Frank and Barbara Biehl - Page 4

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          restrictions on transfer, including maintenance of S election,              
          rights of first refusal, the effects of involuntary transfers,              
          legending shares, the status of transferees, and so on.  The                
          agreement recites that the parties intend that all present and              
          future individual shareholders, other than Mrs. Biehl and the               
          spouse of another shareholder employee, would be employees of the           
          corporation, but that nothing in the agreement is intended to               
          create or imply any obligation of NCMI to employ or continue to             
          employ any shareholder.                                                     
               In March 1994, petitioners filed an action in Santa Clara              
          County, California, Superior Court against NCMI and its other               
          shareholders.  Petitioners were represented by the law firm of              
          Olimpia, Whelan, & Lively.  Petitioners’ original fee agreement             
          dated May 31, 1994, required petitioners to pay Olimpia, Whelan,            
          & Lively an hourly fee for its services.  The second fee                    
          agreement, dated January 25, 1996, changed the original hourly              
          fee agreement to a contingency fee agreement.  Under the terms of           
          the contingency fee agreement, petitioners agreed to pay Olimpia,           
          Whelan, & Lively one-third of all sums recovered.                           
               Petitioners’ action against NCMI included a claim for                  
          wrongful termination of Mr. Biehl’s employment as vice president            
          and general manager of NCMI and a claim for dissolution of NCMI             
          that would have entitled petitioners to be paid for their shares            

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