Occam Networks (OCNW)

Base Salary

        Historically, we have paid base salaries that we believe are below the market median for officers performing comparable jobs at comparable public companies. Based on a compensation survey that we obtained from Culpepper and Associates, Inc. and comparable public company data we reviewed in 2007 (prior to the compensation review described under the caption "Recent Compensation Determinations" above), we believe base salary ranges for our named executive officers during 2006

35

were approximately within the middle of the range for private companies and at the low end of the range for public companies. This compensation range reflects the fact that we were, until recently, effectively operating as a venture-capital-funded private company, and we were managing our cash and expenses in line with our objective to become profitable before exhausting our cash reserves.

        Each year, the compensation committee considered executive compensation as part of its performance review process. Increases were considered within the context of our overall merit increase budget before consideration was given to more specific individual and competitive factors. We did not apply specific formulas to determine increases to the base salaries of our named executive officers, including the chief executive officer. During the 2006 annual compensation review, the compensation committee increased the annual salary for Robert L. Howard-Anderson, our president and chief executive officer, by 7.5% from $200,000 to $215,000. The compensation committee determined this increase was appropriate in light of positive developments in our business during 2005, including the generation of operating income in the fourth quarter. During 2006, the compensation committee increased the base salaries for the remaining executive officers by amounts ranging between 4% and 8%, based on the recommendations of the chief executive officer and the compensation committee's view of relative performance. During 2006, base salaries were set for the other named executive officers as follows: Greg Dion, vice president of operations, $187,200; Chris Farrell, chief financial officer, $178,500; David Mason, vice president of engineering, $185,500; Mark Rumer, chief technology officer, $178,500; and Russ Sharer, vice president of marketing, $183,600. In September 2006, the Company hired Nathan Harrell to serve as vice president of sales, rounding out our executive team. Previously, Mr. Sharer had served dual roles as vice president of sales and marketing. The compensation committee approved a base salary for Mr. Harrell of $175,000.

                                                                            On November 29, 2007, our compensation committee set base salary levels, effective January 1, 2008, for our named executive officers as follows:

4