Exhibit 10.29

 

UNUMPROVIDENT CORPORATION

NON-EMPLOYEE DIRECTOR COMPENSATION PLAN OF 2004

 

1. Establishment of Plan.

 

(a) Purpose. The purpose of the UnumProvident Corporation Non-Employee Director
Compensation Plan of 2004 is to attract, retain and compensate highly-qualified
individuals who are not employees of UnumProvident Corporation or any of its
subsidiaries or affiliates for service as members of the Board by providing them
with competitive compensation and an opportunity to increase their ownership
interest in the Common Stock of the Company. The Company intends that the Plan
will benefit the Company and its stockholders by allowing Non-Employee Directors
to have a personal financial stake in the Company through an ownership interest
in the Common Stock and will closely associate the interests of Non-Employee
Directors with that of the Company’s stockholders.

 

(b) Status of Plan. The Plan is intended, in part, to be a nonqualified,
unfunded plan of deferred compensation under the Internal Revenue Code of 1986,
as amended. The Board recognizes that, as of the Effective Date, there are a
number of bills pending before the U.S. Congress that could impose more
stringent conditions on non-qualified deferred compensation plans than are set
forth in Section 6 of the Plan. Section 6 shall be deemed amended from time to
time, without action by the Company or the necessity to obtain the consent of
any Participant, to the extent necessary to prevent the immediate taxability of
amounts deferred under the Plan under U.S. tax laws. In that event, the
Committee shall cause affected Participants to be promptly notified of such
changed provisions.

 

(c) Participation. All active Non-Employee Directors shall be eligible to
participate in the Plan; provided, however, that Shares may be issued in
settlement of Deferred Share Rights after a Participant ceases to be an active
Non-Employee Director, as provided in Section 6.

 

2. Defined Terms. Unless the context clearly indicates otherwise, the following
terms shall have the following meanings:

 

“Annual Retainer” means the annual retainer payable by the Company to a
Non-Employee Director for service as a director of the Company, as such amount
may be changed from time to time. The term Annual Retainer as used herein shall
include the Base Annual Retainer and the Supplemental Annual Retainer, but no
other fees.

 

“Base Annual Retainer” means the annual retainer paid pursuant to Section 5(a).

 

“Board” means the Board of Directors of the Company.

 

“Company” means UnumProvident Corporation, a Delaware corporation.

 

“Committee” has the meaning assigned such term in Section 3.

 

“Common Stock” means the common stock, par value $.10 per share, of the Company.

 

“Deferral Period” has the meaning set forth in Section 6(f) of the Plan.

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“Deferral Termination Date” has the meaning set forth in Section 6(e) of the
Plan.

 

“Deferred Share Right” means a right, granted under Section 6, to receive one
share of Common Stock on the Payment Date.

 

“Disability” means any illness or other physical or mental condition of a
Participant that renders the Participant incapable of performing his customary
and usual duties for the Corporation, or any medically determinable illness or
other physical or mental condition resulting from a bodily injury, disease or
mental disorder which, in the judgment of the Committee, is permanent and
continuous in nature. The Committee may require such medical or other evidence
as it deems necessary to judge the nature and permanency of the Participant’s
condition.

 

“Distributions” has the meaning set forth in Section 6(f) of the Plan.

 

“Effective Date” means the date of the 2004 annual meeting of the Company’s
stockholders.

 

“Election Form” means a form approved by Executive Compensation pursuant to
which a Non-Employee Director may elect to receive some or all of his or her
Annual Retainer in the form of Deferred Share Rights and the payment terms for
Deferred Share Rights, if applicable.

 

“Election Period” means the period designated by Executive Compensation each
year during which Non-Employee Directors may elect to receive Deferred Share
Rights as payment of some or all of their Annual Retainer. The Election Period
shall end on or before April 30 of each year for the following Plan Year (or
prior to the beginning of the new Plan Year if that occurs prior to April 30).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Executive Compensation” means the Executive Compensation division of the Human
Resources Department of the Company.

 

“Fair Market Value”, on any date, means (i) if the Common Stock is listed on a
securities exchange or traded over the Nasdaq National Market, the average of
the high and low market prices reported in The Wall Street Journal at which a
Share of Common Stock shall have been sold on such day or on the next preceding
trading day if such date was not a trading day, or (ii) if the Common Stock is
not listed on a securities exchange or traded over the Nasdaq National Market,
the mean between the bid and offered prices as quoted by Nasdaq for such date,
provided that if it is determined that the fair market value is not properly
reflected by such Nasdaq quotations, Fair Market Value will be determined by
such other method as the Committee determines in good faith to be reasonable.

 

“Grant Date” means the date on which Deferred Share Rights are granted pursuant
to Section 6, which, in each case, shall be the date on which the Annual
Retainer is payable in each Plan Year.

 

“Hardship” has the meaning set forth in Section 6(h) of the Plan.

 

“Non-Employee Director” means any director of the Company who is not an employee
of the Company or of any of its subsidiaries or affiliates.

 

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“Participant” means any Non-Employee Director who is participating in the Plan
or is receiving a post-service distribution of Shares pursuant to Section 6 of
the Plan.

 

“Payment Date” has the meaning set forth in Section 6(e) of the Plan.

 

“Plan” means the UnumProvident Corporation Non-Employee Director Compensation
Plan of 2004, as amended from time to time.

 

“Plan Year” means the approximately twelve-month period beginning on the date of
the annual meeting of the stockholders of the Company (“annual meeting”) in any
year and ending on the date of the following annual meeting, which, for purposes
of the Plan, is the period for which Annual Retainers are earned.

 

“Rule 16b-3” means Rule 16b-3, as amended from time to time, of the Securities
and Exchange Commission as promulgated under the Exchange Act.

 

“Shares” means shares of Common Stock.

 

“Supplemental Annual Retainer” means the annual retainer paid pursuant to
Section 5(b).

 

3. Administration. The Plan shall be administered by the Compensation Committee
of the Board (the “Committee”). Subject to the provisions of the Plan, the
Committee shall be authorized to interpret the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan;
provided, however, that the Committee shall have no discretion with respect to
the eligibility or selection of Non-Employee Directors to receive awards under
the Plan, the number of Shares subject to any such awards or the time at which
any such awards are to be granted. The Committee’s interpretation of the Plan,
and all actions taken and determinations made by the Committee pursuant to the
powers vested in it hereunder, shall be conclusive and binding upon all parties
concerned including the Company, its stockholders and persons granted awards
under the Plan. The Committee may appoint a plan administrator to carry out the
ministerial functions of the Plan, but the administrator shall have no other
authority or powers of the Committee. Notwithstanding the foregoing, the Board
shall exercise any and all rights, duties and powers of the Committee under the
Plan to the extent required by the applicable exemptive conditions of Rule
16b-3, as determined by the Board its sole discretion.

 

4. Shares Subject to Plan. The Shares issued under the Plan shall not exceed in
the aggregate 500,000 Shares of Common Stock. Such Shares may be acquired on the
open market or issued out of authorized and unissued Shares or treasury Shares.

 

5. Retainers, Fees and Expenses.

 

(a) Base Annual Retainer. Each Non-Employee Director shall be paid a Base Annual
Retainer for service as a director during each Plan Year. The amount and payment
schedule of the Base Annual Retainer shall be established from time to time by
the Board and set forth on Exhibit A hereto. The Board may change the dollar
amounts and payment schedule for the Base Annual Retainer at any time by
amending Exhibit A, which amendments shall not require stockholder approval or
the consent of any Participant. Each person who first becomes a Non-Employee
Director on a date other than an annual meeting date shall be paid a pro-rata
retainer equal to the Base Annual Retainer for such Plan Year,

 

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multiplied by a fraction, the numerator of which is the number of full months
before the next regularly scheduled annual meeting of the Company’s
stockholders, and the denominator of which is 12. Payment of such prorated Base
Annual Retainer shall begin on the date that the person first becomes a
Non-Employee Director.

 

(b) Supplemental Annual Retainer. Certain Non-Employee Directors shall be paid a
Supplemental Annual Retainer for service as chair or co-chair of the Board or of
a committee of the Board during a Plan Year. The amount and payment schedule of
the Supplemental Annual Retainers shall be established from time to time by the
Board and set forth on Exhibit A hereto. The Board may change the dollar amounts
and payment schedule for the Supplemental Annual Retainers at any time by
amending Exhibit A, which amendments shall not require stockholder approval or
the consent of any Participant. A pro-rata Supplemental Annual Retainer will be
paid to any Non-Employee Director who becomes the chair or co-chair of the Board
or of a committee of the Board on a date other than the beginning of a Plan
Year, based on the number of full months between the date such Non-Employee
Director assumed such position and the beginning of the next Plan Year.

 

(c) Form of Payment. Any amount of the Annual Retainer not elected to be
received in the form of Deferred Share Rights, as provided in Section 6, shall
be paid to the Participant in cash.

 

(d) Meeting Fees. Each Non-Employee Director shall be paid a fee in cash for
each meeting of the Board or committee thereof in which he or she participates.
The amount and payment schedule of the meeting fees shall be established from
time to time by the Board and set forth on Exhibit A hereto. The Board may
change the dollar amounts and payment schedule for the meeting fees at any time
by amending Exhibit A, which amendments shall not require stockholder approval
or the consent of any Participant.

 

(e) Special Project Fees. Each Non-Employee Director may be paid a fee in cash
for special project work undertaken in his or her capacity as a Non-Employee
Director. The amount and payment schedule of any such fees shall be established
from time to time by the Board and set forth on Exhibit A hereto. The Board may
change the dollar amounts and payment schedule for such fees at any time by
amending Exhibit A, which amendments shall not require stockholder approval or
the consent of any Participant.

 

(f) Travel Expense Reimbursement. All Non-Employee Directors shall be reimbursed
for reasonable travel expenses (including spouse’s expenses to attend up to one
event per Plan Year to which spouses are invited) in connection with attendance
at meetings of the Board and its committees, or other Company functions at which
the Chief Executive Officer requests the Non-Employee Director to participate.
If the travel expense is related to the reimbursement of commercial airfare,
such reimbursement will not exceed first class rates for domestic travel or
business-class rates for international travel. If the travel expense is related
to reimbursement of non-commercial air travel, such reimbursement shall not
exceed the rate for comparable travel by means of commercial airlines.

 

6. Deferred Share Rights.

 

(a) Election to Receive Deferred Share Rights. A Non-Employee Director may elect
each year to receive up to 100% of his or her Annual Retainer in the form of
Deferred Share Rights in accordance with this Section 6. A Non-Employee Director
who wishes to receive some or all of his or her Annual Retainer for a Plan Year
in the form of Deferred Share Rights must irrevocably elect to do so during the
Election

 

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Period for such Plan Year, by delivering a valid Election Form to Executive
Compensation. A Non-Employee Director’s participation in Section 6 of the Plan
will be effective with respect to the Annual Retainer to be earned in the first
Plan Year beginning after Executive Compensation receives the Non-Employee
Director’s Election Form.

 

(b) Irrevocable, Annual Election. Elections to receive Deferred Share Rights as
payment of Annual Retainer shall be valid only for one Plan Year. New elections
must be made for participation in Section 6 of the Plan for subsequent Plan
Years. The deferral Election Form signed by the Participant prior to the Plan
Year will be irrevocable except in case of Hardship (as defined in Section 6(h))
as determined in good faith by the Board pursuant to Section 6(h); provided,
however, that the Participant may, on a one-time basis and at least one year in
advance of the original Deferral Termination Date, designate a later Deferral
Termination Date, which must be at last five years after the original Deferral
Termination Date.

 

(c) Time of Grant. Deferred Share Rights shall be granted to each Non-Employee
Director who, during the applicable Election Period, filed with Executive
Compensation a written irrevocable election to receive Deferred Share Rights as
payment of some or all of such Non-Employee Director’s Annual Retainer payable
in the following Plan Year. Such Deferred Share Rights will be granted on the
date the Annual Retainer for such Plan Year is otherwise payable (the “Grant
Date”).

 

(d) Number of Deferred Share Rights. The number of Deferred Share Rights granted
pursuant to this Section 6 shall be the number of whole Shares equal to (i) the
dollar amount of the Annual Retainer that the Non-Employee Director elects shall
be payable in the form of Deferred Share Rights, divided by (ii) the Fair Market
Value per Share on the Grant Date. In determining the number of Deferred Share
Rights, any fraction of a Deferred Share Right will be rounded to the next
lowest whole number of Deferred Share Rights. For example:

 

Assume that a Non-Employee Director has elected to defer $50,000 of his or her
Annual Retainer and that the Fair Market Value per Share on the Grant Date is
$15. The Non-Employee Director would be granted 3,333 Deferred Share Rights as
payment of the $50,000 compensation. $50,000 divided by $15 FMV = 3,333 Deferred
Share Rights granted (rounded to the next lowest whole number).

 

(e) Nature of Deferred Share Rights. Each Deferred Share Right constitutes the
right to receive one Share of Common Stock on the earlier of (i) the
Participant’s termination of service as a director, or (ii) another designated
date at least three years after the date of such deferral election (in either
case, the “Deferral Termination Date”). Pursuant to the Election Form, the
Participant will elect whether the Shares will be (a) issued within 30 days
after the Deferral Termination Date, or (b) issued in approximately equal annual
installments of Shares over a period of three, five or seven years (as the
Participant may elect) after the Deferral Termination Date, each such annual
issuance to be made within 30 days after the anniversary of the Deferral
Termination Date. For bookkeeping purposes, any amounts which the Participant
elects to receive in the form of Deferred Share Rights, and any Distributions
credited in accordance with Section 6(f), shall be transferred to and held in
individual deferral accounts. No Shares will be issued until the applicable
payment date(s) (the “Payment Date”), at which time the Company agrees to issue
Shares of Common Stock to the Participant. The Participant will have no rights
as a stockholder with respect to the Deferred Share Rights, and the Deferred
Share Rights will be unsecured.

 

(f) Dividend Equivalents. If any dividends or other rights or distributions of
any kind (“Distributions”) are distributed to holders of Common Stock during the
period from the applicable Grant

 

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Date until the settlement in full of a Participant’s Deferred Share Rights (the
“Deferral Period”), an amount equal to the product of (i) the number of Deferred
Share Rights credited to a Participant’s deferral account as of the date of the
Distribution, and (ii) the per Share cash value of such Distributions on their
distribution date, as such value is determined by the Committee (collectively,
the “Credited Distribution”), will be converted to additional Deferred Share
Rights and credited to the Participant’s deferral account as follows: the
account will be credited with the right to receive additional Shares having a
Fair Market Value as of the date of the Distribution equal to the cash value of
the Credited Distribution. Such additional Deferred Share Rights will be settled
in Shares at the same time as the original Deferred Share Rights with respect to
which the Credited Distributions were made.

 

(g) Transferability of Deferred Share Rights. No Deferred Share Rights shall be
assignable or transferable by the Participant other than by will or the laws of
descent and distribution. No right or interest in the Deferred Share Rights
shall be subject to liability for the debts, contracts or engagements of the
Participant or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that nothing in this Section 6(g)
shall prevent transfers by will or by the applicable laws of descent and
distribution.

 

(h) Hardship. Subject to changes effected pursuant to Section 1(b), the Board
may accelerate the payment in Shares of all or a portion of a Participant’s
Deferred Share Rights on account of his or her Hardship, subject to the
following requirements: (i) the value of such accelerated distribution shall not
exceed the amount necessary to satisfy the Hardship, less the amount which can
be satisfied from other resources which are reasonably available to the
Participant, (ii) the denial of the Participant’s request for a Hardship
acceleration would result in severe financial hardship to the Participant, and
(iii) the Participant has not received an accelerated distribution on account of
Hardship within the 12-month period preceding the acceleration. For purposes of
this Plan, “Hardship” of a Participant, as determined by the Board in its
discretion on the basis of all relevant facts and circumstances and in
accordance with the following nondiscriminatory and objective standards
uniformly interpreted and consistently applied, shall mean a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of his or her dependent, loss of the
Participant’s property due to casualty, or other extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant. A financial need shall not constitute a Hardship unless it is for
at least $500,000 or the entire value of the principal amount of the
Participant’s Deferred Share Rights.

 

(i) Funding. Deferred Share Rights shall be paid from the general assets of the
Company or as otherwise directed by the Company. To the extent that any
Participant acquires the right to receive Deferred Share Rights under the Plan,
such right shall be no greater than that of an unsecured general creditor of the
Company. Participants and their Beneficiaries shall not have any preference or
security interest in the assets of the Company other than as a general unsecured
creditor.

 

(j) Designation of Beneficiary. All amounts or Shares payable under the Plan
shall be paid to the appropriate Participant; provided, however, that a
Participant may, by written instruction during the Participant’s lifetime on a
form prescribed by Executive Compensation, designate one or more primary
Beneficiaries to receive the amount or Shares payable hereunder following the
Participant’s death, and may designate the proportions in which such
Beneficiaries are to receive such payments. A Participant may change such
designations from time to time, and the last written designation filed with the

 

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Committee prior to the Participant’s death shall control. A Beneficiary
designation shall not be considered effective unless made on a form prescribed
by Executive Compensation and which is delivered to Executive Compensation. If
any Participant shall fail to designate a Beneficiary or shall designate a
Beneficiary who shall fail to survive the Participant, the Beneficiary shall be
the Participant’s surviving spouse, or, if none, the Participant’s surviving
descendants (who shall take per stirpes) and if there are no surviving
descendants, the Beneficiary shall be the Participant’s estate.

 

7. Prorated Grants. If on any date, Shares of Common Stock are not available
under the Plan to grant to Non-Employee Directors the full amount of a grant of
Deferred Share Rights contemplated by the Plan, then each such affected director
shall receive an award of Deferred Share Rights equal to the number of Shares of
Common Stock then available under the Plan divided by the number of Non-Employee
Directors entitled to a grant of Deferred Share Rights on such date. Fractional
Shares shall be ignored and not granted. Any shortfall resulting from such
proration shall be paid in the form of cash.

 

8. Stock Ownership Guidelines. Each Non-Employee Director is expected to have or
acquire a minimum number of Shares of Common Stock (such minimum number is shown
on Exhibit A, as adjusted from time to time by the Board).

 

9. Adjustments.

 

(a) Notwithstanding any other term of this Plan, in the event that the Committee
determines that any Distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate
transaction or event, in the Committee’s sole discretion, affects the Common
Stock such that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to an
award or awards hereunder, then the Committee shall, in such manner as it may
deem equitable, adjust the number and type of shares (or other securities or
property) which may be granted under the Plan (including, but not limited to,
adjustments of the maximum number and kind of securities which may be issued).

 

(b) Notwithstanding any other term of this Plan, in the event of any corporate
transaction or event described in paragraph (a) which results in Shares being
exchanged for or converted into cash, securities or other property (including
securities of another corporation), all Deferred Share Rights granted under
Section 6 shall become the right to receive such cash, securities or other
property.

 

(c) The number of Shares finally granted under this Plan shall always be rounded
to the next lowest whole Share, subject to availability of Shares under Section
4. Any fractional Shares that would otherwise be deliverable shall be paid in
cash in an amount equal to the Fair Market Value of such fractional share.

 

(d) Any decision of the Committee pursuant to the terms of this Section 9 shall
be final, binding and conclusive upon the Participants, the Company and all
other interested parties.

 

10. Amendment. The Board may, at any time and from time to time, amend, modify
or terminate the Plan without stockholder approval (but subject to the
provisions herein requiring the consent of

 

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Participants for certain amendments); provided, however, that if an amendment to
the Plan would, in the reasonable opinion of the Board, require stockholder
approval under applicable laws, policies or regulations or the applicable
listing or other requirements of any securities exchange on which the Common
Stock is then listed or traded, then such amendment shall be subject to
stockholder approval. No termination, modification or amendment of the Plan
(other than an automatic amendment pursuant to the terms of the Plan) may,
without the consent of a Participant, adversely affect a Participant’s rights
under an award granted prior thereto.

 

11. Responsibility for Investment Choices. Each Participant is solely
responsible for any decision to receive Annual Retainer in the form of Deferred
Share Rights and accepts all investment risks entailed by such decision,
including the risk of loss and a decrease in the value of the amounts he or she
elects to receive in the form of Deferred Share Rights.

 

12. Indemnification. Each person who is or has been a member of the Committee or
who otherwise participates in the administration or operation of this Plan shall
be indemnified by the Company against, and held harmless from, any loss, cost,
liability or expense that may be imposed upon or incurred by him or her in
connection with or resulting from any claim, action, suit or proceeding in which
such person may be involved by reason of any action taken or failure to act
under the Plan and shall be fully reimbursed by the Company for any and all
amounts paid by such person in satisfaction of judgment against him or her in
any such action, suit or proceeding, provided he or she will give the Company an
opportunity, by written notice to the Committee, to defend the same at the
Company’s own expense before he or she undertakes to defend it on his or her own
behalf. This right of indemnification shall not be exclusive of any other rights
of indemnification.

 

The Committee and the Board may rely upon any information furnished by the
Company, its public accountants and other experts. No individual will have
personal liability by reason of anything done or omitted to be done by the
Company, the Committee or the Board in connection with the Plan.

 

13. Duration of the Plan. The Plan shall remain in effect until the annual
meeting of the Company’s stockholders held in 2009, unless terminated earlier by
the Board.

 

14. Expenses of the Plan. The expenses of administering the Plan shall be borne
by the Company.

 

The foregoing is hereby acknowledged as being the UnumProvident Corporation
Non-Employee Director Compensation Plan of 2004 as adopted by the Board of
Directors of the Company on                     , 2004.

 

UNUMPROVIDENT CORPORATION

By:

 

 

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Its:

 

 

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EXHIBIT A

 

RETAINERS, FEES AND SHARE OWNERSHIP GUIDELINES

 

Base Annual Retainer

 

Capacity of Service

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   Annual Amount

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   Payment Schedule

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Non-Employee Director

   $ 80,000    annually

 

Supplemental Annual Retainers

 

Capacity of Service

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   Annual Amount

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   Payment Schedule

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Chair or Co-Chair of the Board

   $ 200,000    quarterly

Chair of Audit Committee

   $ 7,500    annually

Chair of Compensation Committee

   $ 7,500    annually

Chair of Finance Committee

   $ 7,500    annually

Chair of Governance Committee

   $ 7,500    annually

 

Meeting Fees

 

Type of Meeting

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   Meeting Fee*

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   Payment Schedule

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Any Board or Committee meeting held in person (whether regularly scheduled or
specially called)

   $ 2,000    quarterly in arrears

Any Board or Committee meeting held by conference call (whether regularly
scheduled or specially called)

   $ 500    quarterly in arrears

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* A separate meeting fee is paid for each meeting attended, whether or not held
on the same day. A single meeting fee is paid for a single meeting that covers
more than one day.

 

Special Project Fees

 

Project

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   Fee

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   Payment Schedule

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Special project undertaken at request of the Board in capacity as a Non-Employee
Director

   Up to $ 1,000 per day    Upon completion of
project

 

Minimum Stock Ownership Guidelines: 20,000 Shares. Once the guideline level has
been achieved, the director is expected to hold such number of Shares until his
or her termination as a director.

 

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