Estate of Cyril I. Magnin, Deceased, Donald Isaac Magnin, Executor - Page 7




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          for the benefit of Cyril.  One-sixth of the stock was to be                 
          placed in each of the three remaining trusts, one trust for the             
          benefit of each of Joseph’s three grandchildren.  As the trustee            
          of the four trusts, Cyril had the power to vote the stock.  These           
          provisions were as promised by Joseph to Cyril under the October            
          31, 1951, agreement.  Additionally, Cyril received a life                   
          interest in the income from the Cyril Magnin Trust.                         
               On May 25, 1971, Cyril created three trusts, one for each of           
          his three children.  He transferred, inter alia, the proceeds of            
          his JM stock that had been sold in a 1969 buyout of all JM stock            
          by Amfac, Inc.  Under the terms of each trust, Cyril retained an            
          income interest for his life, and upon Cyril’s death, the trust             
          was to terminate, and the principal and undistributed income were           
          to be distributed to the beneficiary.  This transfer to the 1971            
          trusts was made in fulfillment of Cyril’s obligations under the             
          October 31, 1951, agreement with Joseph.                                    
          Facts Related to Value of JM and Specialty                                  
               JM originally operated one location in downtown San                    
          Francisco.  In 1928, a second store was opened in Palo Alto,                
          California, and three other stores were opened between 1943 and             
          1950--one in San Mateo and two in Sacramento, California.  JM did           
          not begin to expand considerably until the mid-1950's, eventually           
          operating 32 stores by the end of 1969.  JM was primarily engaged           
          in the sale of women’s clothing and accessories, and it also                






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