Nield and Linda Montgomery - Page 5

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          Option Plan (the MGC stock option plan) which provided in                   
          pertinent part:  (1) The plan would be administered by a                    
          committee of no fewer than two “disinterested persons” (the                 
          committee), who would be appointed by MGC’s board of directors              
          (MGC board) from its membership or, in the absence of such                  
          appointments, by the entire MGC board; (2) the committee would              
          have the sole discretion to (a) select the persons to be granted            
          options, (b) determine the number of shares subject to each                 
          option, (c) determine the duration of the exercise period for any           
          option, (d) determine that options may only be exercised in                 
          installments, and (e) impose other terms and conditions on each             
          option as the committee in its sole discretion deemed advisable.            
          The MGC stock option plan expressly contemplated that the                   
          committee would grant to MGC employees ISOs within the meaning of           
          sections 421 and 422.                                                       
               2.  Petitioner’s Incentive Stock Options                               
               On April 1, 1996, September 4, 1998, and March 1, 1999,                
          petitioner executed a series of share option agreements under               
          which he was granted ISOs from MGC.  Each of the share option               
          agreements stated that if petitioner were considered an “insider”           
          subject to section 16(b) of the Exchange Act, petitioner “shall             
          be restricted from selling any Option Shares acquired by him                
          through exercise of the Options or any portion thereof during the           
          six (6) month period following the date of grant of the Option.”            






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