Chief Industries, Inc. and Subsidiaries - Page 8

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          was still a member of the board at that time.  Pursuant to the              
          Mid-Am purchase agreement, petitioner acquired Mid-Am, and Mid-             
          Am’s sole shareholder, Thomas Hastings (Hastings), received,                
          among other things, 58,366 shares of stock in petitioner, a put,            
          and the entitlement to more shares as an earn-out.  The                     
          consideration received by Hastings, a college friend of R.                  
          Eihusen, was unusually generous as compared with the                        
          consideration petitioner used in other acquisitions, and V.                 
          Eihusen believed that this transaction was undertaken for the               
          purpose of diluting his ownership interest in petitioner.                   
               V. Eihusen filed a third-party complaint in the ESOP                   
          litigation against members of the board, alleging that they                 
          committed a breach of fiduciary duty owed to him and to other               
          shareholders of petitioner and that they engaged in civil                   
          conspiracy.  Subsequently, he amended the third-party complaint             
          to name petitioner and Hastings as defendants.  V. Eihusen prayed           
          in the third-party complaint for an injunction, the rescission of           
          agreements among and between petitioner, Mid-Am, and Hastings, an           
          award of attorney’s fees and costs, and for the ordering of other           
          types of relief.  On October 30, 1995, the District Court                   
          dismissed the third-party complaint, as amended, for lack of                
          subject matter jurisdiction.                                                
               Following this dismissal, V. Eihusen on November 14, 1995,             
          filed a lawsuit in the District Court of Hall County, Nebraska              






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