's stockholders.<br>
        <br>
      </li>
      <li>The Company has a Compensation Committee charter and Nominating Committee
        charter.<br>
        <br>
      </li>
      <li>The Company has an Insider Trading Policy, including control procedures
        to comply with current SEC and NASDAQ regulations.<br>
        <br>
      </li>
      <li><i></i><i></i>The Company has a policy that the Board of Directors review
        its own performance on an annual basis.<br>
        <br>
      </li>
      <li>The Company prohibits loans to its officers and directors.</li>
    </ul>
  </ul>
</ul>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>More
  details on the Company's corporate governance initiatives, including copies
  of its Code of Business Conduct and Ethics and the committee charters can be
  found in the "Corporate Governance" section of the Company's web site at http://www.mkr-group.com/SCKT/board_committee.html.</p>
<p><i>Policy for Director Recommendations and Nominations</i></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  Nominating Committee considers candidates for board membership suggested by
  the Board of Directors, management and the Company's stockholders. It is the
  policy of the Nominating Committee to consider recommendations for candidates
  to the Board of Directors from stockholders holding no less than five percent
  of the total outstanding shares of the Company. Stockholders must have held
  such Common Stock continuously for at least 12 months prior to the date of the
  submission of the recommendation. The Nominating Committee will consider persons
  recommended by the Company's stockholders in the same manner as nominees recommended
  by members of the Board of Directors or management.</p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>A
  stockholder who desires to recommend a candidate for election to the Board of
  Directors should direct the recommendation in written correspondence by letter
  to the Company, addressed to:</p>
<p>&nbsp;</p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td width="48%" height="41"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="70%" height="41"><font size="3" face="Times New Roman, Times, serif">Chairman
      of the Nominating Committee c/o Corporate Secretary<br>
      Socket Communications, Inc. dba Socket Mobile, Inc.<br>
      39700 Eureka Drive<br>
      Newark, CA 94560 <br>
      </font></td>
  </tr>
</table>
<p>The notice must include:</p>
<ul>
  <ul>
    <ul type="disc">
      <li><i></i><i></i>the candidate's name, home and business contact information;<br>
        <br>
      </li>
      <li>detailed biographical data and relevant qualifications;<br>
        <br>
      </li>
      <li>a signed letter from the candidate confirming his or her willingness
        to serve;<br>
        <br>
      </li>
      <li>information regarding any relationships between the candidate and the
        Company within the last three years; and<br>
        <br>
      </li>
      <li><i></i><i></i>evidence of the required ownership of Common Stock by
        the recommending stockholder.</li>
    </ul>
  </ul>
</ul>
<p>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp</p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">35<br>
  </font></p>
<hr NOSHADE>
<p><br>
  <font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>In
  addition, a stockholder may nominate a person directly for election to the Board
  of Directors at the annual meeting of the Company's stockholders, provided the
  stockholder complies with the requirements set forth in the Company's bylaws
  and the rules and regulations of the SEC related to stockholder proposals. The
  process for properly submitting a stockholder proposal, including a proposal
  to nominate a person for election to the Board of Directors at an annual meeting,
  is described above in the section entitled "Deadline for Receipt of Stockholder
  Proposals to be Included in the Company's Proxy Materials."<br>
  <br>
  <font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>Where
  the Nominating Committee has either identified a prospective nominee or determines
  that an additional or replacement director is required, the Nominating Committee
  may take such measures that it considers appropriate in connection with its
  evaluation of a director candidate, including candidate interviews, inquiry
  of the person or persons making the recommendation or nomination, engagement
  of an outside search firm to gather additional information, or reliance on the
  knowledge of the members of the committee, the Board of Directors or management.
  In its evaluation of director candidates, including the members of the Board
  of Directors eligible for re-election, the Nominating Committee considers a
  number of factors, including the following:</p>
<ul>
  <ul>
    <ul type="disc">
      <li>The current size and composition of the Board of Directors and the needs
        of the Board of Directors and the respective committees of the Board of
        Directors.<br>
        <br>
      </li>
      <li>Such factors as judgment, independence, character and integrity, area
        of expertise, diversity of experience, length of service and potential
        conflicts of interest.<br>
        <br>
      </li>
      <li>Such other factors as the Nominating Committee may consider appropriate.</li>
    </ul>
  </ul>
</ul>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  Nominating Committee has also specified the following minimum qualifications
  that it believes must be met by a nominee for a position on the Board of Directors:</p>
<ul>
  <ul>
    <ul type="disc">
      <li>The highest personal and professional ethics and integrity.<br>
        <br>
      </li>
      <li>Proven achievement and competence in the nominee's field and the ability
        to exercise sound business judgment.<br>
        <br>
      </li>
      <li>Skills that are complementary to those of the existing members of the
        Board of Directors.<br>
        <br>
      </li>
      <li>The ability to assist and support management and make significant contributions
        to the Company's success.<br>
        <br>
      </li>
      <li>An understanding of the fiduciary responsibilities that are required
        of a member of the Board of Directors and the commitment of time and energy
        necessary to carry out those responsibilities diligently.</li>
    </ul>
  </ul>
</ul>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>In
  connection with its evaluation, the Nominating Committee determines whether
  it will interview potential nominees. After completing the evaluation and interview,
  the Nominating Committee makes a recommendation to the full Board of Directors
  as to the persons who should be nominated to the board, and the Board of the
  Directors determines the nominees after considering the recommendation and report
  of the Nominating Committee.</p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">36<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp;</p>
<p><i>Stockholder Communications to Directors</i></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>Stockholders
  may communicate directly with the members of the Board of Directors by sending
  an email to <i>board@socketmobile.com</i>. The Company's Secretary monitors
  these communications and will ensure that summaries of all received messages
  are provided to the Board of Directors at its regularly scheduled meetings or
  directly to the Chairman of the Board if the matter is deemed to be urgent and
  to require the immediate attention of the Board. Where the nature of a communication
  warrants, Mr. Bass, Chairman of the Board, may decide to obtain the more immediate
  attention of the appropriate committee of the Board of Directors or a non-management
  director, or the Company's management or independent advisors, as appropriate.
  Mr. Bass will also determine whether any response to a stockholder communication
  is necessary or warranted and whether further action is required.<br>
  <br>
  <i>Director Independence</i> </p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>In
  January 2008, the Board of Directors undertook a review of the independence
  of its directors and considered whether any director had a material relationship
  with the Company or its management that could compromise his ability to exercise
  independent judgment in carrying out his responsibilities. As a result of this
  review, the Board of Directors affirmatively determined that all of the directors
  of the Company, with the exception of Mr. Mills, the Company's President and
  Chief Executive Officer, and Mr. Gifford, the Company's Executive Vice President,
  are independent of the Company and its management under the corporate governance
  standards of NASDAQ.<br>
  <i><br>
  Code of Business Conduct and Ethics</i> </p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  Board of Directors has a Code of Business Conduct and Ethics that is applicable
  to all employees, officers and directors of the Company, including the Company's
  senior financial and executive officers. The Code of Business Conduct and Ethics
  is intended to deter wrongdoing and promote ethical conduct among the Company's
  directors, executive officers and employees. The Code of Business Conduct and
  Ethics is available on the Company's website at http://www.mkr-group.com/SCKT/board_committee.html.
  The Company will also post any amendments to or waivers from the Code of Business
  Conduct and Ethics on its website.</p>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">37<br>
  </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b>REPORT
  OF THE COMPENSATION COMMITTEE</b><br>
  <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
  Compensation Committee has reviewed and discussed the Compensation Discussion
  and Analysis with our management. </font></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>Based
  on the Compensation Committee's review and discussion noted above, the Compensation
  Committee recommended to the Board of Directors that the Compensation Discussion
  and Analysis be included in this Proxy Statement on Schedule 14A.</p>
<p align="left">&nbsp&nbsp&nbsp&nbsp&nbsp<font size="3" face="Times New Roman, Times, serif">
  </font></p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td width="48%" height="41"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="2%" height="41"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="50%" height="41"><font size="3" face="Times New Roman, Times, serif"><br>
      COMPENSATION COMMITTEE<br>
      </font></td>
  </tr>
  <tr valign="TOP">
    <td width="48%" height="25"><font size="3" face="Times New Roman, Times, serif">Dated:
      March 10, 2008</font></td>
    <td width="2%" height="25"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="50%" height="25"><font size="3" face="Times New Roman, Times, serif">Enzo
      Torresi &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Peter Sealey</font></td>
  </tr>
</table>
<p><font size="3" face="Times New Roman, Times, serif"><br>
  </font></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b>COMPENSATION
  COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION</b><br>
  </font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>None
  of the members of the Compensation Committee has ever been an officer or employee
  of the Company. No executive officer of the Company serves as a member of the
  board or compensation committee of any entity that had one or more executive
  officers serving as a member of the Company's Board of Directors or Compensation
  Committee.</font></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b>REPORT
  OF THE AUDIT COMMITTEE </b><br>
  </font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
  Board of Directors maintains an Audit Committee comprised of three of the Company's
  outside directors. The Audit Committee oversees the Company's financial processes
  on behalf of the Board of Directors, although management has the primary responsibility
  for preparing the financial statements and maintaining the Company's financial
  reporting process including the system of internal controls. In fulfilling its
  oversight responsibilities, the Audit Committee reviewed with management the
  audited financial statements in the Annual Report to the Securities and Exchange
  Commission on Form 10-K for the year ended December 31, 2007, including discussing
  the quality of the accounting principles, the reasonableness of significant
  judgments and the clarity of disclosures in the financial statements. The Board
  has a written charter for the Audit Committee, a copy of which is posted on
  the Company's website at http://www.mkr-group.com/SCKT/board_committee.html.<br>
  <br>
  <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font><font size="3" face="Times New Roman, Times, serif">The
  Audit Committee reviewed the 2007 financial statements with the Company's independent
  auditors, who are responsible for expressing an opinion on the conformity of
  the financial statements with generally accepted accounting principles, as well
  as their judgment as to the quality, not just the acceptability, of the Company's
  accounting principles. The Audit Committee also discussed such other matters
  as the auditors are required to discuss with the Committee under generally accepted
  auditing standards, including Statement on Auditing Standards No. 61. In addition,
  the Audit Committee discussed with the independent auditors the auditors' independence
  from management and the Company, including the matters in the written disclosures
  and the letter from the independent auditors required by the Independence Standards
  Board, Standard No. 1.<br>
  <br>
  </font><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font><font size="3" face="Times New Roman, Times, serif"></font>The
  Audit Committee also discussed with the Company's independent auditors the overall
  scope and results of their audits of the financial statements including their
  review of internal controls. The Audit Committee met periodically with the independent
  auditors, with and without management present, to discuss the results of their
  examination, their evaluation of the Company's internal controls, and the overall
  quality of the Company's financial reporting. The Audit Committee held two meetings
  with the auditors in regards to their audits of the annual financial statements
  for the year ended December 31, 2007. In addition, a conference call between
  members of the Audit Committee, the auditors and management was held each quarter
  during fiscal 2007 to review quarterly financial reports prior to their issue.</p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp</i></i>
  <br>
  <br>
  </font><font face="Times New Roman, Times, serif" size="3">38<br>
  </font></p>
<hr NOSHADE>
<p><font size="3" face="Times New Roman, Times, serif"><br>
  <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>In reliance
  on the reviews and discussions referred to above, the Audit Committee recommended
  to the Board of Directors, and the Board of Directors has approved, that the
  audited financial statements be included in the Company's Annual Report on Form
  10-K for the year ended December 31, 2007. The Audit Committee also approved
  the appointment of Moss Adams LLP as the Company's independent auditors for
  the year ending December 31, 2008.</font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
  foregoing report has been submitted by the undersigned in our capacity as members
  of the Audit Committee of the Board of Directors.<br>
  </font></p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td width="48%" height="52"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="2%" height="52"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="50%" height="52"><font size="3" face="Times New Roman, Times, serif"><br>
      AUDIT COMMITTEE<br>
      </font></td>
  </tr>
  <tr valign="TOP">
    <td width="48%"><font size="3" face="Times New Roman, Times, serif"><br>
      Dated: March 10, 2008</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="50%"><font size="3" face="Times New Roman, Times, serif"><br>
      Charlie Bass<br>
      Leon Malmed<br>
      Gianluca Rattazzi</font></td>
  </tr>
</table>
<p align="center"><font size="3" face="Times New Roman, Times, serif"> <br>
  <b>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</b><br>
  </font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>There
  were no transactions during the last fiscal year to which the Company has been
  a party, in which the amount involved exceeded $120,000 and in which any director,
  executive officer or beneficial holder of more than five percent of the Company's
  outstanding capital stock had or will have a direct or indirect material interest.
  </font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>See
  also <i>Executive Compensation - Change of Control and Severance Agreements</i>.
  </font></p>
<p><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>Related
  party transactions, regardless of amount, to which the Company has been a party
  in which any director, executive officer or beneficial holder of more than five
  percent of the Company's outstanding capital stock would have a direct or indirect
  material interest requires the prior approval of the Audit Committee or, in
  the case of directors, the full Board of Directors. There were no related party
  transactions during fiscal year 2007.<br>
  <br>
</p>
<p align="center"><b>OTHER MATTERS</b></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font>The
  Company knows of no other matters to be submitted at the 2008 Annual Meeting.
  If any other matters properly come before the 2008 Annual Meeting, it is the
  intention of the persons named in the enclosed form of proxy to vote the shares
  they represent as the Board of Directors may recommend. It is important that
  your shares be represented at the meeting, regardless of the number of shares
  that you hold. Please complete, date, execute and return, at your earliest convenience,
  the accompanying proxy card in the envelope that has been enclosed.</p>
<p align="left">&nbsp;</p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td width="48%" height="52"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="2%" height="52"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="50%" height="52"><font size="3" face="Times New Roman, Times, serif"><br>
      THE BOARD OF DIRECTORS<br>
      </font></td>
  </tr>
  <tr valign="TOP">
    <td width="48%"><font size="3" face="Times New Roman, Times, serif"><br>
      Dated: March 10, 2008</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="50%"><font size="3" face="Times New Roman, Times, serif"><br>
      </font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">39<br>
  </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"> <b>This
  Proxy is solicited on behalf of the Board of Directors of Socket Communications,
  Inc.</b></font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"> <b>2008
  ANNUAL MEETING OF STOCKHOLDERS</b><br>
  </font></p>
<p>The undersigned stockholder of SOCKET COMMUNICATIONS, INC., a Delaware corporation,
  DBA Socket Mobile, Inc., hereby acknowledges receipt of the Notice of Annual
  Meeting of Stockholders and Proxy Statement, each dated March 10, 2008, and
  hereby appoints Kevin J. Mills and David W. Dunlap, and each 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 SOCKET COMMUNICATIONS, INC. to be held on Wednesday,
  April 23, 2008 at 9:00 a.m. local time, at the Company's headquarters at 39700
  Eureka Drive, Newark, California 94560, and at any adjournment or adjournments
  thereof, and to vote all shares of Common Stock which the undersigned would
  be entitled to vote if then and there personally present, on the matters set
  forth below:</p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td width="2%"><font size="3">1.</font></td>
    <td width="1%"><font size="3">&nbsp;</font></td>
    <td colspan=5><font size="3" face="Times New Roman, Times, serif">ELECTION
      OF EIGHT DIRECTORS.</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3"><br>
      &nbsp;</font></td>
    <td colspan=5><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>FOR</b> all nominees
      listed&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Withhold
      Authority to vote for ALL Nominees Listed</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3"><br>
      &nbsp;</font></td>
    <td colspan=5><font size="3" face="Times New Roman, Times, serif"><br>
      Nominees: Charlie Bass; Kevin J. Mills; Micheal L. Gifford; Leon Malmed;
      Thomas O. Miller; Gianluca Rattazzi; Peter Sealey; Enzo Torresi</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3"><br>
      &nbsp;</font></td>
    <td colspan=5 valign="bottom"><font face="Times New Roman, Times, serif" size="3"><b>If
      you wish to withhold authority to vote for any individual nominee, strike
      a line through that nominee's name in the list below:</b></font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3"><br>
      &nbsp;</font></td>
    <td colspan=5><font size="3" face="Times New Roman, Times, serif"><br>
      Charlie Bass; Kevin J. Mills; Micheal L. Gifford; Leon Malmed; Thomas O.
      Miller; Gianluca Rattazzi; Peter Sealey; Enzo Torresi</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%" height="42"><font size="3"><br>
      2.</font></td>
    <td width="1%" height="42"><font size="3"><br>
      &nbsp;</font></td>
    <td colspan=5 height="42"><font size="3" face="Times New Roman, Times, serif"><br>
      PROPOSAL TO RATIFY THE APPOINTMENT OF MOSS ADAMS LLP AS INDEPENDENT PUBLIC
      ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2008.
      </font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="27%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>FOR</b></font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="32%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>AGAINST</b></font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="36%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>ABSTAIN</b></font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%" height="42"><font size="3"><br>
      3.</font></td>
    <td width="1%" height="42"><font size="3"><br>
      &nbsp;</font></td>
    <td colspan=5 height="42"><font size="3" face="Times New Roman, Times, serif"><br>
      PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
      TO EFFECT A CORPORATE NAME CHANGE.</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="27%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>FOR</b></font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="32%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>AGAINST</b></font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="36%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>ABSTAIN</b></font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%" height="42"><font size="3"><br>
      4.</font></td>
    <td width="1%" height="42"><font size="3"><br>
      &nbsp;</font></td>
    <td colspan=5 height="42"><font size="3" face="Times New Roman, Times, serif"><br>
      PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
      TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK AT A RATIO
      WITHIN THE RANGE FROM ONE-FOR-5 TO ONE-FOR-10, TOGETHER WITH A CORRESPONDING
      REDUCTION IN THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK
      AND CAPITAL STOCK, AT ANY TIME PRIOR TO DECEMBER 31, 2008. </font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3"><br>
      &nbsp;</font></td>
    <td width="27%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>FOR</b></font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="32%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>AGAINST</b></font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="36%"><font size="3" face="Times New Roman, Times, serif"><br>
      /&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>ABSTAIN</b></font></td>
  </tr>
</table>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td colspan="7">&nbsp;</td>
  </tr>
  <tr valign="TOP">
    <td colspan="7">In their discretion, the Proxies are entitled to vote upon
      such other matters as may properly come before the meeting or any adjournments
      thereof.</td>
  </tr>
  <tr valign="TOP">
    <td width="2%" height="78"><font size=2><br>
      &nbsp;</font></td>
    <td width="2%" height="78"><font size=2><br>
      &nbsp;</font></td>
    <td width="96%" colspan=5 height="78"> <b><br>
      THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
      WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF MOSS
      ADAMS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND AS THE PROXIES DEEM ADVISABLE
      ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.</b></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size=2><br>
      &nbsp;</font></td>
    <td width="2%"><font size=2><br>
      &nbsp;</font></td>
    <td width="30%"><font size="3" face="Times New Roman, Times, serif"><br>
      <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
      Signature</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="30%"><font size="3" face="Times New Roman, Times, serif"><br>
      <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
      Signature</font></td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="30%"><font size="3" face="Times New Roman, Times, serif"><br>
      Date: <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>,
      2008</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%" height="51"><font size=2><br>
      &nbsp;</font></td>
    <td width="2%" height="51"><font size=2><br>
      &nbsp;</font></td>
    <td width="96%" colspan=5 height="51"><br>
      (This Proxy should be marked, dated and 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.)</td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center">&nbsp;</p>
<hr NOSHADE>
<font face="Times New Roman, Times, serif" size="3"> </font>
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