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<SEC-DOCUMENT>0000944075-09-000014.txt : 20090316
<SEC-HEADER>0000944075-09-000014.hdr.sgml : 20090316
<ACCEPTANCE-DATETIME>20090313204934
ACCESSION NUMBER:		0000944075-09-000014
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20090429
FILED AS OF DATE:		20090316
DATE AS OF CHANGE:		20090313
EFFECTIVENESS DATE:		20090316

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SOCKET MOBILE, 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:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-25904
		FILM NUMBER:		09681872

	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

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SOCKET COMMUNICATIONS INC
		DATE OF NAME CHANGE:	19950418
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>proxy.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>

</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE  VLINK=PURPLE>
<font face="Times New Roman, Times, serif" size="3"><BR>
</font>
<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">/ /</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">/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">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" face="Times New Roman, Times, serif"><B><font size="3">SOCKET
      MOBILE,&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">&nbsp;</TD>
    <TD WIDTH="3%" height="16"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TD>
    <TD WIDTH="2%" height="16">&nbsp;</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" 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">Amount
      Previously 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="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" 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">Filing
      Party:<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">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"><br>
  <b>SOCKET MOBILE, INC.</b></font></P>
<P ALIGN="CENTER"><font face="Times New Roman, Times, serif" size="3"><b> NOTICE
  OF 2009 ANNUAL MEETING OF STOCKHOLDERS<br>
  To Be Held April 29, 2009 </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
  Mobile, Inc., a Delaware corporation (the "Company"), to be held Wednesday,
  April 29, 2009 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>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>(1) To
  elect seven directors to serve until their respective successors are elected.<br>
  <br>
  <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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, 2009.<br>
  <br>
  <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>(3) To
  transact such other business as may properly come before the meeting or any
  adjournment thereof.</font></P>
<p><font face="Times New Roman, Times, serif" size="3"> <i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i></font><font face="Times New Roman, Times, serif">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>Only
  stockholders of record at the close of business on March 2, 2009 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 following the instructions on your proxy ballot. 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" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="2%"><font size="2" face="Times New Roman, Times, serif">&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" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="2%"><font size="2" face="Times New Roman, Times, serif"><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" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="2%"><font size="2" face="Times New Roman, Times, serif">&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" face="Times New Roman, Times, serif"><br>
      <font size="3">Newark, California<br>
      March 12, 2009</font></font></td>
    <td width="2%"><font size="2" face="Times New Roman, Times, serif"><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"><b>YOUR VOTE IS IMPORTANT.<br>
  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></font></P>
<blockquote>&nbsp;</blockquote>
<P align="center">&nbsp;</P>
<hr NOSHADE>
<P align="center">&nbsp;</P>
<P align="center"><font face="Times New Roman, Times, serif"><b>SOCKET MOBILE,
  INC.</b></font></P>
<P align="center"> <font face="Times New Roman, Times, serif"><b>PROXY STATEMENT
  FOR<br>
  2009 ANNUAL MEETING OF STOCKHOLDERS</b><br>
  <b><br>
  INFORMATION CONCERNING SOLICITATION AND VOTING</b><br>
  </font></P>
<P align="left"><font face="Times New Roman, Times, serif"><b>GENERAL</b></font></P>
<P align="left"> <font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  enclosed proxy is solicited on behalf of the Board of Directors of Socket Mobile,
  Inc. (the "Company"), for use at the 2009 Annual Meeting of Stockholders to
  be held Wednesday April 29, 2009 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 2009 Annual Meeting of Stockholders. The 2009 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>These proxy
  solicitation materials and our Annual Report on Form 10-K for the year ended
  December 31, 2008, including financial statements, were first mailed on or about
  March 20, 2009 to all stockholders entitled to vote at the 2009 Annual Meeting.</font></P>
<P align="left"><font face="Times New Roman, Times, serif"><b>Important Notice
  Regarding the Availability of Proxy Materials for the Stockholder Meeting to
  be Held on April 29, 2009. The Proxy Statement and Annual Report are available
  at http://www.mkr-group.com/SCKT/stockholder_info.html.</b> Stockholders may
  access the Proxy Statement, Notice of Annual Meeting, Annual Report on Form
  10-K and Proxy Card at this site.<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>Holders of record
  of our Common Stock at the close of business on March 2, 2009 (the "Record Date")
  are entitled to notice of and to vote at the 2009 Annual Meeting. At the Record
  Date, 3,229,916 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>The only
  persons known by the Company to beneficially own more than five percent of the
  Company's Common Stock as of the Record Date were Charlie Bass, the Chairman
  of the Company's Board of Directors, Roy L. Rogers as trustee for the Rogers
  Family Trust UTD 01-21-81 and the Roy and Ruth Rogers Unitrust, UTD 09-28-89,
  and Leviticus Partners, L.P. Please see "Security Ownership of Certain Beneficial
  Owners and Management" for more information on these holdings. </font></P>
<P align="left"><font face="Times New Roman, Times, serif"><b> REVOCABILITY OF
  PROXIES</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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 2009 Annual Meeting and voting in person. </font></P>
<P align="left"><font face="Times New Roman, Times, serif" size="3"><b>VOTING
  AND SOLICITATION</b><br>
  </font></P>
<P><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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 2009 Annual Meeting gives notice of his or her intention to cumulate
  votes with respect to the election of directors (Proposal One), then each stockholder
  may cumulate such stockholder's votes for the election of directors 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 seven 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.</font></P>
<P><font face="Times New Roman, Times, serif"><br>
  <br>
  </font></P>
<p align="center"><font face="Times New Roman, Times, serif" size="3">1<br>
  </font></p>
<hr NOSHADE>
<P><font face="Times New Roman, Times, serif"><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.</font></P>
<P><font face="Times New Roman, Times, serif"><b> QUORUM; VOTE REQUIRED; ABSTENTIONS;
  BROKER NON-VOTES</b></font></P>
<P> <font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  presence at the 2009 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," "WITHHOLD or "ABSTAIN" on a subject matter
  (the "Votes Cast") are treated as being present at the meeting for purpose of
  establishing a quorum entitled to vote on the matter.</font></P>
<P> <font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Proposal
  One</i>. Directors are elected by a plurality of the votes of the shares present
  in person or represented by proxy at the meeting and entitled to vote on the
  election of directors. If a quorum is present at the meeting, the seven 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>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Proposal Two</i>.
  Ratification of appointment of Moss Adams LLP as the Company's independent public
  accountants for the fiscal year ending December 31, 2009 requires the affirmative
  vote of a majority of the Votes Cast on the matter at the 2009 Annual Meeting.<br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp<br>
  &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>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 purpose
  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 Proposal 2, which requires the affirmative vote of a majority of the Votes
  Cast.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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.</font></P>
<P>&nbsp;</P>
<p align="center"><font face="Times New Roman, Times, serif" size="3">2<br>
  </font></p>
<hr NOSHADE>
<P><font face="Times New Roman, Times, serif"><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 size="3"><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  Company currently intends to hold its 2010 Annual Meeting of Stockholders in
  April 2010 and to mail proxy statements relating to such meeting in March 2010.
  Proposals of stockholders of the Company that are intended to be presented by
  such stockholders at the 2010 Annual Meeting must be received by the Company
  no later than November 20, 2009, 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. In addition, stockholders
  must comply with the procedural requirements in the Company's bylaws. Under
  the Company's bylaws, notice of any stockholder nomination to the board or proposal
  of business must be delivered to or mailed and received by the Secretary of
  the Company not less than ninety (90) days prior to the meeting; provided, however,
  that in the event that less than one-hundred (100) days notice or prior public
  disclosure of the date of the meeting is given or made to stockholders, notice
  by the stockholder to be timely must be so received not later than the close
  of business on the tenth day following the day on which such notice of the date
  of the meeting is mailed or such public disclosure is made. To be in proper
  form, a stockholder's notice to the Secretary shall set forth: (i) the name
  and address of the stockholder who intends to make the nominations or propose
  the business and, as the case may be, of the person or persons to be nominated
  or of the business to be proposed; (ii) a representation that the stockholder
  is a holder of record of stock of the Company entitled to vote at such meeting
  and, if applicable, intends to appear in person or by proxy at the meeting to
  nominate the person or persons specified in the notice; (iii) if applicable,
  a description of all arrangements or understandings between the stockholder
  and each nominee and any other person or persons (naming such person or persons)
  pursuant to which the nomination or nominations are to be made by the stockholder;
  (iv) such other information regarding each nominee or each matter of business
  to be proposed by such stockholder as would be required to be included in a
  proxy statement filed pursuant to the proxy rules of the Securities and Exchange
  Commission had the nominee been nominated, or intended to be nominated, or the
  matter been proposed, or intended to be proposed by the Board of Directors;
  and (v) if applicable, the consent of each nominee to serve as director of the
  Company if so elected. The chairman of the meeting shall refuse to acknowledge
  the nomination of any person or the proposal of any business not made in compliance
  with the foregoing procedure. Stockholders can obtain a copy of the Company's
  bylaws from the Company upon request. The Company's bylaws are also on file
  with the Securities and Exchange Commission.</font></font></P>
<p align="left"><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<font size="3"><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i></font>If
  a stockholder intends to submit a proposal at the 2010 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 21, 2010, or else the proxy
  holders will be allowed to use their discretionary authority to vote against
  the proposal when it is raised at the 2010 Annual Meeting.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<font size="3"><i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i></font>The
  attached proxy card grants the persons named as proxies discretionary authority
  to vote on any matter raised at the 2009 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 2009 Annual Meeting.</font></p>
<p align="left"><font face="Times New Roman, Times, serif"><br>
  <br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">3<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"><font face="Times New Roman, Times, serif"><b><font size="3">ELECTION
  OF DIRECTORS</font></b></font></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>The
    proxy holders will vote to elect as directors the seven nominees named below,
    unless a proxy card is marked otherwise. The nominees consist of seven of
    the eight current directors. Gianluca Rattazzi who has served as a director
    since 1998 has decided to retire from the Board at the end of his current
    term. The Board intends to reduce the size of the Board to seven members following
    the election of directors. If a person other than a management nominee is
    nominated at the 2009 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 seven 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>All seven
    directors will be elected for one-year terms expiring at the 2010 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>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="28">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><B>Name
        of Nominee<BR>
        </B></font> </div>
      <HR NOSHADE>
    </TH>
    <TH WIDTH="2%" height="28"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TH>
    <TH WIDTH="5%" ALIGN="CENTER" height="28"><font size="3" face="Times New Roman, Times, serif"><B>Age</B></font>
      <HR NOSHADE>
    </TH>
    <TH WIDTH="2%" height="28"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TH>
    <TH WIDTH="50%" ALIGN="CENTER" height="28"><font size="3" face="Times New Roman, Times, serif"><B>Position(s)
      Currently Held With the Company</B></font>
      <HR NOSHADE>
    </TH>
    <TH WIDTH="2%" height="28"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></TH>
    <TH WIDTH="13%" ALIGN="CENTER" height="28"><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">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">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">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">48</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">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">51</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 (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">71</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">57</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 of the 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">Peter
      Sealey (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">68</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 (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">64</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. Gianluca Rattazzi, who is retiring from the Board, is also a
      member of this committee.<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>There
  are no family relationships among any of the directors or executive officers
  of the Company. </font></p>
<p><font face="Times New Roman, Times, serif">&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>Kevin 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.</font></p>
<p><font face="Times New Roman, Times, serif">&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>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i></font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">4<br>
  </font></p>
<hr NOSHADE>
<p><font face="Times New Roman, Times, serif"><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,
  and 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.</font></p>
<p><font face="Times New Roman, Times, serif"> &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
  in February 2008. He is a Partner in The SAGE Group of Bellevue, Washington,
  a management consulting company that works with executives at small to midsize
  companies on business transformation and revitalization strategies for value-creating
  events. Mr. Miller and The SAGE Group also advise private equity firms who invest
  in wireless and mobility companies. Prior to The SAGE Group, 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
  from 2004 to 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 directors of InfoLogix, Inc., an enterprise mobility
  automation company serving the healthcare industry, since October 2006. Mr.
  Miller has been a member of 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.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>Peter 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 directors 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. From 1997
  to 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.</font></p>
<p><font face="Times New Roman, Times, serif"><br>
  <br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">5<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp;</p>
<p><font face="Times New Roman, Times, serif"><b>BOARD MEETINGS AND COMMITTEES</b><font size="3"><b><br>
  </b> </font></font> </p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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. </font></p>
<p><font face="Times New Roman, Times, serif">&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 2008
  and three telephone meetings. The independent directors met separately without
  management or the management directors after each of the four regular Board
  meetings held during 2008. 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. All directors attended the 2008 Annual Meeting
  of Stockholders. <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The Audit
  Committee consists of Messrs. Bass, Rattazzi and Miller. As required by Nasdaq
  rules, the members of the Audit Committee each qualify as "independent" under
  the standards established by the United States Securities and Exchange Commission
  for members of audit committees. The Audit Committee also includes one 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 Securities and Exchange
  Commission rules. Stockholders should understand that this designation is a
  disclosure required by the Securities and Exchange Commission 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 liabilities 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 liabilities of any other member of the Audit Committee or Board of Directors.
  </font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  Audit Committee met with management and the independent accountants four times
  by telephone and one time in person during the year ended December 31, 2008
  to review quarterly and annual financial information and to discuss the results
  of quarterly review procedures performed by the independent accountants 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
  accountants, 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, 2008, the Audit Committee
  met in February 2009 and again in March 2009 with management and with the independent
  accountants, reviewed the financial statements and the annual audit results,
  including the independent accountants' assessment of the Company's internal
  controls and procedures, and discussed with the independent accountants the
  matters denoted as required communications by Statement of Auditing Standards
  61 (SAS 61). The meetings also included a review of internal accounting controls,
  a discussion and review of auditor independence, the pre-approval of the independent
  accountants' fees, and a recommendation to the Board of Directors to approve
  the issuance of the financial statements for the year ended December 31, 2008.
  The report of the Audit Committee for the year ended December 31, 2008 is included
  in this Proxy Statement. </font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">6<br>
  </font></p>
<hr NOSHADE>
<p><font face="Times New Roman, Times, serif"><br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The Nominating
  Committee consists of Messrs. Bass and Malmed. The Nominating Committee considers
  and recommends nominations for the Board of Directors and facilitates the self-assessment
  of Board performance by the independent directors. The Nominating Committee
  met twice, one time in January 2009 and one time in March 2009. At those meetings,
  the Nominating Committee determined that each current director being nominated
  was willing and able to serve as a director for the ensuing year and recommended
  their nomination. For 2010, 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 20, 2009
  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.
  </font></p>
<p align="left"> <font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  Compensation Committee, which consists of Messrs. Malmed, Torresi and Sealey,
  held eleven meetings during fiscal year 2008. 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 2008 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.
  <br>
  <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>Regular
  meetings of the Board of Directors are scheduled once per quarter. Directors
  who are not employees of the Company received $3,000 per regular meeting of
  the Board of Directors that they attended 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 Board service, generally
  at the time of each election of the Board of Directors. Options are awarded
  for Board service, committee service and committee and Board leadership positions.
  On April 23, 2008, options that vest monthly over a one year period were awarded
  to the outside directors for the service period that commenced on April 23,
  2008, at an exercise price of $9.20 per share, the fair market value of the
  Common Stock on the date of grant, in the following amounts: <br>
  <br>
  </font></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>Shares
        Granted<br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">Charlie
        Bass</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">5,000</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">Leon
        Malmed</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">3,000</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">Thomas
        O. Miller</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">3,500</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">Gianluca
        Rattazzi</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">3,500</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">Peter
        Sealey</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2,500</font></div>
    </td>
  </tr>
  <tr>
    <td align="left" width="40%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">Enzo
        Torresi</font></div>
    </td>
    <td width="20%">&nbsp;</td>
    <td width="20%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">3,000</font></div>
    </td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif"><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Directors
  are also awarded an initial stock option grant which vests monthly over a four
  year period when they initially join the board. On February 17, 2008 Mr. Miller
  was appointed to the Board and received an initial stock option grant of 2,500
  shares that vests monthly. The exercise price was $7.00 per share, the fair
  market value on the date of grant. </font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>All
  share numbers and prices in this Proxy Statement, including the number of stock
  option grant shares and exercise prices listed above, are reported on a post-split
  basis, reflecting a one for ten reverse stock split which became effective on
  October 24, 2008.</font></p>
<p><font face="Times New Roman, Times, serif"><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>If a quorum
  is present at the Annual Meeting, the seven 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.<b><br>
  <br>
  THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL
  OF THE COMPANY'S NOMINEES FOR DIRECTORS.</b></font></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">7<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><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  Audit Committee has selected Moss Adams LLP, independent public accountants,
  to audit the financial statements of the Company for the fiscal year ending
  December 31, 2009, 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>Moss Adams
  LLP has audited the Company's financial statements for each of the five fiscal
  years ended December 31, 2004 through December 31, 2008. Representatives of
  Moss Adams LLP are expected to be present at the 2009 Annual Meeting. The representatives
  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>
  <b><br>
  FEES BILLED BY MOSS ADAMS LLP DURING FISCAL YEARS 2008 AND 2007</b><br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Audit Fees</i>:
  <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Audit fees
  billed to the Company by Moss Adams LLP for their audit of the Company's 2008
  and 2007 fiscal year financial statements and review of the Company's quarterly
  financial statements for fiscal 2008 and 2007 totaled $238,000 in each year.
  The Company was not deemed an accelerated filer for fiscal years 2008 and 2007,
  and an audit of the Company's internal controls at December 31, 2008 and 2007
  was not required.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Audit-Related
  Fees</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Audit-related
  fees billed to the Company by Moss Adams LLP during the Company's 2008 and 2007
  fiscal years totaled $3,000 and $10,555, 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.</font></p>
<p align="left"><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>Tax
  Fees</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Fees billed
  to the Company by Moss Adams LLP for tax services during the Company's 2008
  and 2007 fiscal years were $20,000 in each year. Tax fees are for preparation
  of the prior year's annual tax returns.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>All Other Fees</i>:
  <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>There were
  no other fees billed to the Company during the Company's 2008 and 2007 fiscal
  years by Moss Adams LLP.</font></p>
<p align="left"><font face="Times New Roman, Times, serif"><i> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Approval
  Procedures</i>: <br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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 accountants 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>The Audit
  Committee has considered whether the provision of the services described in
  this section is compatible with maintaining Moss Adams LLP's independence and
  determined that it is. </font></p>
<p align="left"><font face="Times New Roman, Times, serif"><br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><br>
  8 <br>
  </font></p>
<hr NOSHADE>
<p><font face="Times New Roman, Times, serif"><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>Ratification
  of the appointment of Moss Adams LLP as the Company's independent public accountants
  for the fiscal year ending December 31, 2009 requires the affirmative vote of
  a majority of the Votes Cast on the matter at the 2009 Annual Meeting.<br>
  <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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.</font></p>
<p><font face="Times New Roman, Times, serif"><b>THE BOARD OF DIRECTORS UNANIMOUSLY
  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, 2009.</b></font></p>
<p><font face="Times New Roman, Times, serif"><font size="3"><br>
  </font></font> </p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">9<br>
  </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</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>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 named in the table;
  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 Mobile, Inc., 39700 Eureka Drive, Newark, California
  94560.</font></p>
<table width="100%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="240" align="LEFT" height="70"><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" height="70">&nbsp;</th>
    <th width="110" align="CENTER" height="70">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Number
        of Shares of<br>
        Common Stock<br>
        Beneficially Owned</font></div>
      <hr NOSHADE>
    </th>
    <th width="9" align="CENTER" height="70">&nbsp;</th>
    <th width="110" align="CENTER" height="70">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Percentage
        of Shares of<br>
        Common Stock<br>
        Beneficially Owned (2)</font></div>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240" height="16"><font face="Times New Roman, Times, serif"><b><i>5%
      Stockholders</i></b></font></td>
    <td width="10" align="RIGHT" height="16">&nbsp;</td>
    <td width="107" align="RIGHT" height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">185,684</font></div>
    </td>
    <td width="9" align="RIGHT" height="16">&nbsp;</td>
    <td width="110" align="RIGHT" height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">5.7%</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font face="Times New Roman, Times, serif">Roy L. Rogers (3)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">172,228</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">5.3
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font face="Times New Roman, Times, serif">Leviticus Partners,
      L.P. (4)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">&nbsp;</td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240">&nbsp;</td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">&nbsp;</td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font face="Times New Roman, Times, serif"><b><i>Directors
      and Executive Officers</i></b></font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">&nbsp;</td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Charlie
      Bass (5)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">215,474</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">6.6%</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills (6)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">98,250</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">3.0</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford (7)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">79,604</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2.4</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 (8)</font></td>
    <td width="10" align="RIGHT" height="16">&nbsp;</td>
    <td width="107" align="RIGHT" height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">67,483</font></div>
    </td>
    <td width="9" align="RIGHT" height="16">&nbsp;</td>
    <td width="110" align="RIGHT" height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2.1</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Leonard
      L. Ott (9) </font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">50,536</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</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
      (10)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">34,517</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1.1</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="BOTTOM">
    <td width="240"><font size="3" face="Times New Roman, Times, serif">Leon Malmed
      (11)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">34,250</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</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 (11)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">33,833</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</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">Tim I.
      Miller (12)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">32,172</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</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">Lee A.
      Baillif (13)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">25,835</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</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 (11) </font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">25,000</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</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 (11)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">17,303</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</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 (14)</font></td>
    <td width="10" align="RIGHT" height="15">&nbsp;</td>
    <td width="107" align="RIGHT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">9,562</font></div>
    </td>
    <td width="9" align="RIGHT" height="15">&nbsp;</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 (11)</font></td>
    <td width="10" align="RIGHT" height="15">&nbsp;</td>
    <td width="107" align="RIGHT" height="15">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">8,229</font></div>
    </td>
    <td width="9" align="RIGHT" height="15">&nbsp;</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) (15)</font></td>
    <td width="10" align="RIGHT">&nbsp;</td>
    <td width="107" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">732,048</font></div>
    </td>
    <td width="9" align="RIGHT">&nbsp;</td>
    <td width="110" align="RIGHT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">19.6%</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 3,229,916 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) Shares held by Roy L. Rogers as trustee for the Rogers Family Trust
      UTD 01-21-81 which holds 97,283 shares of Common Stock, and the Roy and
      Ruth Rogers Unitrust, UTD 09-28-89 which holds 88,401 shares of Common Stock.
      Mr. Rogers'address is 3000 Sand Hill Road, Building 1, Suite 260, Menlo
      Park, CA 94025.<br>
      (4) AMH Equity LLC is the general partner of Leviticus Partners, L.P. The
      address of Leviticus Partners, L.P. is 60 East 42nd Street, Suite 901, New
      York, NY 10165.<br>
      (5) Includes 41,250 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (6) Includes 85,240 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (7) Includes 54,384 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (8) Includes 58,937 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (9) Includes 49,096 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (10) Includes 31,125 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (11) Consists of shares of Common Stock subject to options exercisable within
      60 days of March 2, 2009.<br>
      (12) Includes 31,717 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (13) Includes 23,177 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (14) Includes 9,000 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009.<br>
      (15) Includes 502,541 shares of Common Stock subject to options exercisable
      within 60 days of March 2, 2009. </font></td>
  </tr>
</table>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">10 </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif"><b>SECTION 16(a)
  BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</b></font></p>
<p align="left"><font face="Times New Roman, Times, serif"><br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i><font size="3">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. We prepare Section 16(a) forms on behalf of our executive officers
  and directors based on the information provided by them. Based solely on review
  of this information, the Company believes that during fiscal 2008 all of its
  executive officers and directors complied with their Section 16(a) filing requirements.
  <br>
  <br>
  <br>
  </font></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> <br>
  &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i> </font><font face="Times New Roman, Times, serif">The
  current executive officers of the Company are as follows: </font></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">48</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%"><font face="Times New Roman, Times, serif">President and Chief
      Executive Officer and Director</font></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">66</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%"><font face="Times New Roman, Times, serif">Vice President
      of Finance and Administration, Chief Financial Officer and Secretary</font></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">51</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%"><font face="Times New Roman, Times, serif">Executive Vice
      President and Director</font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3" face="Times New Roman, Times, serif">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">48</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%"><font face="Times New Roman, Times, serif">Vice President
      and Controller</font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3" face="Times New Roman, Times, serif">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" face="Times New Roman, Times, serif">54</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%"><font face="Times New Roman, Times, serif">Vice President
      of Worldwide Operations</font></td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="TOP">
    <td width="28%"><font size="3" face="Times New Roman, Times, serif">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 face="Times New Roman, Times, serif">60</font></div>
    </td>
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="62%"><font face="Times New Roman, Times, serif">Vice President
      of Engineering</font></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 face="Times New Roman, Times, serif">50</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"><font face="Times New Roman, Times, serif">Vice
      President and Chief Technical Officer</font></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" face="Times New Roman, Times, serif">51</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"><font face="Times New Roman, Times, serif">Sr.
      Vice President of Worldwide Sales and Marketing</font></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>For
  information regarding Kevin J. Mills and Micheal L. Gifford, please see "Proposal
  One - 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>&nbsp</i></i><i><i>Lee
  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">&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><font face="Times New Roman, Times, serif"><br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">11<br>
  </font></p>
<hr NOSHADE>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i><br>
  </i>&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. From February 1998 to October
  2007, Mr. Noggle served as an independent engineering consultant offering technical
  product management, product design and product development services to a number
  of private companies, including Endpoints, Inc. (imaging) and Nanochip, Inc.
  (ASIC design), designing and developing new and advanced electronic products
  with an emphasis on chip design and imaging devices. From September 1999 through
  February 2001 he was President and CEO of Viznetix, an engineering management
  consulting company he founded. 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.</font></p>
<p><font face="Times New Roman, Times, serif"><br>
  <font size="3"><br>
  </font></font></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif">12<br>
  </font></p>
<hr NOSHADE>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b><br>
  DIRECTOR COMPENSATION<br>
  </b></font></p>
<p><font face="Times New Roman, Times, serif"><b>Compensation of Non-Employee
  Directors</b></font></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>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, 2008. </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">&nbsp;</th>
    <th width="12%" height="31">&nbsp;</th>
    <th width="12%" valign="bottom" align="CENTER" height="31">&nbsp;</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" face="Times New Roman, Times, serif">Fees
      Earned or Paid in Cash ($)</font>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3" face="Times New Roman, Times, serif">Option
      Awards ($)(1) </font>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3" face="Times New Roman, Times, serif">Total
      ($) </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">$19,834(2)
        </font></div>
    </td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$31,834
        </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">$13,665(3)
        </font></div>
    </td>
    <td height="0">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$25,665
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="11">
      <p><font face="Times New Roman, Times, serif">Thomas O. Miller (appointed
        Feb 17, 2008)</font></p>
    </td>
    <td height="14">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$9,000</font></div>
    </td>
    <td height="11">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$17,699(4)
        </font></div>
    </td>
    <td height="11">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$26,699
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="11">
      <p><font size="3" face="Times New Roman, Times, serif">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">$13,884(5)
        </font></div>
    </td>
    <td height="11">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$37,884
        </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">$9,916(6)
        </font></div>
    </td>
    <td height="2">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$21,916
        </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">$11,900(7)
        </font></div>
    </td>
    <td height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$23,900
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td height="199" colspan="4">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2" face="Times New Roman, Times, serif">(1) Amounts shown are
      not intended to reflect value actually received by the directors. Instead,
      the amounts shown are the compensation costs recognized for option awards
      vesting in fiscal 2008 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 an option to purchase 5,000 shares on April 23,
      2008 with a grant date fair value, computed in accordance with FAS 123R,
      of $16,500. The aggregate equity awards held by Mr. Bass at December 31,
      2008 were options to purchase 41,250 shares of Common Stock. The valuation
      for these awards at such date, determined pursuant to FAS 123R, was $457,050.<br>
      (3) Mr. Malmed was granted an option to purchase 3,000 shares on April 23,
      2008 with a grant date fair value, computed in accordance with FAS 123R,
      of $9,900. The aggregate equity awards held by Mr. Malmed at December 31,
      2008 were options to purchase 34,250 shares of Common Stock. The valuation
      for these awards at such date, determined pursuant to FAS 123R, was $416,750.<br>
      (4) Mr. Miller was granted a fully vested option to purchase 2,500 shares
      on February 17, 2008 in connection with his appointment as a director on
      that date. The grant date fair value, computed in accordance with FAS 123R,
      was $10,000. Mr. Miller was also granted an option to purchase 3,500 shares
      on April 23, 2008 with a grant fair value, computed in accordance with FAS
      123R of $11,550. The aggregate equity awards held by Mr. Miller at December
      31, 2008 were options to purchase 9,000 shares of Common Stock. The valuation
      for these awards at such date, determined pursuant to FAS 123R, was $39,550.<br>
      (5) Mr. Rattazzi was granted an option to purchase 3,500 shares on April
      23, 2008 with a grant date fair value, 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 33,833 shares of Common Stock. The valuation
      for these awards at such date, determined pursuant to FAS 123R, was $411,653.<br>
      (6) Mr. Sealey was granted an option to purchase 2,500 shares on April 23,2008
      with a grant date fair value, computed in accordance with FAS 123R, of $8,250.
      The aggregate equity awards held by Mr. Sealey at December 31, 2008 were
      options to purchase 25,000 shares of Common Stock. The valuation for these
      awards at such date, determined pursuant to FAS 123R, was $227,000.<br>
      (7) Mr. Torresi was granted an option to purchase 3,000 shares on April
      23, 2008 with a grant date fair value, computed in accordance with FAS 123R,
      of $9,900. The aggregate equity awards held by Mr. Torresi at December 31,
      2008 were options to purchase 31,125 shares of Common Stock. The valuation
      for these awards at such date, determined pursuant to FAS 123R, was $398,075.
      </font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>Each
  outside director receives meeting attendance fees of $3,000 for each regular
  meeting attended in person. During 2008, the Board met four times in person
  and three times by telephone, and all directors attended all meetings.</font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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.
  Options to purchase 2,500 shares are awarded to each director for Board and
  committee service. The director serving as the Board chairperson receives an
  option to purchase an additional 1,000 shares. Directors serving as chairpersons
  of the Nominating and Compensation Committees receive an option to purchase
  an additional 500 shares, the director serving as the chairperson of the Audit
  Committee receives an option to purchase an additional 1,500 shares, and members
  serving on the Audit Committee receive an option to purchase an additional 1,000
  shares. As a result, on April 23, 2008, the outside directors as a group were
  granted options to purchase an aggregate of 20,500 shares. These options vest
  monthly over a one year period commencing April 23, 2008, and have an exercise
  price of $6.00 per share, which was the fair market value of the Common Stock
  on the date of grant. See also Proposal One - Compensation of Directors. </font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">13<br>
  </font></p>
<hr NOSHADE>
<p align="center"><font face="Times New Roman, Times, serif"><b><br>
  COMPENSATION DISCUSSION AND ANALYSIS</b></font></p>
<p><font face="Times New Roman, Times, serif"><i>Overview</i></font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  Compensation Committee of the Board of Directors establishes the general compensation
  policies of the Company as well as the compensation plans and specific compensation
  levels for executive officers. The Committee strives to ensure that the Company's
  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 financial goals, such as revenue attainment and profitability. </font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>As
  a result, the Company strives to provide a total compensation package that is
  fair, reasonable and competitive with prevailing practices in the Company's
  industry, allowing for above average total compensation when justified by business
  results and individual contribution.</font></p>
<p><font face="Times New Roman, Times, serif"><i>Compensation Philosophy and Objectives</i></font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  Company's fiscal 2008 and 2009 compensation policies, plans and programs are
  intended to achieve the following objectives:</font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">attract, retain and motivate
        talented executive officers;<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">provide executive officers
        with cash bonus opportunities linked to achievement of business objectives
        and individual performance goals; and<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">align the financial interests
        of executive officers with those of stockholders by providing executive
        officers with an equity stake in the Company.</font></li>
    </ul>
  </ul>
</ul>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  Company's approach to executive compensation is to be "middle of the road" for
  base compensation, to set above-median financial compensation targets as variable
  compensation to motivate and reward performance, and to offer equity incentives
  while maintaining acceptable levels of dilution.</font></p>
<p><font face="Times New Roman, Times, serif"><i>Elements of Executive Compensation.
  </i></font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>The
  three major components of the Company's executive officer compensation are:
  </font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>(i)
  base salary,</font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>(ii)
  variable incentive awards; and </font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp</i></i>(iii)
  long-term, equity-based incentive awards.</font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>The
  components of the Company's rewards program, as well as the total direct compensation
  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 the Company's executive officers are also entitled to earn
  variable incentive awards and stock option grants as part of their compensation
  packages. The Company focuses on optimizing its compensation program to motivate
  executives to improve the Company's results on a cost-effective basis.</font></p>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>The
  national compensation survey of the American Electronics Association was chosen
  to benchmark the Company's 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.</font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">14<br>
  </font></p>
<hr NOSHADE>
<p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp<br>
  </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 for each executive
  officer designed to recognize the skills and experience the individual brings
  to the Company and the performance contributions he or she makes. Overall, the
  total direct compensation level 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
  from the median is allowed when, in the judgment of the Compensation Committee,
  the value of the 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 at or 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 amount at his previous employer.</font></p>
<p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
  Compensation Committee determines both the amount and timing of base salary
  increases. Factors affecting the level of base salary 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. </font></p>
<p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>During
  2008, the base salary levels for executive officers were unchanged primarily
  due to the overall financial performance and condition of the Company At the
  end of 2007, the Company executed and completed a major product development
  program to develop and market its own mobile 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. This mobile handheld computer
  development program, along with expenses to increase sales, marketing and engineering
  resources and investments in inventory to support sales of these new products
  during 2008, have increased operating losses and put pressure on cash resources,
  as revenue growth has been below the rate of expense increases over the past
  two 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 both its net income results and its cash
  position. </font></p>
<p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</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, which is approved by the Compensation
  Committee, and performance is measured quarterly. The Compensation Plan measures
  four components:</font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">Quarterly Company revenue
        compared to a Board-approved "Financial Plan";<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif"> Quarterly Company gross
        margins compared to the Financial Plan;<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif"> Company expenses compared
        to the Financial Plan; and<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">Achievement of individual
        quarterly management objectives. </font></li>
    </ul>
  </ul>
</ul>
<div align="left">
  <p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></font></p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">15<br>
    </font></p>
  <hr NOSHADE>
  <p align="center">&nbsp; </p>
  <p> <font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
    Financial Plan is approved each year by the 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 for
    each component. Awards are capped at twice the target award levels for each
    financial component, and executive officers earn zero for a financial component
    if attainment of that component is less than 80 percent. Variable incentive
    targets for executives ranged from 9 percent to 40 percent of total cash compensation
    in fiscal 2008, averaging 25 percent for all executives. 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. </font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>
    </i>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, and elevate the
    importance of reaching or exceeding financial goals as set in the Company's
    annual Financial Plan. The Financial Plan is set at the beginning of each
    year. The Financial Plan has historically set aggressive targets for revenue,
    gross margins, and operating expenses. The Company's management has performed
    well relative to achieving operating expense targets, but has underperformed
    in achieving revenue and gross margin targets in recent years. Reasons for
    not achieving Financial Plan targets in 2006 through 2008 included: (i) underestimating
    the time required to develop products and bring them to market; (ii) reductions
    in handheld computer product availability by handheld computer manufacturers
    whose products work with the Company's peripheral data collection and connectivity
    products and on whom the Company relies for a portion of its data collection
    peripheral sales; (iii) delay in the completion of mobile business applications
    for the Company's products developed by third party software vendors; and
    (iv) slowdown in customer buying caused by adverse economic conditions in
    2008. The effect of missing the Financial Plan targets on the compensation
    of the executives is amplified when actual financial results are less than
    80% of the Financial Plan targets as the executives receive no compensation
    for such results. On the upside, the variable quantitative profitability-based
    portions of the awards (revenue, gross margins and expense) can result in
    an individual earning up to 200% of the individual's target, providing strong
    financial incentives to meet or exceed Financial Plan objectives.</font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Actual
    variable compensation payments as a percentage of variable compensation targets
    during 2006 through 2008 are shown in the table below for the Named Executive
    Officers. <b><br>
    </b><br>
    </font></p>
  <table width="74%" border=0 cellspacing=0 cellpadding=0 align="center" height="297">
    <tr valign="BOTTOM">
      <th width="20%" align="LEFT" height="15">
        <div align="left"><font size="3" face="Times New Roman, Times, serif"><b>Named
          Executive Officer <br>
          </b></font> </div>
        <hr NOSHADE>
      </th>
      <th width="40%" align="CENTER" height="15"><font face="Times New Roman, Times, serif"><b>Position(s)</b>
        </font>
        <hr NOSHADE>
      </th>
      <th align="CENTER" height="15"><font face="Times New Roman, Times, serif"><b>2008</b>
        </font>
        <hr NOSHADE>
      </th>
      <th align="CENTER" height="15"><font face="Times New Roman, Times, serif"><b>2007</b>
        </font>
        <hr NOSHADE>
      </th>
      <th align="CENTER" height="15"><font face="Times New Roman, Times, serif"><b>2006</b>
        </font>
        <hr NOSHADE>
      </th>
    </tr>
    <tr bgcolor="#FFFFFF" valign="bottom">
      <td width="20%" valign="top"><font size="3" face="Times New Roman, Times, serif">Kevin
        J. Mills</font></td>
      <td height="18" width="40%" valign="top"><font size="3" face="Times New Roman, Times, serif">President
        and Chief Executive Officer and Director</font></td>
      <td height="18" valign="top" align="center"><font size="3" face="Times New Roman, Times, serif">85%
        </font></td>
      <td height="18" valign="top" align="center"><font size="3" face="Times New Roman, Times, serif">81%
        </font></td>
      <td align="center" height="18" valign="top"><font size="3" face="Times New Roman, Times, serif">70%<br>
        </font></td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="bottom">
      <td width="20%" valign="top"><font size="3" face="Times New Roman, Times, serif">Micheal
        L. Gifford</font></td>
      <td height="18" width="40%" valign="top"><font size="3" face="Times New Roman, Times, serif">Executive
        Vice President and Director</font></td>
      <td height="18" valign="top" align="center"><font size="3" face="Times New Roman, Times, serif">85%
        </font></td>
      <td height="18" valign="top" align="center"><font size="3" face="Times New Roman, Times, serif">82%
        </font></td>
      <td align="center" height="18" valign="top"><font size="3" face="Times New Roman, Times, serif">64%<br>
        </font></td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="bottom">
      <td width="20%" valign="top"><font size="3" face="Times New Roman, Times, serif">Robert
        C. Zink (1)<br>
        </font></td>
      <td height="18" width="40%" valign="top">
        <div align="left"><font size="3" face="Times New Roman, Times, serif">Sr.
          Vice President Worldwide Sales and Marketing</font></div>
      </td>
      <td height="18" valign="top" align="center">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">83%
          </font></div>
      </td>
      <td height="18" valign="top" align="center">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">100%
          </font></div>
      </td>
      <td align="center" height="18" valign="top">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">
          -<br>
          </font></div>
      </td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="bottom">
      <td width="20%" valign="top" height="39"><font size="3" face="Times New Roman, Times, serif">David
        W. Dunlap<br>
        </font></td>
      <td height="39" width="40%" valign="top">
        <div align="left"><font size="3" face="Times New Roman, Times, serif">Vice
          President of Finance and Administration, Chief Financial Officer and
          Secretary</font></div>
      </td>
      <td height="18" valign="top" align="center">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">86%
          </font></div>
      </td>
      <td height="18" valign="top" align="center">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">82%
          </font></div>
      </td>
      <td align="center" height="18" valign="top">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">
          70% </font></div>
      </td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="bottom">
      <td width="20%" valign="top">
        <p><font size="3" face="Times New Roman, Times, serif">Thomas L. Noggle
          (2) </font></p>
      </td>
      <td align="RIGHT" height="35" width="40%" valign="top">
        <div align="left"><font face="Times New Roman, Times, serif">Vice President
          of Engineering</font></div>
      </td>
      <td align="center" height="18" valign="top">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">80%
          </font></div>
      </td>
      <td align="center" height="18" valign="top">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">100%
          </font></div>
      </td>
      <td align="center" height="18" valign="top">
        <div align="center"><font size="3" face="Times New Roman, Times, serif">
          - </font></div>
      </td>
    </tr>
    <tr bgcolor="#FFFFFF" valign="bottom">
      <td colspan="5" valign="top" height="63">
        <hr NOSHADE align="LEFT" width="120">
        <div align="left"><font size="2" face="Times New Roman, Times, serif">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.
          <br>
          Note 2: Mr. Noggle commenced employment on November 1, 2007 and his
          variable target attainment was guaranteed for 2007 as part of his employment
          offer</font></div>
      </td>
    </tr>
  </table>
  <p align="left"><font face="Times New Roman, Times, serif"><i><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></i>The
    Compensation Committee with the concurrence of management has suspended the
    variable incentive awards program for the first quarter of 2009 as a cost
    saving measure, subject to review at the end of the quarter. </font></p>
  <p align="left">&nbsp;</p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">16<br>
    </font></p>
  <hr NOSHADE>
  <p>&nbsp;</p>
  <p><font face="Times New Roman, Times, serif"><i><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</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 the 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 each award 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. </font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</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) 200,000 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 employees of the Company based on recommendations from management
    regarding employee responsibilities and performance. </font></p>
  <p align="left"><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>The
    Compensation Committee, in consultation with management, prepares an annual
    allocation plan dividing the 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 in 2008 were made on
    February 14, 2008. Refresher grants are made annually, typically during the
    first quarter of the year on the first open trading day of the quarter, which
    is two days after the release of earnings for the prior year. The 2008 refresher
    grants had a vesting start date of March 1, 2008 and vest monthly over 48
    months, contingent upon 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 provide a return only if the
    individual remains with the Company and only if the market price of the Company's
    Common Stock appreciates during the option term. </font></p>
  <p align="left"><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbspThe
    Compensation Committee believes that stock option grants are effective in
    attracting and retaining key employees, and the Company 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 potential for substantial
    cumulative compensation if stock prices increase, thus aligned with the interests
    of stockholders. The Company believes stock options are effective executive
    incentives because of the expectations of the management team that the Company's
    products and the markets they address provide opportunities for growth that
    may result in share price appreciation. <i><br>
    </i></font></p>
  <div align="left">
    <p><font face="Times New Roman, Times, serif"><i>Equity Incentive Grant Policies.</i></font></p>
  </div>
  <div align="left">
    <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>General
      option grant practices</i>. All stock options grants are awarded by the
      Compensation Committee, or by 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 2008, the Compensation Committee met
      eleven times, and stock option grants were awarded at nine of those meetings.
      During 2007, the Compensation Committee met ten times, and stock option
      grants were awarded at nine of those meetings.<br>
      <br>
      </font></p>
  </div>
  <p align="left"><font face="Times New Roman, Times, serif"><i><br>
    </i></font></p>
</div>
<div align="left">
  <p align="center"><font face="Times New Roman, Times, serif" size="3">17<br>
    </font></p>
  <hr NOSHADE>
  <p>&nbsp;</p>
  <div align="left"></div>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Initial
    stock option grants</i>. The Compensation Committee awards initial stock option
    grants to each new employee of the Company on the first trading day of the
    month following the individual's commencement of employment. The size of the
    grant is based on the responsibilities of the 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. Grants to rank-and-file
    employees are made 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. 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 ensures that the employee is familiar with the Company and its goals and
    objectives prior to options vesting. During 2008, the Company granted options
    to purchase a total of 33,780 shares to 16 new employees, representing 19
    percent of all shares subject to stock options granted during the year. </font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</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 and the employee's contributions in meeting the Company's
    goals and objectives. 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 the Insider Trading Policy contained
    therein and vest over 48 months. In 2008, the Company awarded options to acquire
    an aggregate of 42,500 shares to the eight executive officers of the Company,
    representing 23 percent of all shares subject to stock options granted during
    the year. The Company also granted refresher options to purchase a total of
    79,350 shares to 74 non-officer employees in 2008, representing 44 percent
    of all shares subject to stock options granted during the year. In addition,
    the Company granted options to purchase 3,000 shares to the members of the
    Company's Technical Advisory Board as their sole compensation for serving
    on the Board, representing 2 percent of the shares subject to all stock options
    granted during the year. </font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Director
    stock option grants</i>. A portion of the compensation of the Company's outside
    directors is in the form of an annual stock option grant. Director grants
    are granted 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 Nominating and Compensation Committee service. Additional options
    are awarded for Board and committee leadership positions and Audit Committee
    service, as discussed on page 22 under "Director Compensation." During 2008,
    the Company granted annual options to purchase a total of 20,500 shares to
    the 6 independent directors of the Company, representing 11 percent of the
    shares subject to all stock options granted during the year, and approved
    a new director grant for Mr. Miller of 2,500 shares representing 1 percent
    of the shares subject to all stock options granted during the year. </font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp<i>&nbsp</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.</font></p>
  <p><font face="Times New Roman, Times, serif"><i>Accounting and Tax Implications</i></font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i>Accounting
    for Stock-Based Compensation.</i> On January 1, 2006, we adopted Financial
    Accounting Standard 123&reg;, "Share-Based Payment," ("SFAS 123R") for the
    fiscal years ended December 31, 2006 and beyond. Under Financial Accounting
    Standard 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. These estimates 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 was estimated using a Black-Scholes option
    pricing model. The Company adopted the modified prospective recognition method
    and implemented the provisions of SFAS 123R beginning with the first quarter
    of 2006.<br>
    <br>
    </font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font></p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">18<br>
    </font></p>
  <hr NOSHADE>
  <p><font face="Times New Roman, Times, serif"><br>
    <br>
    <br>
    <i> &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</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 issuance of grants qualifying as "performance-based
    compensation" under Section 162(m) of the Internal Revenue Code; however,
    no grants deemed performance-based compensation grants have been awarded to
    the executive officers of the Company.</font></p>
  <p><font face="Times New Roman, Times, serif"><i>Compensation of the Chief Executive
    Officer</i></font></p>
  <p><font face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>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 discussed elsewhere within this Compensation
    Discussion and Analysis. 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 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. During 2008, the Company did not increase the base salary or variable
    salary targets of any of its executive officers except Mr. Zink, who was granted
    an increase in his variable compensation target in January 2008 pursuant to
    employment arrangements agreed to when he joined the Company in April 2007.
    </font></p>
  <p><font face="Times New Roman, Times, serif"><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 2008. His total base salary during the year was $190,000,
    and his total target variable compensation was $100,000 for a total compensation
    target of $290,000. Mr. Mills earned 85% of his total target variable compensation
    during fiscal year 2008 under the Management Variable Incentive Compensation
    Plan in which all executive officers participate due primarily to the Company
    achieving its financial targets during the year except for underachieving
    revenue and gross margin targets in the first and fourth quarters. Mr. Mills'
    total compensation is below the median compensation for chief executive officers
    of public companies of similar size, as reported in the national compensation
    survey of the American Electronics Association. </font></p>
  <p><font face="Times New Roman, Times, serif"><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 7,500 shares
    on February 14, 2008 at the same time that refresher grants were awarded to
    all employees of the Company. These options commenced vesting on March 1,
    2008 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 the interests 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. </font></p>
  <p><font face="Times New Roman, Times, serif"><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.</font></p>
  <p><font face="Times New Roman, Times, serif"><br>
    <br>
    </font></p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">19<br>
    </font></p>
  <hr NOSHADE>
  <p align="center"><font face="Times New Roman, Times, serif"><b><br>
    <br>
    SUMMARY COMPENSATION TABLE</b><font size="3"><br>
    <b>For Fiscal Year Ended December 31, 2008</b></font></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 2008 compensation information and comparable
    information for the two preceding fiscal years for the Chief Executive Officer,
    Chief Financial Officer, and the three other executive officers of the Company
    who were the most highly compensated in fiscal year 2008 (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="36%" 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="7%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif"><b>Year</b></font>
      <hr NOSHADE>
    </th>
    <th width="13%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif"><b>Salary<br>
      ($)</b>(1)</font>
      <hr NOSHADE>
    </th>
    <th width="13%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif">Option
      Awards<br>
      ($)(2) </font>
      <hr NOSHADE>
    </th>
    <th width="13%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif">Non-Equity
      Incentive Plan Compensation ($)(3)</font>
      <hr NOSHADE>
    </th>
    <th width="18%" align="CENTER" height="42"><font size="3" face="Times New Roman, Times, serif"><b>Total<br>
      ($)</b></font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="17"><font size="2" face="Times New Roman, Times, serif">Kevin
      J. Mills<br>
      <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>President
      and Chief Executive Officer and <br>
      <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Director</font></td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">2008<br>
        2007<br>
        2006</font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">$
        189,604<br>
        190,000<br>
        180,000</font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">$
        43,145<br>
        68,844<br>
        72,227</font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">$
        84,756<br>
        80,588<br>
        69,974</font></div>
    </td>
    <td align="RIGHT" height="17" width="18%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">$
        317,505 <br>
        339,432<br>
        322,201</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="15">&nbsp;</td>
    <td align="RIGHT" height="17" width="7%">&nbsp;</td>
    <td align="RIGHT" height="15" width="13%">&nbsp;</td>
    <td align="RIGHT" height="15" width="13%">&nbsp;</td>
    <td align="RIGHT" height="15" width="13%">&nbsp;</td>
    <td align="RIGHT" height="15" width="18%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="18"><font size="2" 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 <br>
      <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Marketing</font></td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">2008<br>
        2007</font></div>
    </td>
    <td height="18" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">174,635
        <br>
        131,250</font></div>
    </td>
    <td height="18" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">40,378<br>
        29,813</font></div>
    </td>
    <td height="18" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">95,863<br>
        118,250 </font></div>
    </td>
    <td height="18" width="18%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">310,876<br>
        279,313</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="15">&nbsp;</td>
    <td align="RIGHT" height="17" width="7%">&nbsp;</td>
    <td align="RIGHT" height="15" width="13%">&nbsp;</td>
    <td align="RIGHT" height="15" width="13%">&nbsp;</td>
    <td align="RIGHT" height="15" width="13%">&nbsp;</td>
    <td align="RIGHT" height="15" width="18%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="15"><font size="2" 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="7%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">2008<br>
        2007<br>
        2006</font></div>
    </td>
    <td align="RIGHT" height="15" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">175,000<br>
        175,000<br>
        165,000</font></div>
    </td>
    <td align="RIGHT" height="15" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">38,955<br>
        63,547<br>
        63,230</font></div>
    </td>
    <td align="RIGHT" height="15" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">42,473<br>
        40,768<br>
        31,963</font></div>
    </td>
    <td align="RIGHT" height="15" width="18%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">256,428<br>
        279,315<br>
        260,193</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="13">&nbsp;</td>
    <td align="RIGHT" height="13" width="7%">&nbsp;</td>
    <td align="RIGHT" height="13" width="13%">&nbsp;</td>
    <td align="RIGHT" height="13" width="13%">&nbsp;</td>
    <td align="RIGHT" height="13" width="13%" valign="top">&nbsp;</td>
    <td align="RIGHT" height="13" width="18%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="30">
      <p><font size="2" face="Times New Roman, Times, serif">David W. Dunlap<br>
        <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Vice
        President of Finance and Administration,<br>
        </font><font size="2" face="Times New Roman, Times, serif"><i><i>&nbsp</i></i><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="7%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">2008<br>
        2007<br>
        2006</font></div>
    </td>
    <td align="RIGHT" height="30" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">169,646
        <br>
        170,000<br>
        160,000</font></div>
    </td>
    <td align="RIGHT" height="30" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">36,913<br>
        60,411<br>
        60,674</font></div>
    </td>
    <td align="RIGHT" height="30" width="13%" valign="top">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">42,854<br>
        40,962<br>
        34,906</font></div>
    </td>
    <td align="RIGHT" height="30" width="18%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">249,413<br>
        271,373<br>
        255,580</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="17">&nbsp;</td>
    <td align="RIGHT" height="17" width="7%">&nbsp;</td>
    <td align="RIGHT" height="17" width="13%">&nbsp;</td>
    <td align="RIGHT" height="17" width="13%">&nbsp;</td>
    <td align="RIGHT" height="17" width="13%">&nbsp;</td>
    <td align="RIGHT" height="17" width="18%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="36%" height="17">
      <p><font size="2" face="Times New Roman, Times, serif">Thomas L. Noggle
        (5)<br>
        <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i>Vice
        President of Engineering</font></p>
    </td>
    <td align="RIGHT" height="17" width="7%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">2008
        <br>
        2007 </font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">160,000<br>
        26,667</font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">30,075<br>
        3,915</font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">31,850<br>
        8,000</font></div>
    </td>
    <td align="RIGHT" height="17" width="18%">
      <div align="center"><font size="2" face="Times New Roman, Times, serif">221,925<br>
        38,582</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="6" height="35">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2" face="Times New Roman, Times, serif">(1) Represents base
      salary as described under <i>Compensation Summary and Analysis - Elements
      of Executive Compensation</i>.<br>
      (2) Represents Long-Term, Equity-Based Incentive Awards as described under
      Compensation Summary and Analysis - Elements of Executive Compensation.
      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 the fiscal year for financial statement
      reporting purposes, as determined pursuant to Statement of Financial Accounting
      Standards No. 123(R).<br>
      (3) Represents Variable Incentive Awards as described under <i>Compensation
      Summary and Analysis - Elements of Executive Compensation</i>.<br>
      (4) Mr. Zink commenced employment on April 2, 2007. His non-equity incentive
      plan compensation included $66,250 in 2007 to defray moving, relocation
      and other costs associated with commencement of his employment.<br>
      (5) Mr. Noggle commenced employment on November 1, 2007. </font></td>
  </tr>
</table>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">20 </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b>GRANTS
  OF PLAN-BASED AWARDS<br>
  For Fiscal Year Ended December 31, 2008 </b></font></p>
<p align="left"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font><font face="Times New Roman, Times, serif">The
  following table shows for the fiscal year ended December 31, 2008 certain information
  regarding options granted to the Named Executive Officers. Options were granted
  as described under <i>Compensation Summary and Analysis</i> - <i>Elements of
  Executive Compensation</i> - <i>Long-Term, Equity-Based Incentive Awards</i>
  and - <i>Equity Incentive Grant Policies</i>.</font></p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="59">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Name
        <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3" face="Times New Roman, Times, serif">Grant<br>
      Date</font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3" face="Times New Roman, Times, serif">All
      Other Option Awards: Number of Securities Underlying Options (#) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3" face="Times New Roman, Times, serif">Exercise
      or Base Price of<br>
      Option Awards ($/share)</font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="59"><font size="3" face="Times New Roman, Times, serif">Grant
      Date Fair Value of <br>
      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">2/14/2008
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">7,500
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$7.20
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$27,750
        </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</font></td>
    <td height="18" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2/14/2008
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">5,000
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">7.20
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,500</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">2/14/2008
        </font></div>
    </td>
    <td align="RIGHT" height="19" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">6,500
        </font></div>
    </td>
    <td align="RIGHT" height="19" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">7.20
        </font></div>
    </td>
    <td align="RIGHT" height="19" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">24,050
        </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">2/14/2008
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">6,000
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">7.20
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">22,200
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="20">
      <p><font size="3" face="Times New Roman, Times, serif">Thomas L. Noggle
        </font></p>
    </td>
    <td align="RIGHT" height="20" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2/14/2008
        </font></div>
    </td>
    <td align="RIGHT" height="20" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2,500
        </font></div>
    </td>
    <td height="18" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">7.20
        </font></div>
    </td>
    <td align="RIGHT" height="20" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">9,250
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="6" height="70">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2" face="Times New Roman, Times, serif">(1) The value of option
      awards is based on the fair value as of the grant date of such award, determined
      pursuant to Statement of Financial Accounting Standards No. 123(R), which
      was $3.70 per share. 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 Common 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 to the recipient will depend on the
      market value of the Company's Common Stock at such date in the future when
      the option is exercised. </font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif"><b>OUTSTANDING EQUITY
  AWARDS<br>
  At Fiscal 2008 Year-End</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><font face="Times New Roman, Times, serif">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, 2008.</font></p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" height="59" width="30%">&nbsp;</th>
    <th align="CENTER" height="59" colspan="5"> <font size="3" face="Times New Roman, Times, serif">Option
      Awards </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr valign="BOTTOM">
    <th align="LEFT" height="100" width="30%">
      <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" width="16%"><font size="3" face="Times New Roman, Times, serif">Number
      of Securities Underlying Unexercised Options - Exercisable (#)(1) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100" width="1%">&nbsp;</th>
    <th align="CENTER" height="100" width="21%"><font size="3" face="Times New Roman, Times, serif">Number
      of Securities<br>
      Underlying Unexercised<br>
      Options - Unexercisable<br>
      (#)(1)(2) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100" width="13%"><font size="3" face="Times New Roman, Times, serif">Option
      Exercise<br>
      Price per Share<br>
      ($)(3) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100" width="19%"><font size="3" face="Times New Roman, Times, serif">Option
      Expiration Date(4) </font>
      <hr NOSHADE>
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="30%" height="17"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills </font></td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">6,767<br>
        30,000<br>
        9,000<br>
        6,700<br>
        5,000<br>
        4,500<br>
        5,000<br>
        8,375<br>
        2,635<br>
        2,406<br>
        1,406</font></div>
    </td>
    <td align="RIGHT" height="17" width="1%">&nbsp;</td>
    <td align="RIGHT" height="17" width="21%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">-
        <br>
        - <br>
        - <br>
        - <br>
        - <br>
        - <br>
        - <br>
        1,625<br>
        2,865<br>
        3,094<br>
        6,094</font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$5.625<br>
        33.75<br>
        10.60<br>
        12.90<br>
        7.60<br>
        7.30<br>
        32.00<br>
        15.00<br>
        11.70<br>
        10.00<br>
        7.20</font></div>
    </td>
    <td align="RIGHT" height="17" width="19%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">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<br>
        2/14/2018</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="30%" height="17">&nbsp;</td>
    <td align="RIGHT" height="17" width="16%">&nbsp;</td>
    <td align="RIGHT" height="17" width="1%">&nbsp;</td>
    <td align="RIGHT" height="17" width="21%">&nbsp;</td>
    <td align="RIGHT" height="17" width="13%">&nbsp;</td>
    <td align="RIGHT" height="17" width="19%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="30%" height="43"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink (5)</font></td>
    <td align="RIGHT" height="43" width="16%">
      <div align="center"><font face="Times New Roman, Times, serif">12,500<br>
        938</font></div>
    </td>
    <td align="RIGHT" height="43" width="1%">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="43" width="21%">
      <div align="center">
        <p><font face="Times New Roman, Times, serif">17,500<br>
          4,062</font></p>
      </div>
    </td>
    <td align="RIGHT" height="43" width="13%">
      <div align="center"><font face="Times New Roman, Times, serif">9.30<br>
        7.20</font></div>
    </td>
    <td align="RIGHT" height="43" width="19%">
      <div align="center"><font face="Times New Roman, Times, serif">4/2/2017<br>
        2/14/2018</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="30%" height="17">&nbsp;</td>
    <td align="RIGHT" height="17" width="16%">&nbsp;</td>
    <td align="RIGHT" height="17" width="1%">&nbsp;</td>
    <td align="RIGHT" height="17" width="21%">&nbsp;</td>
    <td align="RIGHT" height="17" width="13%">&nbsp;</td>
    <td align="RIGHT" height="17" width="19%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="30%" height="17"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford </font></td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">3,997<br>
        10,000<br>
        7,500<br>
        5,000<br>
        3,400<br>
        3,500<br>
        4,750<br>
        7,538<br>
        2,396<br>
        2,188<br>
        1,219 </font></div>
    </td>
    <td align="RIGHT" height="17" width="1%">&nbsp;</td>
    <td align="RIGHT" height="17" width="21%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">-<br>
        -<br>
        -<br>
        -<br>
        -<br>
        -<br>
        -<br>
        1,462<br>
        2,604<br>
        2,812<br>
        5,281</font></div>
    </td>
    <td align="RIGHT" height="17" width="13%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">5.625<br>
        33.75<br>
        10.60<br>
        12.90<br>
        7.60<br>
        7.30<br>
        32.00<br>
        15.00<br>
        11.70<br>
        10.00<br>
        7.20</font></div>
    </td>
    <td align="RIGHT" height="17" width="19%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">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<br>
        2/14/2018</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="30%" height="17">&nbsp;</td>
    <td align="RIGHT" height="17" width="16%">&nbsp;</td>
    <td align="RIGHT" height="17" width="1%">&nbsp;</td>
    <td align="RIGHT" height="17" width="21%">&nbsp;</td>
    <td align="RIGHT" height="17" width="13%">&nbsp;</td>
    <td align="RIGHT" height="17" width="19%">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<p><font face="Times New Roman, Times, serif"><br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">21<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">&nbsp;</th>
    <th align="CENTER" height="59" colspan="4"> <font size="3" face="Times New Roman, Times, serif">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" face="Times New Roman, Times, serif">Number
      of Securities Underlying Unexercised Options - Exercisable (#)(1) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3" face="Times New Roman, Times, serif">Number
      of Securities Underlying Unexercised Options - Unexercisable (#)(1)(2) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3" face="Times New Roman, Times, serif">Option
      Exercise<br>
      Price per Share<br>
      ($)(3) </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" height="100"><font size="3" face="Times New Roman, Times, serif">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">David
      W. Dunlap </font></td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">13,125<br>
        7,500<br>
        6,500<br>
        5,000<br>
        3,400<br>
        3,500<br>
        4,500<br>
        7,119<br>
        2,300<br>
        2,100<br>
        1,125 </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">-<br>
        -<br>
        -<br>
        -<br>
        -<br>
        -<br>
        -<br>
        1,381<br>
        2,500<br>
        2,700<br>
        4,875 </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$5.625<br>
        33.75<br>
        10.60<br>
        12.90<br>
        7.60<br>
        7.30<br>
        32.00<br>
        15.00<br>
        11.70<br>
        10.00<br>
        7.20 </font></div>
    </td>
    <td align="RIGHT" height="17" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">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<br>
        2/14/2018</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="17">&nbsp;</td>
    <td align="RIGHT" height="17" width="7%">&nbsp;</td>
    <td align="RIGHT" height="17" width="16%">&nbsp;</td>
    <td align="RIGHT" height="17" width="16%">&nbsp;</td>
    <td align="RIGHT" height="17" width="16%">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="33%" height="53"><font size="3" face="Times New Roman, Times, serif">Thomas
      L. Noggle (6) </font></td>
    <td align="RIGHT" height="53" width="7%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">5,417<br>
        469</font> </div>
    </td>
    <td align="RIGHT" height="53" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">14,583<br>
        2,031 </font></div>
    </td>
    <td align="RIGHT" height="53" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">8.30<br>
        7.20</font></div>
    </td>
    <td align="RIGHT" height="53" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">11/1/2017<br>
        2/14/2018</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="6" height="46">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2" face="Times New Roman, Times, serif">(1) Options were granted
      as described under <i>Compensation Summary and Analysis</i> - <i>Elements
      of Executive Compensation</i> - <i>Long-Term, Equity-Based Incentive Awards</i>
      and - <i>Equity Incentive Grant Policies</i>. The vesting period and vesting
      start date were established by the Compensation Committee. Shares unexercisable
      were not vested as December 31, 2008.<br>
      (2) Grant dates and vesting period information for all grants not fully
      vested as of December 31, 2008 are as follows:</font></td>
  </tr>
</table>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <td width="25%" align="LEFT" height="19">&nbsp;</td>
    <td width="5%" align="CENTER" height="19">&nbsp;</td>
    <td width="17%" align="CENTER" height="19">&nbsp;</td>
    <td width="5%" align="CENTER" height="19">&nbsp;</td>
    <td width="25%" align="CENTER" height="19">&nbsp;</td>
    <td width="5%" align="CENTER" height="19">&nbsp;</td>
    <td width="33%" align="CENTER" height="19">&nbsp;</td>
  </tr>
  <tr valign="BOTTOM">
    <th width="25%" align="LEFT" height="26" valign="bottom">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">Grant
        Date</font><font face="Times New Roman, Times, serif"><b><font size="3"><br>
        </font> </b></font></div>
      <hr NOSHADE>
    </th>
    <th width="5%" align="LEFT" height="26" valign="bottom">&nbsp;</th>
    <th width="17%" align="LEFT" height="26" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif"><b><font size="3"><font size="2">Expiration
        Date </font><br>
        </font> </b></font></div>
      <hr NOSHADE>
    </th>
    <th width="5%" align="LEFT" height="26" valign="bottom">&nbsp;</th>
    <th width="25%" align="LEFT" height="26" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif"><b><font size="3"><font size="2">Vesting
        Start Date </font><br>
        </font> </b></font></div>
      <hr NOSHADE>
    </th>
    <th width="5%" align="LEFT" height="26" valign="bottom">&nbsp;</th>
    <th width="33%" align="LEFT" height="26" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif"><b><font size="3"><font size="2">Months
        to fully vest</font><br>
        </font> </b></font></div>
      <hr NOSHADE>
    </th>
  </tr>
  <tr valign="top">
    <td width="25%" bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">1/28/2005
      </font></td>
    <td align="RIGHT" height="16" width="5%">&nbsp;</td>
    <td align="RIGHT" height="17" width="17%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">1/28/2015
        </font></div>
    </td>
    <td align="RIGHT" height="16" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td align="RIGHT" height="16" width="25%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">1/1/2006
        </font></div>
    </td>
    <td align="RIGHT" height="16" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td align="RIGHT" height="16" width="33%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr valign="top">
    <td width="25%" height="11" bgcolor="#FFFFFF">
      <p><font size="2" face="Times New Roman, Times, serif">2/17/2006</font></p>
    </td>
    <td align="RIGHT" height="17" width="5%">&nbsp;</td>
    <td align="RIGHT" height="15" width="17%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">2/17/2016
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td align="RIGHT" height="17" width="25%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">1/1/2007
        </font></div>
    </td>
    <td align="RIGHT" height="17" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td align="RIGHT" height="17" width="33%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr valign="top">
    <td width="25%" bgcolor="#FFFFFF" height="15"><font size="2" face="Times New Roman, Times, serif">2/26/2007
      </font></td>
    <td align="RIGHT" height="15" width="5%">&nbsp;</td>
    <td height="18" width="17%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">2/26/2017
        </font></div>
    </td>
    <td align="RIGHT" height="15" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td align="RIGHT" height="15" width="25%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">3/1/2007</font></div>
    </td>
    <td align="RIGHT" height="15" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td align="RIGHT" height="15" width="33%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr valign="top">
    <td width="25%" bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">4/2/2007
      </font></td>
    <td height="18" width="5%">&nbsp;</td>
    <td height="18" width="17%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">4/2/2017
        </font></div>
    </td>
    <td height="18" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td height="18" width="25%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">4/2/2007
        </font></div>
    </td>
    <td height="18" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td height="18" width="33%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr valign="top">
    <td width="25%" bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">11/1/2007
      </font></td>
    <td height="18" width="5%">&nbsp;</td>
    <td height="18" width="17%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">11/1/2017
        </font></div>
    </td>
    <td height="18" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td height="18" width="25%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">11/1/2007
        </font></div>
    </td>
    <td height="18" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td height="18" width="33%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr valign="top">
    <td width="25%" bgcolor="#FFFFFF"><font size="2" face="Times New Roman, Times, serif">2/14/2008
      </font></td>
    <td height="18" width="5%">&nbsp;</td>
    <td height="18" width="17%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">2/14/2018
        </font></div>
    </td>
    <td height="18" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td height="18" width="25%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">3/1/2008
        </font></div>
    </td>
    <td height="18" width="5%" bgcolor="#FFFFFF">&nbsp;</td>
    <td height="18" width="33%" bgcolor="#FFFFFF">
      <div align="left"><font size="2" face="Times New Roman, Times, serif">48
        </font></div>
    </td>
  </tr>
  <tr valign="top">
    <td colspan="10" height="52" bgcolor="#FFFFFF"> <font size="2" face="Times New Roman, Times, serif"><br>
      (3) Exercise prices are set at the closing price of the Company's Common
      Stock on the date of grant. <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.<br>
      (6) Mr. Noggle commenced employment on November 1, 2007.</font></td>
  </tr>
</table>
<font face="Times New Roman, Times, serif"><br>
<br>
</font>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">22<br>
  </font></p>
<hr NOSHADE>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif"><b>OPTION EXERCISES
  AND STOCK VESTED</b><br>
  <b>For Fiscal Year Ended December 31, 2008</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><font face="Times New Roman, Times, serif">The
  following tables show for the fiscal year ended December 31, 2008 certain information
  regarding options exercised by the Named Executive Officers:</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 colspan="2" align="CENTER" height="15"><font size="3" face="Times New Roman, Times, serif">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" face="Times New Roman, Times, serif">Number
      of Shares<br>
      Acquired on Exercise <br>
      (#) </font>
      <hr NOSHADE>
    </th>
    <th width="12%" align="CENTER" height="15"><font size="3" face="Times New Roman, Times, serif">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">2,500
        </font></div>
    </td>
    <td height="14">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">$813
        </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="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">833
        </font></div>
    </td>
    <td height="0">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">437
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="12">
      <p><font size="3" face="Times New Roman, Times, serif">David W. Dunlap</font></p>
    </td>
    <td height="12">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">4,250
        </font></div>
    </td>
    <td height="12">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">6,763
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td height="14">
      <p><font face="Times New Roman, Times, serif">Thomas L. Noggle</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" face="Times New Roman, Times, serif">(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"><font face="Times New Roman, Times, serif"><b>EQUITY COMPENSATION
  PLAN INFORMATION</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><font face="Times New Roman, Times, serif">The
  following table provides information as of December 31, 2008 about the Common
  Stock that may be issued under all equity compensation plans of the Company.<br>
  <br>
  </font></p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th align="LEFT" width="46%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b><br>
        </b></font> </div>
    </th>
    <th align="CENTER" width="17%"><font size="3" face="Times New Roman, Times, serif">Number
      of securities to be issued upon exercise of outstanding options </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" width="16%"><font size="3" face="Times New Roman, Times, serif">Weighted-average
      exercise price of outstanding options </font>
      <hr NOSHADE>
    </th>
    <th align="CENTER" width="21%"><font size="3" face="Times New Roman, Times, serif">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="46%"><font size="3" face="Times New Roman, Times, serif">Equity
      compensation plans approved by security holders (1) </font></td>
    <td align="RIGHT" width="17%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        921,229</font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$13.68
        </font></div>
    </td>
    <td align="RIGHT" width="21%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">175,377
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td width="46%"><font size="3" face="Times New Roman, Times, serif">Equity
      compensation plans not approved by security holders (2)</font></td>
    <td align="RIGHT" width="17%" style="border-bottom: 1px solid #000000">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        106,275</font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$28.02
        </font></div>
    </td>
    <td align="RIGHT" width="21%" style="border-bottom: 1px solid #000000">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">22,065
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="bottom">
    <td width="46%"><font size="3" face="Times New Roman, Times, serif">Total
      </font></td>
    <td align="RIGHT" width="17%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">1,027,504
        </font></div>
    </td>
    <td align="RIGHT" width="16%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$15.16
        </font></div>
    </td>
    <td align="RIGHT" width="21%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">197,442
        </font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td height="46" colspan="4">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2" face="Times New Roman, Times, serif">(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)
      200,000 shares, (b) four percent of the total outstanding shares of the
      Company's Common Stock on that date, or (c) a lesser amount as determined
      by the Board of Directors. As a result, a total of 129,196 shares became
      available for grant under the 2004 Equity Incentive Plan on January 1, 2009,
      in addition to those set forth in the table above.<br>
      (2) Consists of the 1999 Stock Plan. The Board does not plan to issue any
      new grants from the 1999 Plan.</font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">23<br>
  </font></p>
<hr NOSHADE>
<p align="center"><font face="Times New Roman, Times, serif"><b><br>
  COMPENSATION COMMITTEE REPORT</b><font size="3"><br>
  <i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font></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 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><font face="Times New Roman, Times, serif">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.</font></p>
<p align="left"><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp<font size="3">
  </font></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 12, 2009</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, Chairman<br>
      Leon Malmed<br>
      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>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif"><b>POST EMPLOYMENT
  AND CHANGE-IN-CONTROL COMPENSATION</b></font></p>
<p align="left"><font face="Times New Roman, Times, serif"><b><br>
  Change of Control and Severance Agreements </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><font face="Times New Roman, Times, serif">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.</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><font face="Times New Roman, Times, serif">The
  Company renewed separate employment agreements, effective as of December 31,
  2008, with Messrs. Kevin J. Mills, Lee A. Baillif, David W. Dunlap, Micheal
  L. Gifford, Tim I. Miller, Thomas L. Noggle, Leonard L. Ott and Robert C. Zink
  for a period of three years expiring December 31, 2011. The agreements replaced
  agreements that expired on December 31, 2008. The agreements provide that if
  the Company terminates the executive's employment without cause, the Company
  will pay the executive: (i) three months' base salary plus one months base salary
  for each two years of completed employment up to a maximum of 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 the continuation period for base salary; (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 any of the executive's vested stock options may
  also be extended up to a period not to exceed one year based on formulas in
  the employment agreements. Additionally, under the 1999 Stock Plan and the 2004
  Equity Incentive Plan, the rights of all optionees, including executive officers,
  to exercise all their outstanding options become fully vested and immediately
  exercisable upon a change of control of the Company, unless the options are
  assumed by the acquiring entity.</font></p>
<p align="left">&nbsp;</p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">24<br>
  </font></p>
<hr NOSHADE>
<p align="center"><font face="Times New Roman, Times, serif"><br>
  </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><font face="Times New Roman, Times, serif">Payments
  to be made to each of the Named Executive Officers following severance are estimated
  as follows:</font></p>
<table width="100%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="BOTTOM">
    <th width="247" align="LEFT">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Compensation
        and Benefits <br>
        </b></font> </div>
      <hr NOSHADE>
    </th>
    <th width="14"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></th>
    <th width="119" align="CENTER">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Voluntary
        Resignation </font></div>
      <hr NOSHADE align="center">
    </th>
    <th width="24">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </th>
    <th width="148" align="CENTER">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">For
        Cause (1) </font></div>
      <hr NOSHADE align="center">
    </th>
    <th width="24">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></div>
    </th>
    <th width="148" align="CENTER">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">For
        Good Reason (2) </font></div>
      <hr NOSHADE align="center">
    </th>
    <th width="24" align="CENTER">
      <div align="center"></div>
    </th>
    <th width="148" align="CENTER">
      <div align="center"><font size="3" face="Times New Roman, Times, serif"><b>Involuntary
        Without Cause (2)</b></font> </div>
      <hr NOSHADE align="center">
    </th>
    <th width="24">
      <div align="center"></div>
    </th>
    <th width="148" align="CENTER">
      <div align="center"><font size="3" 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="24" align="CENTER">
      <div align="center"></div>
    </th>
    <th width="148" align="CENTER">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Due
        to Death or<br>
        Disability (2) </font></div>
      <hr NOSHADE align="center">
    </th>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif">Kevin
      J. Mills</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td width="148" align="RIGHT" height="0">&nbsp;</td>
    <td width="24" height="0">&nbsp;</td>
    <td width="148" align="RIGHT" height="0">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td width="148" align="RIGHT" height="0">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Base
      Salary (3)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$95,000</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$95,000</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$95,000</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">$95,000</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Variable
      Incentive (4)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">37,500</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">37,500</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">37,500</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">37,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Stock
      Options (5)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>HealthCare
      Benefits (6)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,428</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,428</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,428</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,428</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Other
      Perquisites (7)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif">Micheal
      L. Gifford</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Base
      Salary (3)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">87,500</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">87,500</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">87,500</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">87,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Variable
      Incentive (4)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Stock
      Options (5)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>HealthCare
      Benefits (6)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,720</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,720</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,720</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,720</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Other
      Perquisites (7)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif">Robert
      C. Zink</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Base
      Salary (3)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">58,333</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">58,333</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">58,333</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">58,333</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Variable
      Incentive (4)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">43,125</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">43,125</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">43,125</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">43,125</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Stock
      Options (5)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>HealthCare
      Benefits (6)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,224</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,224</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,224</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,224</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Other
      Perquisites (7)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif">David
      W. Dunlap</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td height="0" width="24">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Base
      Salary (3)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">85,000</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">85,000</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">85,000</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">85,000</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Variable
      Incentive (4)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">18,750</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Stock
      Options (5)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>HealthCare
      Benefits (6)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,716</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,716</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,716</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        2,716</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Other
      Perquisites (7)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="18"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td width="14" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="119">&nbsp;</td>
    <td height="18" width="24">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td height="18" width="24">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td width="24" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="18"><font size="3" face="Times New Roman, Times, serif">Timothy
      I. Miller</font></td>
    <td width="14" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="119">&nbsp;</td>
    <td height="18" width="24">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td height="18" width="24">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td width="24" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
    <td width="24" align="RIGHT" height="18">&nbsp;</td>
    <td align="RIGHT" height="18" width="148">&nbsp;</td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Base
      Salary (3)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">77,500</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">77,500</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">77,500</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">77,500</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Variable
      Incentive (4)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">13,125</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">13,125</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">13,125</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">13,125</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Stock
      Options (5)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>HealthCare
      Benefits (6)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,818</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,818</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,818</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">
        3,818</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="247" height="0"><font size="3" face="Times New Roman, Times, serif"><i>&nbsp&nbsp&nbsp<i>&nbsp</i></i>Other
      Perquisites (7)</font></td>
    <td width="14" height="0">&nbsp;</td>
    <td align="RIGHT" height="0" width="119">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td height="0" width="24">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</font></div>
    </td>
    <td width="24" align="RIGHT" height="0">
      <div align="center"></div>
    </td>
    <td align="RIGHT" height="0" width="148">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">-</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" face="Times New Roman, Times, serif">(1) Cause is defined
      in each executive's employment agreement 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 reasons for termination except voluntary resignation or termination
      by the Company for cause are covered under the terms of the employment agreement
      as either resignation by the executive for good reason or involuntary termination
      by the Company without cause.<br>
      (3) Except in the case of voluntary resignation or termination for cause,
      base salary is continued from the date of termination for three months plus
      one month for each two years of completed service up to a maximum of six
      months.<br>
      (4) Except in the cases of voluntary resignation or termination for cause,
      scheduled variable incentive payments are paid which equal 100% of the bonus
      to which the executive would have otherwise been entitled for the quarter
      of termination and 50% of such bonus entitlement for the following quarter.
      <br>
      (5) Except in the cases of voluntary resignation or termination for cause,
      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 executive's employment
      agreement. In the event of a change in control where stock options are not
      assumed by the acquiring entity, all options granted and outstanding become
      vested and fully 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 voluntary resignation or termination for cause,
      healthcare benefits are continued up to the earlier of the expiration of
      the base salary continuation period (see note 3) or the executive securing
      other employment that includes such benefits.<br>
      (7) There are no perquisites in the compensation packages of any of the
      executive officers.</font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">25<br>
  </font></p>
<hr NOSHADE>
<p align="center"><font face="Times New Roman, Times, serif"><br>
  <b><br>
  LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS</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><font face="Times New Roman, Times, serif">Pursuant
  to the Delaware General Corporation Law, the Company has adopted provisions
  in its Certificate of Incorporation that eliminate the personal liability of
  directors to the Company or its stockholders for monetary damages for breach
  of the directors' fiduciary duties in certain circumstances. In addition, 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.</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><font face="Times New Roman, Times, serif">The
  Company has entered into indemnification agreements with each of its current
  directors and officers that provide for indemnification and advancement of expenses
  to the fullest extent permitted by Delaware law, including circumstances in
  which indemnification or the advancement of expenses is discretionary under
  Delaware law. </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</i></i></font><font face="Times New Roman, Times, serif">The
  Company believes that the limitation of liability and indemnification provisions
  in its Certificate of Incorporation and bylaws and the indemnification agreements
  with its directors and officers 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 these provisions or agreements would apply.</font></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><b><br>
  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><font face="Times New Roman, Times, serif">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 Securities Exchange
  Commission or the Public Company Accounting Oversight Board, the listing standards
  of the Nasdaq Stock Market and the 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:</font></p>
<p><font face="Times New Roman, Times, serif"><i>Executive Compensation Authority</i>
  </font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">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>
        <br>
        </font>
        <ul>
        </ul>
      </li>
      <li><font face="Times New Roman, Times, serif"> The Compensation Committee
        reviews and approves annual salary increases for all other employees of
        the Company, upon the recommendation of management.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">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.
        </font></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><font face="Times New Roman, Times, serif">The Board of Directors has
        confirmed that a majority of the Company's directors are independent,
        as defined by current SEC regulations and Nasdaq rules.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">The Company's independent
        directors hold formal meetings without the presence of management and
        chaired by an independent director.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">The Audit, Compensation and
        Nominating Committees consist solely of independent directors. </font></li>
    </ul>
  </ul>
</ul>
<p align="left">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">26<br>
  </font></p>
<hr NOSHADE>
<p align="left"><font face="Times New Roman, Times, serif"><br>
  </font></p>
<p align="left"><font face="Times New Roman, Times, serif"><i>Audit Committee</i>
  </font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">All Audit Committee members
        possess the required level of financial literacy, as required by SEC regulations.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">Mr. Bass, a member of the
        Audit Committee, possesses the qualifications of an "audit committee financial
        expert," as required by SEC regulations.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">The Audit Committee's charter
        formalizes and makes explicit the following:<br>
        <br>
        </font>
        <ul type="circle">
          <li><font face="Times New Roman, Times, serif">The Audit Committee's
            ability to retain independent consultants and experts as it sees fit,
            at Company expense;<br>
            <br>
            </font></li>
          <li><font face="Times New Roman, Times, serif">The Audit Committee's
            authority to appoint, review and assess the performance of the Company's
            independent auditors;<br>
            <br>
            </font></li>
          <li><font face="Times New Roman, Times, serif">The Audit Committee's
            ability to hold regular executive sessions with the Company's independent
            auditors and with the Company's Chief Financial Officer, Controller
            and other Company officers directly, as it considers appropriate;<br>
            <br>
            </font></li>
          <li><font face="Times New Roman, Times, serif">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>
            </font></li>
          <li><font face="Times New Roman, Times, serif">The Audit Committee's
            duty to maintain a formal complaint monitoring procedure (a "whistleblower"
            policy) to enable confidential and anonymous reporting to the Audit
            Committee; and<br>
            <br>
            </font></li>
          <li><font face="Times New Roman, Times, serif">The Audit Committee's
            authority over the independent auditors' rotation policy.</font></li>
        </ul>
      </li>
    </ul>
  </ul>
  <p>&nbsp;</p>
</ul>
<p><font face="Times New Roman, Times, serif"><i>Other Governance Matters</i>
  </font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">The Company has a formal
        Code of Business Conduct and Ethics that applies to all officers, directors
        and employees.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">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>
        </font></li>
      <li><font face="Times New Roman, Times, serif">Each of the Compensation
        Committee and Nominating Committee has a written charter.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">The Company has an Insider
        Trading Policy, including control procedures to comply with current SEC
        regulations and Nasdaq rules.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">The Company has a policy
        that the Board of Directors reviews its own performance on an annual basis.
        <br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">The Company prohibits loans
        to its officers and directors.</font></li>
    </ul>
  </ul>
</ul>
<p><font face="Times New Roman, Times, serif">More details on the Company's corporate
  governance initiatives, including copies of its Code of Business Conduct and
  Ethics and each of 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.</font></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><font face="Times New Roman, Times, serif"><br>
  <i><br>
  Policy for Director Recommendations and Nominations</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><font face="Times New Roman, Times, serif">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's Common Stock. Stockholders
  must have held such shares 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.</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><font face="Times New Roman, Times, serif">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:</font></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<br>
      c/o Corporate Secretary<br>
      Socket Mobile, Inc.<br>
      39700 Eureka Drive<br>
      Newark, CA 94560 <br>
      </font></td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif">The notice must include:</font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">the candidate's name, home
        and business contact information;<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">detailed biographical data
        and relevant qualifications;<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">a signed letter from the
        candidate confirming his or her willingness to serve;<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">information regarding any
        relationships between the candidate and the Company within the last three
        years; and<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">evidence of the required
        ownership of Common Stock by the recommending stockholder.</font></li>
    </ul>
  </ul>
</ul>
<p><font face="Times New Roman, Times, serif"><br>
  <font size="3"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&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 Securities and Exchange Commission 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
  "<i>Deadline for Receipt of Stockholder Proposals to be Included in the Company's
  Proxy Materials</i>."<br>
  <br>
  <font size="3"><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:</font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">The current size and composition
        of the Board of Directors and the needs of the Board of Directors and
        its various committees.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">Such factors as judgment,
        independence, character and integrity, area of expertise, diversity of
        experience, length of service and potential conflicts of interest.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">Such other factors as the
        Nominating Committee may consider appropriate.</font></li>
    </ul>
  </ul>
</ul>
<p><font face="Times New Roman, Times, serif">&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp</font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">28<br>
  </font></p>
<hr NOSHADE>
<p><font face="Times New Roman, Times, serif"> <font size="3"><i>&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp<i>&nbsp&nbsp&nbsp&nbsp&nbsp</i></i></font></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><font face="Times New Roman, Times, serif">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:</font></p>
<ul>
  <ul>
    <ul type="disc">
      <li><font face="Times New Roman, Times, serif">The highest personal and
        professional ethics and integrity.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">Proven achievement and competence
        in the nominee's field, and the ability to exercise sound business judgment.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">Skills complementary to those
        of the existing members of the Board of Directors.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">The ability to assist and
        support management and make significant contributions to the Company's
        success.<br>
        <br>
        </font></li>
      <li><font face="Times New Roman, Times, serif">An understanding of the fiduciary
        responsibilities required of a member of the Board of Directors, and the
        commitment of time and energy necessary to carry out those responsibilities
        diligently.</font></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><font face="Times New Roman, Times, serif">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, and the Board of the Directors determines
  the nominees after considering the recommendation and report of the Nominating
  Committee.</font></p>
<p><font face="Times New Roman, Times, serif"><i>Stockholder Communications to
  Directors</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></font><font face="Times New Roman, Times, serif">Stockholders
  may communicate directly with the members of the Board of Directors by sending
  an email to <i>socketboard@socketmobile.com</i>. The Company's Secretary monitors
  these communications and ensures 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
  also determines whether any response to a stockholder communication is necessary
  or warranted and whether further action is required.<br>
  <br>
  <i>Director Independence</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></font><font face="Times New Roman, Times, serif">In
  January 2009, 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 the Nasdaq Stock Market.<i><br>
  <br>
  Code of Business Conduct and Ethics</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></font><font face="Times New Roman, Times, serif">The
  Board of Directors has a Code of Business Conduct and Ethics that is applicable
  to all employees, executive 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.</font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">29<br>
  </font></p>
<hr NOSHADE>
<p>&nbsp;</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><br>
  <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 at least 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, 2008, including
  discussing the quality of the accounting principles, the reasonableness of significant
  judgments and the clarity of disclosures in the financial statements. The Audit
  Committee has a written charter, a copy of which is posted on the Company's
  website at http://www.mkr-group.com/SCKT/board_committee.html.</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
  Audit Committee reviewed the 2008 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.</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><font face="Times New Roman, Times, serif">The
  Audit Committee also discussed with the Company's independent auditors the overall
  scope and results of their audit 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 regard to their audit of the Company's annual financial
  statements for the year ended December 31, 2008. In addition, a conference call
  among members of the Audit Committee, the auditors and management was held each
  quarter during fiscal 2008 to review the Company's quarterly financial reports
  prior to their issuance.<br>
  <font size="3"><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 concurred, that the
  Company's audited financial statements be included in the Company's Annual Report
  on Form 10-K for the year ended December 31, 2008. The Audit Committee also
  approved the appointment of Moss Adams LLP as the Company's independent auditors
  for the year ending December 31, 2009.</font></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 12, 2009</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>
      Thomas O. Miller<br>
      Gianluca Rattazzi</font></td>
  </tr>
</table>
<p align="center"><font size="3" face="Times New Roman, Times, serif"> <br>
  </font></p>
<p align="center">&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"><font size="3" face="Times New Roman, Times, serif"><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 was 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,
  however, <i>Executive Compensation</i> - <i>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><font face="Times New Roman, Times, serif">Related
  party transactions, regardless of amount, to which the Company has been a party
  and in which any director, executive officer or beneficial holder of more than
  five percent of the Company's outstanding capital stock has or would have a
  direct or indirect material interest require the prior approval of the Audit
  Committee or, in the case of an interest of a director, the full Board of Directors.
  There were no such related party transactions during fiscal year 2008.<br>
  <br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif"><b>OTHER MATTERS</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><font face="Times New Roman, Times, serif">The
  Company knows of no other matters to be submitted at the 2009 Annual Meeting
  of Stockholders. If any other matters properly come before the 2009 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.<br>
  <br>
  <br>
  </font></p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td width="48%"><font size="3" face="Times New Roman, Times, serif"><br>
      Dated: March 12, 2009</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>
      THE BOARD OF DIRECTORS </font></td>
  </tr>
</table>
<p align="left">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">31<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 Mobile, Inc.</b></font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"> <b>2009
  ANNUAL MEETING OF STOCKHOLDERS </b></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><font face="Times New Roman, Times, serif">The
  undersigned stockholder of SOCKET MOBILE, INC., a Delaware corporation, hereby
  acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
  Statement, each dated March 12, 2009, 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 2009 Annual Meeting of Stockholders of SOCKET
  MOBILE, INC. to be held on Wednesday, April 29, 2009 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:</font></p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr valign="TOP">
    <td width="2%"><font size="3" face="Times New Roman, Times, serif">1.</font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td colspan=5><font size="3" face="Times New Roman, Times, serif">ELECTION
      OF SEVEN DIRECTORS.</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><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" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><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; Peter Sealey; Enzo Torresi</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><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" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><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; Peter Sealey; Enzo Torresi</font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%" height="42"><font size="3" face="Times New Roman, Times, serif"><br>
      2.</font></td>
    <td width="1%" height="42"><font size="3" face="Times New Roman, Times, serif"><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, 2009.
      </font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="3" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="1%"><font size="3" face="Times New Roman, Times, serif"><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"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr valign="TOP">
    <td colspan="7"><font face="Times New Roman, Times, serif">In their discretion,
      the Proxies are entitled to vote upon such other matters as may properly
      come before the meeting or any adjournments thereof.</font></td>
  </tr>
  <tr valign="TOP">
    <td colspan="7" height="70"><font face="Times New Roman, Times, serif"><br>
      <b> 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></font></td>
  </tr>
  <tr valign="TOP">
    <td width="2%"><font size="2" face="Times New Roman, Times, serif"><br>
      &nbsp;</font></td>
    <td width="2%"><font size="2" 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>
      <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;</u>,
      2009<br>
      Date </font></td>
  </tr>
  <tr valign="TOP">
    <td colspan="7" height="51"><font size="2" face="Times New Roman, Times, serif"><br>
      </font><font face="Times New Roman, Times, serif">(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.)</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center">&nbsp;</p>
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