Nield and Linda Montgomery - Page 7

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          agreement with MGC governing his employment status with MGC and             
          his ISOs (the 1999 employment agreement).  Pursuant to the 1999             
          employment agreement: (1) Petitioner resigned as president, chief           
          executive officer, and director of MGC, and he resigned as an               
          officer and director of MGC’s subsidiaries; (2) petitioner agreed           
          to assist MGC’s new chief executive officer “in order to provide            
          for a smooth transition for the Company”; (3) MGC agreed to make            
          a lump-sum payment of $360,000 to petitioner; (4) MGC and                   
          petitioner agreed to accelerate the vesting dates of petitioner’s           
          ISOs; and (5) petitioner and MGC agreed that petitioner would               
          continue to be employed by MGC through April 1, 2001, for the               
          purpose of providing advice regarding regulatory developments,              
          testimony at legal, regulatory, and administrative proceedings as           
          necessary, and other mutually agreed duties.                                
               After November 1, 1999, MGC never requested petitioner to              
          prepare any formal reports for the company, and petitioner did              
          not prepare any formal reports for MGC.                                     
               Table 2 sets forth (1) the fair market value of MGC shares             
          as of the dates petitioner’s ISOs were granted, and (2) the total           
          fair market value of all shares as to which petitioner’s ISOs               
          were exercisable for the first time during each of the years 1997           
          to 2001 (taking into account the accelerated vesting schedule               
          that MGC and petitioner agreed to on November 1, 1999):                     







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