DIRECTOR COMPENSATION

                    The board of directors' general policy on director
compensation is that compensation for independent directors should consist of
both cash and equity-based compensation. Directors who are our employees
(currently Mr. Beattie) are not paid for board service in addition to their
regular employee compensation. Effective as of June 22, 2004, non-employee
directors (currently Messrs. Berens, Dooley, Mauran, Tatham and Thomas) are paid
an annual retainer of $25,000 and a fee of $1,000 for each meeting of our board
of directors attended or a committee of the board attended on a date separate
from a board meeting. In the event a committee meeting is on the same date as a
board meeting, the board member receives $500 for attending the committee
meeting. A $3,500 annual retainer is paid to the audit committee chairperson and
a $2,500 annual retainer is paid to the compensation committee chairperson. In
addition to the cash compensation, non-employee directors receive a grant of
stock options for 7,000 shares of our common stock under our Non-Employee
Director Stock Option Plan upon re-election to the board at each annual meeting
of shareholders. The options are exercisable three years after the date of
grant, and the exercise price for each option is equal to the closing price of
our common stock on the date of grant. In addition, our board members were
reimbursed for all expenses incurred in connection with their activities as
directors.