-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V8DmZi4Z+KBfqFmPmFZYjS7AdHQt6uWMXR7b0XmmfExP2EehQOLWSdBEhokkk+gU 6zXT4ylQJ+Ogb1vdRLO4Qg== 0000863111-96-000017.txt : 19961011 0000863111-96-000017.hdr.sgml : 19961011 ACCESSION NUMBER: 0000863111-96-000017 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960930 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19961010 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MG PRODUCTS INC CENTRAL INDEX KEY: 0000863111 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 330098392 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18660 FILM NUMBER: 96641956 BUSINESS ADDRESS: STREET 1: 8154 BRACKEN CREEK CITY: SAN ANTONIO STATE: TX ZIP: 78266-2143 BUSINESS PHONE: 2106515288 MAIL ADDRESS: STREET 1: 8154 BRAKEN CREEK CITY: SAN ANTONIO STATE: TX ZIP: 78266-2143 FORMER COMPANY: FORMER CONFORMED NAME: CREST INDUSTRIES INC DATE OF NAME CHANGE: 19930328 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) September 30, 1996 M.G. Products, Inc. (Exact Name of Registrant as Specified in Charter) California 0-18660 33-0098392 (State or Other (Commission File (IRS Employer Jurisdiction if Number) Indentification) of Incorportion 8154 Bracken Creek, San Antonio, Texas 78266-2143 (Address of Principal Executive Offices) (ZipCode) Registrant's telephone number,including area code (210)651-5188 Item 1. Changes in Control of Registrant. On September 30, 1996, M.G. Products, Inc. ("M.G.") sold 3,642,076 shares (the "Shares") of its authorized but theretofore unissued no par value common stock to Exportadora Cabrera, S.A. de C.V. ("Exportadora"), a major M.G. shareholder and creditor, pursuant to a Purchase Agreement dated as of September 30, 1996 between Exportadora and M.G. The Purchase Agreement constitutes Exhibit 1 to this Report. The Shares were issued in cancellation of $2,003,141 of M.G.'s indebtedness to Exportadora. The $2,003,141 indebtedness was incurred in M.G.'s acceptance of cash advances and the purchase of goods and services from several subsidiaries of Exportadora. Immediately after the closing of the transaction, Exportadora owned 7,245,144 of the then outstanding 14,206,154 shares, being 51%. The price of 55> per share was determined by arms-length negotiations between the independent directors of M.G. and representatives of Exportadora in June of 1996. The delay in closing the transaction was due, inter alia, to the requirement of filing a pre-merger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Exportadora purchased the Shares for investment. The Shares are subject to the Shareholders' Agreement referred to below. Concurrent with the execution of the Purchase Agreement and as a condition to the sale of the Shares, M.G., Exportadora, Michael P. Farrah, the Michael Patrick Farrah Trust, a recently created and as yet unfunded revocable inter-vivos trust, the Shannon Ann Farrah Trust, Shannon Ann Farrah, the 1996 Shannon Ann Farrah Trust and the 1996 Michael P. Farrah Trust (collectively hereinafter referred to as the "Participants") entered into a Shareholders' Agreement dated September 30, 1996. A copy constitutes Exhibit 2 to this Report. The major provisions of the Shareholders'Agreement are: (i) Restrictions Against Transfer. The Shareholders' Agreement contains restrictions against the transfer of shares of M.G. common stock by the Participants, and grants Participants options and rights of first refusal to purchase shares from other Participants, under certain circumstances. (ii) Voting Agreement and Irrevocable Proxy. The Shareholders' Agreement provides that for voting purposes the shares of the Participants will be pooled and then equally divided between two groups (the Farrah Group and the Exportadora Group) so as to achieve equal voting power between the two groups despite the fact that one group owns a greater number of shares than the other. The Farrah Group consists of Michael P. Farrah, the Michael Patrick Farrah Trust, the 1996 Michael P. Farrah Trust, Shannon Ann Farrah, the 1996 Shannon Ann Farrah Trust, and the Shannon Ann Farrah Trust. Michael Farrah is the sole beneficiary of the independently trusteed 1996 Michael P. Farrah Trust, and of the Michael Patrick Farrah Trust, of which he is the trustee. Shannon Ann Farrah is the sole beneficiary of the independently trusteed Shannon Ann Farrah Trust and of the independently trusteed 1996 Shannon Ann Farrah Trust. The Exportadora Group consists of Exportadora Cabrera, S.A. de C.V. and of Mr. Juan Pablo Cabrera. Mr. Juan Pablo Cabrera, who on September 30, 1996 owned 30,770 shares of M.G.'s common stock is a director of M.G. and its Chairman of the Board and Chief Executive Officer. Mr. Cabrera is also an officer of Rooster Products, Inc., the U.S. marketing and distribution subsidiary of Exportadora, based in San Antonio, Texas. The pooled shares will be voted for the Farrah Group by Michael P. Farrah and for the Cabrera Group by Alejandro Cabrera Robles, or their successors or assigns, pursuant to irrevocable proxies. Michael Farrah is Vice President of Manufacturing of an affiliate of M.G. and a Director of M.G. Mr. Alejandro Cabrera Robles is the Chairman of Exportadora, a Mexican holding company which he controls, based in Guadalajara, Mexico, is a director of M.G. and is the father of Juan Pablo Cabrera. As shown in the table on page 4, on October 1, 1996 the Farrah Group owned 3,642,965 shares and the Cabrera Group owned 7,275,914 shares of M.G. common stock. The Shareholders' Agreement terminates on September 30, 1999 or earlier if sales or other dispositions by the Farrah Group or the Cabrera Group pursuant to the Shareholders' Agreement have resulted in such Group owning less than 50% of that Group's shares shown in the preceding paragraph. (iii) Registration Rights. The Shareholders' Agreement grants the Participants the right to include all or any of their shares of M.G. common stock in Registration Statements that M.G. may file under the Securities Act of 1933. If before September 30, 1998 no Participant had the opportunity to participate in any such Registration Statement, the Participants have the one-time right to demand that M.G. register any or all of their M.G. shares. (iv) Other Provisions. The foregoing summary of certain provisions of the Shareholders' Agreement does not fully describe the agreement, which includes numerous other provisions typically contained in agreements of this type. Reference is made to the Shareholders' Agreement of which a copy is filed as Exhibit 2 to this Report. The following table sets forth as of October 1, 1996 information with respect to the beneficial ownership of M.G.'s common stock by each member of the Farrah Group and of the Exportadora Group.
Shareholder No. of Shares Percent of Name and Address Outstanding Shares Exportadora Cabrera, SA de CV. Paraiso 1750 Colonia del Fresno Guadalajara, Jalisco Mexico 44900 7,245,144 51% Juan Pablo Cabrera 8154 Bracken Creek San Antonio, Texas 78266-2143 30,770 * Michael Farrah 8154 Bracken Creek San Antonio, Texas 78266-2143 883,557 6.22% Michael Patrick Farrah Trust c/o Michael Farrah 8154 Bracken CreekSan Antonio, Texas 78266-2143 0 0 Shannon Ann Farrah 11730 E. Lusitano Place Tucson, Arizona 85748 100,000 * The Shannon Ann Farrah Trust Edward C. Kliem, Jr., trustee 21671 Branta Circle Huntington Beach, California 92646 779,547 5.49% The1996 Michael P.Farrah Trust Barry R. Shreiar, trustee 4590 MacArthur Boulevard,Suite 390 Newport Beach, California 92660 939,930 6.62% 1996 Shannon Ann Farrah Trust Barry R. Shreiar, trustee 4590 MacArthur Boulevard,Suite 390 Newport Beach, California 92660 939,931 6.62% *Less than 1%
The voting rights and investment power with respect to all of these shares are restricted pursuant to the terms of the Shareholders' Agreement. The shares in the 1996 Michael P. Farrah Trust and the 1996 Shannon Ann Farrah Trust were sold to the Trusts by Mr. Patrick Farrah, the father of Michael and of Shannon and formerly a director and the Chief Executive Officer of M.G. Each Trust paid for the shares with its Promissory Note which is collateralized by a pledge of the shares. Accordingly, should there be a default in the payment of principal or interest on the Promissory Notes or any other default under the Pledge Agreements, Patrick Farrah has the right to foreclose on the shares in the Trust involved. In such event the Participants have the right of first refusal to acquire the shares proposed to be foreclosed on. The 1996 Michael P. Farrah Trust and the 1996 Shannon Ann Farrah Trust and the attachments thereto are filed as Exhibits 3 and 4 respectively, to this Report on Form 8-K. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Businesses Acquired. None (b) Pro Forma Financial Information. None (c) Exhibits. Exhibit 1 Purchase Agreement dated September 30, 1996, exclusive of the exhibits thereto. Exhibit 2 Shareholders' Agreement dated September 30, 1996 Exhibit 3 The 1996 Michael P. Farrah Trust Exhibit 4 The 1996 Shannon Ann Farrah Trust SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. M.G. PRODUCTS, INC. October 8, 1996 By /s/ ISHMAEL D.GARCIA Ishmael D. Garcia Chief Financial Officer EXHIBIT INDEX Exhibit No. Description Exhibit 1 Purchase Agreement dated September 30, 1996 between M.G. Products, Inc. and Exportadora Cabrera, S.A. de C.V., exclusive of exhibits thereto. Exhibit 2 Shareholders' Agreement dated September 30, 1996 among M.G. Products, Inc., Exportadora Cabrera, S.A. de C.V., Michael P. Farrah, The Shannon Ann Farrah Trust, Shannon Ann Farrah, The 1996 Shannon Ann Farrah Trust, and The 1996 Michael P. Farrah Trust. Exhibit 3 The 1996 Michael P. Farrah Trust Exhibit 4 The 1996 Shannon Ann Farrah Trust EX-99 2 N:\DOCS\57415\000\4950607Z.040 If you are looking for initial codes, hit CTRL-I. You can edit the format of your document here, such as: page length, fonts, left/right/top/bottom margins, etc. PURCHASE AGREEMENT September 30, 1996 Exportadora Cabrera, S.A. de C.V. Paraiso #1750 Colonia Del Fresno Guadalajara, Jal. Mexico C.P. 44900 Gentlemen: M.G. Products, Inc., a California corporation (the "Company"), proposes to issue and sell to you 3,642,076 fully paid and nonassessable shares of its authorized but heretofore unissued common stock, no par value per share (hereinafter called the "Stock"). You have advised the Company that you desire to purchase the Stock upon the terms and subject to the conditions set forth in this Purchase Agreement. 1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions and upon the representations, warranties and agreements herein set forth, on September 30, 1996 (the "Closing Date") the Company agrees to issue and sell the Stock to you and you agree to purchase the Stock from the Company at a total purchase price of $2,003,141.85 ($0.55 per share) which will be paid by the cancellation on the Closing Date of $2,003,141.85 of our indebtedness to you. 2. REPRESENTATIONS AND WARRANTIES BY COMPANY. The Company represents, warrants and agrees with you that: (a) The Company is duly organized and validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to carry on its business. (b) The Company's Report on Form 10-K for the fiscal year ended December 31, 1995 and the Company's Reports on Form 10- Q for the quarters ended March 31 and June 30, 1996 (collectively herein referred to as the "Reports") are attached as Exhibits A, B and C. The financial statements included in the Reports (hereafter referred to as the "Financial Statements") have been prepared in accordance with generally accepted accounting principles for such Reports, consistently followed throughout the periods covered. The June 30, 1996 balance sheet fairly presents the condition of the Company at June 30, 1996 and the statement of profit and loss for the quarter then ended fairly presents the results of the operations of the Company for such period. (c) Neither this Agreement, nor the Financial Statements, nor any certificate furnished or to be furnished to you by the Company or any officer thereof, contain or will contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading and the Company has apprised you of all such facts as would be relevant to a prudent investor's determination in making an additional investment in the Company. (d) To the knowledge of the Company, no fact or condition exists or is contemplated or threatened which might result in a material adverse change in the assets, liabilities or condition (financial or otherwise) or business of the Company in the future, which have not been disclosed to you in the Financial Statements, other supporting documents or in discussions. (e) Since June 30, 1996, the Company has not declared any cash dividend or declared or made any other distribution on any of its stock, and has not directly or indirectly, purchased or otherwise acquired any stock of the Company or agreed to do so. (f) Since June 30, 1996, neither the business nor the condition (financial or otherwise) of the Company, nor any of its properties or assets has been materially adversely affected in any way (whether or not insured) as the result of any revocation of license or right to do business, fire, explosion, labor trouble, condemnation, Act of God or otherwise. (g) Except as set forth in the Financial Statements there is no action, proceeding, or investigation pending or, to the knowledge of the Company, threatened which might result in any materially adverse change in the Company's business or condition (financial or otherwise) or in any of its properties or assets, or in any liability on the part of the Company (not covered by insurance), or which questions the validity of this Agreement or of the Stock or of any action taken or to be taken by the Company pursuant to or in connection with this Agreement. The Financial Statements set forth accurately and in reasonable detail all litigation to which the Company is a party at the date hereof wherein relief sought is other than money damages or if the only relief sought is money damages, involving an amount in excess of $50,000. (h) The Company's Articles of Incorporation, as amended, authorize the issuance of 15,000,000 shares of common stock of which 10,564,078 shares are outstanding on the date hereof. Except as shown in the Reports, no rights, options, warrants or other agreements for the issuance of stock of the Company, nor any securities convertible into stock of the Company are outstanding. All corporate action necessary for the issuance of the Stock has been duly taken. (i) Except as shown in the Reports, the Company has no stock option plan, pension plan, profit sharing plan, or bonus plan for its employees. 3. MECHANICS OF THE CLOSING. (a) The delivery to you of the Stock and the payment by you therefor shall be made at the Company's office in San Antonio, Texas at 10 A.M. on September 30, 1996. This date may by agreement in writing signed by the Company and Mr. Juan Carlos Rodriguez, as your representative, be changed to a date and/or an hour other than set forth above, and in the event that any such agreement is entered into the altered date or hour shall for all purposes of this Agreement become the Closing Date. (b) Delivery of the Stock shall be made to you on the Closing Date against cancellation of the indebtedness referred to in Section 1 hereof. (c) The certificate for the Stock when delivered shall be in definitive form, shall be registered in your name and shall bear the legends shown on Exhibit D. 4. PURCHASER'S CONDITIONS PRECEDENT TO THE CLOSING. Your obligations to purchase and pay for the Stock are subject to the accuracy on the Closing Date of all representations and warranties by the Company contained herein or otherwise made by or on behalf of the Company in writing in connection with the transactions contemplated hereby, and to the fulfillment to your satisfaction, prior to or at the Closing Date, of the following additional conditions: (a) You shall have received from Kindel & Anderson L.L.P., securities counsel for the Company, a favorable opinion addressed to you and dated the Closing Date, substantially in the form of Exhibit E. (b) The Company shall have performed and complied with all covenants and conditions contained herein required to be performed or complied with by it prior to or at the Closing Date. (c) The Company shall have delivered to you its certificate dated the Closing Date and signed by its Chief Financial Officer certifying in form satisfactory to you and to your counsel that the conditions specified in sub-paragraph (b) of this paragraph 4 have been met and that, in particular, the issue and sale of the Stock are in full compliance with the provisions of the Articles of Incorporation of the Company, as amended, and the By-laws of the Company, as amended. (d) The Company shall have delivered to you the certificate evidencing the Stock. 5. COMPANY'S CONDITIONS PRECEDENT TO THE CLOSING. (a) The Company shall have received a fully executed copy of a shareholder's agreement, substantially in the form of Exhibit F hereto. (b) The Company shall have received the evidence of cancellation of indebtedness provided for in Section 3. 6. INVESTMENT REPRESENTATIONS. You understand that the Stock is offered and sold to you pursuant to an exemption commonly referred to as the "Private Placement" or "Non-public Offering" exemption from the registration requirements under the Securities Act of 1933 (the "Act"). You also understand that the Stock is subject to restrictions on transfer and resale and may not be transferred or resold except as permitted under the Act and the applicable state securities laws, pursuant to registration or exemption therefrom, and that, except as shown in Exhibit F, the Company has no intention to register the shares under the Act. You agree that you will purchase the Stock for your own account for investment and with no present intention of distributing or reselling the same, but subject to your right to dispose of the Stock if at some future time you deem it advisable so to do. 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All covenants, agreements, representations and warranties made herein and in any documents delivered at the Closing or pursuant thereto, shall be deemed to be material and to have been relied upon by you, and shall survive the Closing to the extent immediately hereinafter provided. All liabilities of the Company with respect to such covenants, agreements, representations and warranties shall terminate and expire on the first anniversary of the Closing Date; provided, however, that all such liabilities shall survive beyond the aforesaid one-year period in respect of any claim that shall be asserted in reasonable detail by written notice mailed to the Company on or prior to said first anniversary. 8. NOTICES. Any notice, request, instructions or other document deemed by either party to be necessary or desirable to be given to the other parties shall be in writing and shall be delivered by public courier service as follows: If to Exportadora: Exportadora Cabrera, S.A. de C.V. Paraiso #1750 Colonia Del Fresno Guadalajara, Jal. Mexico C.P. 44900 Attn: Mr. Juan Carlos Rodriguez If to the Company: M.G. Products, Inc. 8154 Bracken Creek San Antonio, Texas 78266-2143 Attn: Chief Financial Officer The addresses to which deliveries must be made may be changed from time to time by a notice delivered as aforesaid. 9. MISCELLANEOUS. (a) All the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto whether so expressed or not. (b) This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of California without giving effect to principles of conflicts of laws. (c) This Agreement may be executed in several counterparts each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Please confirm that the foregoing correctly sets forth the agreement between us by signing a copy of this agreement in the place provided below and returning the same to us. When confirmed by you, this letter will constitute the Agreement between the Company and you. M.G. PRODUCTS, INC. By: EXPORTADORA CABRERA, S.A. DE C.V. By: LIST OF EXHIBITS EXHIBIT A 10-K B 10-Q for first quarter C 10-Q for second quarter D Legends E Kindel & Anderson L.L.P. opinion F Shareholder Agreement EXHIBIT D "The securities evidenced by this certificate have not been registered pursuant to the Securities Act of 1933, as amended (the "Act"), or any state securities law, and such securities may not be sold, transferred or otherwise disposed of unless the same are registered and qualified in accordance with the Act and any applicable state securities laws, or in the opinion of counsel reasonably satisfactory to the Company, such registration and qualification are not required." "The shares represented by this certificate are subject to an irrevocable proxy and certain restrictions against transfer under the terms of a Shareholders' Agreement entered into by and among this Company and certain of its shareholders, effective as of September 30, 1996, a copy of which is on file at the Company's principal place of business or registered office. A copy of such Agreement will be furnished to the holder hereof without charge upon written request to the Company at its principal place of business or registered office." EX-99 3 CORPSA:2131.5 30296-1 AND ADJUST T SHAREHOLDERS' AGREEMENT dated September 30, 1996 by and among M.G. PRODUCTS, INC. a California corporation and EXPORTADORA CABRERA, S.A. DE C.V., a Mexican corporation, MICHAEL P. FARRAH, THE MICHAEL PATRICK FARRAH TRUST, THE SHANNON ANN FARRAH TRUST, SHANNON ANN FARRAH , THE 1996 SHANNON ANN FARRAH TRUST, and THE 1996 MICHAEL P. FARRAH TRUST as shareholders TABLE OF CONTENTS ARTICLE 1 General Restriction Against Transfer 1.1 No Transfers Except Pursuant to Agreement. 1.2 Statement on Certificates. 1.3 Delivery of Agreement to All Parties; Company to Maintain Master Copy. 1.4 Shares Subject Hereto. ARTICLE 2 Voting Agreement 2.1 Voting. 2.2 Number of Shares. ARTICLE 3 Optional Purchase Upon Occurrence of Certain Purchase Events 3.1 Purchase Events. 3.2 Notice of Purchase Event. 3.3 Company's Option to Purchase. 3.4 Other Shareholders' Option to Purchase. 3.5 Purchase Price; Manner of Payment; Closing. 3.6 Right to Transfer Unpurchased Shares; Continuation of Restrictions. ARTICLE 4 Purchase Price of Shares 4.1 If Purchase Event is a Proposed Sale of Shares. 4.2 Listed Shares. 4.3 Unlisted Shares. ARTICLE 5 Closings and Payment of Purchase Price 5.1 Place and Date of Closing. 5.2 Payment of Purchase Price. 5.3 Delivery of Shares. 5.4 Insufficient Corporate Surplus. 5.5 Status of Shares Purchased by Company. ARTICLE 6 Registration Rights 6.1 Piggyback Registration. 6.2 Demand Registration. 6.3 Expenses. 6.4 Maintenance of Registration Statement and Prospectus. 6.5 Blue Sky Qualification. 6.6 Indemnification. ARTICLE 7 Pledges 7.1 Right to Pledge. 7.2 Foreclosure on Pledged Shares. ARTICLE 8 Termination of Agreement 8.1 Events Causing Termination. 8.2 Issuance of New Certificates. ARTICLE 9 Defined Terms ARTICLE 10 Miscellaneous 10.1 Prior Agreements Superseded. 10.2 Governing Law. 10.3 Notices. 10.4 Amendment. 10.5 Waiver of Option Period. 10.6 Successors and Assigns. 10.7 Waiver of Breach. 10.8 Specific Performance. 10.9 Legal Construction. 10.10Counterparts. 10.11Headings. 10.12Gender. Schedule A A-1 Shareholders and Shares Subject to Agreement A-1 Schedule B B-1 Valuation of Shares B-1 SHAREHOLDERS' AGREEMENT THIS SHAREHOLDERS' AGREEMENT is entered into effective the 30th day of September, 1996 by and among the Company and the Shareholders, with respect to all of the issued and outstanding Shares. Capitalized terms used in this Agreement shall have the meanings set forth in Article 9 hereof. W I T N E S S E T H: WHEREAS, this Agreement serves as a voting agreement and irrevocable proxy among the Company and the Shareholders for the purpose of achieving voting parity among certain of the Shareholders; WHEREAS, this Agreement also provides for the optional purchase of Shares held by a Shareholder upon the occurrence of various events, including (i) a proposed transfer of the Shareholder's Shares to a third party or another Shareholder, (ii) the occurrence of an Event of Bankruptcy with respect to the Shareholder, (iii) the mental incompetence of a Shareholder who is a natural person, or (iv) the death of the Shareholder; and WHEREAS, the Company and the undersigned Shareholders have determined that it is in their respective best interests to enter into this Agreement for the following reasons: 1. the Agreement provides that, only for purposes of shareholder voting, the Shares will be pooled and then equally divided between two different groups, which collectively constitute all of the Shareholders, so as to achieve equal voting power between the two groups, despite the fact that one group owns a greater number of Shares than does the other group; 2. the Agreement will facilitate continuity of harmonious management by allowing the Shareholders to prevent ownership of the Shares from passing to persons unacceptable to them; 3. the Agreement establishes a fair price for the Shares if such shares are no longer listed on a securities exchange or other trading system and in the event of any transfer under the circumstances described above; NOW, THEREFORE, in consideration of the mutual representations, warranties and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE General Restriction Against Transfer 1.1 No Transfers Except Pursuant to Agreement. Each Shareholder agrees that he will not transfer, assign, hypothecate, or in any way alienate any of his Shares, or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except in accordance with the terms and conditions of this Agreement. Any purported transfer in violation of any provision of this Agreement shall be void and ineffectual, and shall not operate to transfer any interest or title to the purported transferee; provided, however, that any member of the Cabrera Group or the Farrah Group may transfer their Shares to any other member of their respective Group. 1.2 Statement on Certificates. The Company and the Shareholders agree that all certificates representing the Shares shall bear the following legend: "The shares represented by this certificate are subject to an irrevocable proxy and certain restrictions against transfer under the terms of a Shareholders' Agreement entered into by and among this Company and certain of its shareholders, effective as of September 30, 1996, a copy of which is on file at the Company's principal place of business or registered office. A copy of such Agreement will be furnished to the holder hereof without charge upon written request to the Company at its principal place of business or registered office." All Shares hereafter issued by the Company to the Shareholders shall bear a similar legend. 1.3 Delivery of Agreement to All Parties; Company to Maintain Master Copy. A fully executed counterpart of this Agreement shall be delivered to each of the parties hereto, but the counterpart delivered to the Company shall be deemed the master copy of this Agreement, and in the event of any discrepancies among the various counterparts hereof such master copy shall control. 1.4 Shares Subject Hereto. This Agreement shall apply to all of the Shares presently owned by the Shareholders, as listed on Schedule A attached hereto, and to all Shares of the Company's common stock hereafter acquired by the Shareholders. A listing of any additional Shares hereafter acquired by the Shareholders, shall be endorsed on Schedule A attached to the counterpart of this Agreement maintained at the principal offices of the Company, and each listing so endorsed shall be verified by the signatures of the President or Vice President and of the Secretary of the Company. If a Shareholder becomes the record or beneficial owner of any Shares which, through inadvertence or oversight, are not listed on Schedule A hereto, such Shares shall nevertheless be subject to all of the terms and conditions of this Agreement. ARTICLE Voting Agreement 3.1 Voting. Before exercising their voting rights on any matter submitted to a vote at a meeting of the shareholders or to be acted upon by the shareholders by written consent, the Shareholders will pool all of the Shares. The Shareholders will then, and only for the purposes of shareholder voting, equally divide the number of Shares between the Cabrera Group and the Farrah Group, as such terms are defined in Article 9 hereof. By doing so, the Cabrera Group and the Farrah Group will have equal voting power as shareholders of the Company. It is the Shareholders' intent that the Cabrera Group and the Farrah Group are to have equal voting power with respect to any and all matters brought to a vote of the shareholders of the Company, despite the fact that either the Farrah Group or the Cabrera Group may possess a greater number of Shares than the other. Therefore, the Farrah Group grants to the Cabrera Group, and the Cabrera Group grants to the Farrah Group an irrevocable proxy upon execution of this Agreement and until the termination of this Agreement, whereby each proxy holder agrees to vote the necessary number of Shares with the proxy grantor to achieve the equal voting power referred to in this Section 2.1. The individuals directing the voting for each group shall be: Michael P. Farrah on behalf of the Farrah Group and Alejandro Cabrera on behalf of the Cabrera Group, or their successors or assigns. 3.2 Number of Shares. At the time of execution of this Agreement, the Cabrera Group and the Farrah Group each held the following number of Shares in the Company: CABRERA GROUP: 7,275,914 SHARES FARRAH GROUP: 3,642,965 SHARES ARTICLE Optional Purchase Upon Occurrence of Certain Purchase Events 3.1 Purchase Events. Upon the occurrence of any of the following Purchase Events with respect to a Selling Shareholder, the Company and the other Shareholders shall have options to purchase the Selling Shareholder's Shares, as hereinafter described in this Article 3: A the Selling Shareholder receives and desires to accept a bona fide offer for the purchase of all or a portion of his Shares (or any rights or interests therein), whether from a person who is not a party to this Agreement or from another Shareholder; B. the Selling Shareholder, if a natural person, is adjudged to be mentally incompetent by a court of competent jurisdiction; C. an Event of Bankruptcy occurs with respect to the Selling Shareholder; D. any of the Selling Shareholder's Shares are foreclosed against or levied upon for the payment of his debts; E. the Selling Shareholder who is a natural person dies; F. the Selling Shareholder who is a trust is required pursuant to the terms of the agreement creating such trust to transfer, sell or otherwise dispose of the Shares held in such trust to an individual or entity other than those appearing in the definition of the Cabrera Group if such trust is part of the Cabrera Group or the Farrah Group if such trust is part of the Farrah Group; or G. the Selling Shareholder proposes or is required to make any other voluntary or involuntary transfer of his Shares. 3.2 Notice of Purchase Event. Promptly following the occurrence of a Purchase Event described in Section 3.1 above, the Selling Shareholder shall give written notice of the Purchase Event to the Company and the other Shareholders (the "Notice"). The Notice shall be effective at a date determined in accordance with Section 10.3 hereof (the "Effective Date of the Notice"). The Notice shall contain the following information: the nature and relevant details of the Purchase Event; the number of Shares affected by the Purchase Event (the "Offered Shares"); and if the Purchase Event is an offer to purchase the Selling Shareholder's Shares under Section 3.1.A above: 1. the name of the proposed purchaser; 2. the price per Offered Share offered by the proposed purchaser (or the cash equivalent price per Offered Share if the proposed purchaser offered to exchange property other than cash for the Offered Shares); 3. whether payment is to be made in lump sum or in installments; 4. if payments are to be made in installments, the number of installments, the schedule of payments and the rate of interest to be charged on outstanding unpaid amounts; 5. all other terms and conditions of the proposed transfer; and 6. a statement signed by the proposed purchaser that he has agreed to execute and become a party to this Agreement following such transfer. 3.3 Company's Option to Purchase. During a period of thirty(30) days after the Effective Date of the Notice, the Company shall have an exclusive option to purchase all, but not less than all, of the Offered Shares. If the Selling Shareholder is a member of the board of directors of the Company, he shall not participate in or vote upon the Company's decision as to whether to exercise this option. If the Company decides to exercise this option, it shall give written notice of exercise to the Selling Shareholder prior to the expiration of the thirty (30) day option period. 3.4 Other Shareholders' Option to Purchase. If the Company does not exercise its purchase option, then during a period from thirty- one (31) to sixty (60) days after the Effective Date of the Notice, the Shareholders other than the Selling Shareholder shall have an exclusive option to purchase all, but not less than all, of the Offered Shares. If the other Shareholders decide to exercise this option, they shall give written notice of exercise to the Selling Shareholder prior to the expiration of the option period described in this Section 3.4. Unless the purchasing Shareholders agree otherwise, each purchasing Shareholder shall be entitled to purchase that portion of the Offered Shares that the number of Shares held by him bears to the number of Shares held by all of the purchasing Shareholders. 3.5 Purchase Price; Manner of Payment; Closing. The purchase price for Shares purchased pursuant to this Article 3 shall be determined in accordance with Article 4 of this Agreement. The manner in which the purchase price may be paid, and the place, date and manner of closing of the purchase, shall be determined in accordance with Article 6 of this Agreement. 3.6 Right to Transfer Unpurchased Shares; Continuation of Restrictions. If the purchase options provided in this Article 3 are not exercised, the Selling Shareholder shall have the following rights: If the Purchase Event is an offer to purchase the Selling Shareholder's Shares under Section 3.1.A above, then during a period from sixty-one (61) to ninety (90) days after the Effective Date of the Notice the Selling Shareholder shall have the right to transfer the Offered Shares to the proposed transferee on the same terms and conditions and at a price equal to or in excess of (but not less than) the price specified in the Notice. The purchaser must execute and become a party to this Agreement. If the Purchase Event is one of the events described in Sections 3.1.B through .G, then during a period from sixty- one (61) to one hundred eighty (180) days after the Effective Date of the Notice the Selling Shareholder, or its representatives, may proceed to transfer the Offered Shares in the manner contemplated by the Notice (if the Notice contemplated any transfer). If the Offered Shares are not transferred within the applicable period set forth above, the restrictions contained in this Agreement shall resume and continue in effect thereafter as to the Selling Shareholder. ARTICLE Purchase Price of Shares 4.1 If Purchase Event is a Proposed Sale of Shares. If the Purchase Event is the Selling Shareholder's receipt of a bona fide offer for the purchase of his Shares, the purchase price at which the Company or the other Shareholders may exercise their options to purchase shall be determined as follows: A. The purchase options of the Company and the other Shareholders shall be exercisable at the price per Share stated in the Notice. B. If the proposed transferee offered the Selling Shareholder property other than cash in exchange for the Offered Shares, so that the Notice states a cash equivalent price per Offered Share, then in such event the Company or any Shareholder shall be entitled to demand an appraisal of the noncash property offered by the proposed transferee to verify the cash equivalent price per offered Share set forth in the Notice. If the appraised value is lower than the price per Share reflected in the Notice, then the appraised value shall be used to determine the price per Share at which the offered Shares may be purchased by the Company or the Shareholders. If the appraised value is higher than the price per Share reflected in the Notice, then the price per Share set forth in the Notice shall prevail. 4.2 Listed Shares. Except as stated in Section 4.1, the purchase price of Shares pursuant to this Agreement shall equal the market price of the Common Stock of the Company (the "Market Price"). The Market Price shall mean the average of the daily market prices of the Common Stock over a period of twenty (20) consecutive business days ending five (5) calendar days prior to the Effective Date of the Notice. The Market Price for each such business day shall be the average of the closing prices on such day of the Common Stock on all domestic exchanges on which the Common Stock is then listed, or if there shall have been no sales on any exchange on such day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if the Common Stock shall not be so listed, the average of the representative bid and asked prices quoted on the NASDAQ System as of 4:30 P.M., Eastern time, on such day, or if the Common Stock shall not be quoted in the NASDAQ System, the average of the high and low bid and asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization. If the Common Stock is listed on any domestic exchange, the term "business days" as used in this Article 4 shall mean business days on which such exchange is open for trading. 4.3 Unlisted Shares. If at any time the Common Stock of the Company is not listed as described in Section 4.2, then the purchase price of the Shares shall equal the Fixed Price as determined in this Section 4.3. A. Initial Fixed Price. The Fixed Price of each Share shall be $1.00. By executing this Agreement, the parties hereto acknowledge and agree that this amount represents a fair and equitable valuation of each Share as of the date hereof and until subsequently changed. B. Annual Review of Fixed Price by Shareholders. Annually, the Shareholders or more frequently if the Shareholders desire, shall review the Fixed Price of each Share and be adjusted, if necessary, by the agreement of each of the Shareholders. If the Shareholders are unable to agree on a Fixed Price, then the Shareholders shall appoint an independent appraiser for the purpose of fixing such a price. If the Shareholders are unable to agree on an independent appraiser, then the Farrah Group shall select one appraiser, the Cabrera Group shall select another appraiser, and those two appraisers shall then select the independent appraiser who shall be engaged to fix the per share price. Each of the Farrah and Cabrera Groups shall divide the costs of the appraisal process equally. Each Fixed Price so determined shall be endorsed on Schedule B attached to the master copy of this Agreement maintained at the principal offices of the Company. Each Fixed Price so endorsed shall be verified by the signatures of the President or Vice President and of the Secretary of the Company. Each Fixed Price shall remain in effect until subsequently altered pursuant to this Section 4.3.B. ARTICLE Closings and Payment of Purchase Price 5.1 Place and Date of Closing. The closing of any purchase and sale of Shares pursuant to this Agreement shall take place at the office of the Company at a date agreed to by the Selling Shareholder and each purchaser, subject to the following limitations: if the purchase is by the Company pursuant to Section 3.3, the closing shall be held within thirty (30) days after the effective date of the Company's notice that it is exercising its purchase option; if the purchase is by the Shareholders pursuant to Section 3.4, the closing shall be held within thirty (30) days after the effective date of the Shareholders' notice that they are exercising their purchase option; if a decedent's Shares are being purchased pursuant to death under Section 3.1.E, the closing shall not be held until the decedent's personal representatives have been qualified 5.2 Payment of Purchase Price. The purchase price for any Shares purchased pursuant to this Agreement may be paid, at the option of the purchaser(s), either (i) in cash or (ii) by giving the seller one-third of the purchase price in cash and a promissory note in the amount of the remaining two-thirds of the purchase price. The portion of the purchase price for Shares purchased hereunder which is to be paid in cash, shall be paid by certified check or cashier's check. Where a promissory note is given, the amount of the note shall be paid in twenty-four (24) equal monthly installments, with the first installment being due on the first day of the second month following the date of the closing. Interest shall be payable with each installment on the then- outstanding principal amount, at the "applicable Federal rate" (as determined under Section 1274 of the Internal Revenue Code of 1986) as of the date upon which the promissory note is given. The promissory note shall be subject to prepayment, without penalty, in whole or in part, at any time. The due date of the note shall be accelerated upon default in the payment of any monthly installment or upon default in the payment of interest. If the purchaser(s) elect to pay the purchase price by delivery of a promissory note, the purchaser(s) shall grant to the seller a security interest in all of the purchased Shares as security for repayment of the debt evidenced by such promissory note. The purchaser(s) shall execute all such security agreements, financing statements and other instruments, and shall do all such acts and things (including, if necessary, appointment of a bailee to hold the certificates representing the purchased Shares) as shall be reasonably necessary to perfect the seller's security interest in the purchased Shares under the terms of the California Uniform Commercial Code. 5.3 Delivery of Shares. At the closing of any purchase and sale of Shares pursuant to this Agreement, and upon receipt of cash and/or a promissory note in payment for the Shares being sold, the seller shall endorse in blank and deliver such Shares to the purchasing party or parties (unless delivery to a bailee is required under Section 5.2.D above). The seller shall also execute and deliver any other documents or instruments necessary to transfer ownership of the Shares. 5.4 Insufficient Corporate Surplus. If the Company is not permitted to purchase such Shares under the California Corporation's Code, then the Company shall not be permitted to elect to purchase pursuant to this Agreement. 5.5 Status of Shares Purchased by Company. Any Shares purchased by the Company pursuant to this Agreement shall be held as authorized and unissued shares. ARTICLE Registration Rights 6.1 Piggyback Registration. The Company for a period of three (3) years, will give written notice to the Shareholders not less than 30 days in advance of the initial filing of any registration statement under The Securities Act of 1933 (the "1933 Act") (other than a registration statement pertaining to securities issuable pursuant to employee stock option, stock purchase, or similar plans or a registration statement pertaining to securities issuable in connection with the merger, consolidation, acquisition of assets, or exchange of securities) covering any Common Stock or other securities of the Company and will afford the Shareholders the opportunity to have included in such registration all or such part of the shares of Common Stock then held by the Shareholders as may be designated by written notice to the Company not later than 10 days following receipt of such notice from the Company. The Company shall not be entitled to exclude the shares of Common Stock held by the Shareholders if shares of other shareholders are being included in any such registration statement and, in such circumstances, the Shareholders shall be entitled to include the shares of Common Stock held by them on a pro-rata basis in the proportion that the number of shares of Common Stock held by the Shareholders bears to the shares of Common Stock held by all other shareholders who hold pre- existing registration rights, including the shares proposed to be included in such registration statement. The Shareholders shall not be entitled to include shares in more than two registration statements pursuant to the provisions of Sections 6.1 or 6.2, and all rights of the Shareholders under Sections 6.1 or 6.2 shall terminate after the Shareholders have included shares of Common Stock in two registration statements pursuant to Sections 6.1 or 6.2. 6.2 Demand Registration. In the event that during the term of this Agreement, commencing upon the second (2nd) anniversary date of this Agreement, no Shareholder has had the opportunity to participate in any registration pursuant to Section 6.1 above, any Shareholder or Shareholders owning in the aggregate not less than five percent (5%) of the then outstanding shares shall have the one-time right to demand that the Company register under the 1933 Act up to all of its shares of Common Stock. The Company shall, as promptly as possible, and in no event more than sixty (60) days after being requested in writing by the Shareholder to do so, prepare and file an appropriate registration statement under the 1933 Act as to the shares of Common Stock referred to herein and use it best efforts to cause such registration statement to become effective, provided that if there is more than one Shareholder, the Company shall have an additional sixty (60) day period to notify all other Shareholders of the demand by any one of them and to allow all Shareholders to participate in the registration if, in the judgment of the Company, this participation would be in the best interests of the Company. The Company shall not be required to file more than one registration statement for all of the Shareholders pursuant to this Section 6.2. 6.3 Expenses. The Company will pay all out-of-pocket costs and expenses of any registration effected pursuant to the provisions of Sections 6.1 or 6.2, including registration fees, legal fees, accounting fees, printing expenses (including such number of any preliminary and the final prospectus as may be reasonably requested), blue sky qualification fees and expenses, and all other expenses, except for underwriting commissions or discounts applicable to the shares of Common Stock being sold by the Shareholders and the fees of counsel for the Shareholders, all of which shall be paid by the Shareholders. 6.4 Maintenance of Registration Statement and Prospectus. The Company will maintain the effectiveness of any registration statement filed pursuant to Sections 6.1 or 6.2 for a period of time reasonably sufficient for the Shareholders to dispose of the shares of Common Stock included therein, and will file any amendments or supplements to any such registration statement necessary to accomplish the foregoing; provided, that in no event shall the Company be required to maintain effectiveness of any such registration statement for more than one hundred and eighty (180) days after the effective date thereof. The Company shall furnish such number of prospectuses and other documents incident thereto as any of the Shareholders may reasonably request. 6.5 Blue Sky Qualification. The Company shall use its best efforts to effect qualification of the shares of Common Stock included in any registration statement filed pursuant to the provisions of Sections 6.1 or 6.2 in such states as the Shareholders shall request, but the Company shall not be required in connection therewith to execute a general consent to service of process or qualify to do business in any state. 6.6 Indemnification. Each party will agree to indemnify the other with respect to any and all loss, liability, claim, damage and expense whatsoever arising out of any alleged untrue statement of a material fact contained in such registration statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of any alleged untrue statement of a material fact contained in any preliminary prospectus or prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom, of a material fact necessary in order to make the statements therein not misleading, or arising out of any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any state securities law in connection with any registration effected pursuant to this Article 6, provided that in the case of any indemnification sought against any of the Shareholders, the indemnification provided for herein shall extend only to information furnished in writing by such Shareholder for inclusion in any such registration statement. ARTICLE Pledges 7.1 Right to Pledge. Notwithstanding any other provision of this Agreement, a Shareholder shall have the right to pledge, subject to lien or otherwise encumber his Shares, provided (1) that such transaction shall constitute a bona fide security arrangement with respect to a bona fide lending arrangement, and (2) that such transaction shall provide no voting rights or other ownership interest (other than a secured lender's interest) to any person not a signatory to this Agreement. 7.2 Foreclosure on Pledged Shares. If pledged Shares are foreclosed against or levied upon by the secured lender, then the Company and the other Shareholders will have an option to purchase such Shares as described in Section 3.1.D hereof. ARTICLE Termination of Agreement 8.1 Events Causing Termination. This Agreement shall terminate and the certificates representing the Shares subject to this Agreement shall be released from the terms hereof, on the occurrence of any of the following events: the cessation of the Company's business; the unanimous written agreement of the Company and the Shareholders to terminate this Agreement; when either the Farrah Group or the Cabrera Group, pursuant to the terms of this Agreement, transfers, assigns, sells or otherwise disposes of Shares and such disposition results in such group owning less than 50% of that group's Shares as listed in Schedule A; an Event of Bankruptcy with respect to the Company; upon the election of a Shareholder if the Company or another Shareholder violates any material provision of this Agreement and does not cure such violation within thirty (30) days after written notice thereof has been given by the electing Shareholder; or upon the third anniversary date of the execution of this Agreement; provided, however, that the Agreement may be renewed by the written agreement of the Company and the Shareholders. 8.2 Issuance of New Certificates. Upon the termination of this Agreement for any of the reasons specified above, the certificates representing the Shares shall be surrendered to the Company and the Company shall issue new certificates for the same number of Shares but without the legend required by Section 1.2 of this Agreement. ARTICLE Defined Terms The capitalized terms used in this Agreement shall have the meanings specified in this Article 9. The 1933 Act shall have the meaning specified in Section 6.1 The 1934 Act shall have the meaning specified in Section 6.6. Agreement means this Shareholders' Agreement. Cabrera Group shall mean Exportadora Cabrera, S.A. de C.V., a Mexican corporation and Juan Pablo Cabrera in his individual capacity. Common Stock shall mean all of the authorized, issued and outstanding shares of stock in M.G. Products, Inc. having no par value. Company means M.G. PRODUCTS, INC., a California corporation. Effective Date of the Notice shall have the meaning specified in Section 3.2 hereof. Event of Bankruptcy. A Shareholder or the Company shall be deemed to have suffered an Event of Bankruptcy if: (i) such person makes a general assignment for the benefit of creditors; (ii) such person files a voluntary bankruptcy petition; (iii) such person becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceeding; (iv) such person files a petition or answer seeking for such person a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law; (v) such person files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such person in a proceeding of the types described in clauses (i) through (iv) above; (vi) such person seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of such person or of all or any substantial part of such person's properties; (vii) 120 days expire after the date of the commencement of a proceeding against such person of the type referenced in clause (iv) above if the proceeding has not been previously dismissed; or (viii) 90 days expire after the date of the appointment, without such person's consent or acquiescence, of a trustee, receiver or liquidator of the type referenced in clause (vi) above if the appointment has not previously been vacated or stayed, or 90 days expire after the date of expiration of a stay, if the appointment has not previously been vacated. Farrah Group shall mean Michael P. Farrah, the Michael Patrick Farrah Trust, The 1996 Michael P. Farrah Trust, Shannon Ann Farrah, The 1996 Shannon Ann Farrah Trust, and the Shannon Ann Farrah Trust. Fixed Price shall have the meaning specified in Section 4.2 hereof. Market Price shall have the meaning specified in Section 4.2 hereof. Notice shall have the meaning specified in Section 3.2 hereof. Offered Shares shall have the meaning specified in Section 3.2 hereof. Purchase Event shall mean any of the events specified in Section 3.1 hereof. Selling Shareholder shall mean any Shareholder who is required or elects to sell his Shares pursuant to this Agreement (or any person appointed or authorized to act on his behalf). Shareholder(s), singly or collectively, shall mean Exportadora Cabrera, S.A. de C.V., a Mexican corporation, Michael P. Farrah, The Michael Patrick Farrah Trust, The 1996 Michael P. Farrah Trust, Shannon Ann Farrah, The 1996 Shannon Ann Farrah Trust, and the Shannon Ann Farrah Trust. Shares shall mean shares of the common stock, no par value, of the Company that are subject to this Agreement. ARTICLE Miscellaneous 10.1 Prior Agreements Superseded. This Agreement constitutes the sole and only agreement of the parties hereto and supersedes any prior understanding or written or oral agreements between the parties respecting the subject matter hereof. This Agreement specifically supersedes that certain Shareholders Agreement dated December 30, 1994 entered into by and between M.G. Products and certain holders of shares of stock in the Company. 10.2 Governing Law. This Agreement shall be interpreted, construed and governed in accordance with the laws of the State of California without giving effect to principles of conflicts of law. 10.3 Notices. All notices, payments and other required communications to the parties shall be in writing, and shall be addressed to the Company at its principal place of business and to the Shareholders at their respective addresses as shown on Schedule A hereto. All notices shall be given (i) by personal delivery, or (ii) by electronic communication, with a confirmation sent by registered or certified mail, return receipt requested, or (iii) by registered or certified mail, return receipt requested. All notices shall be effective and shall be deemed delivered (i) if by personal delivery, on the date of delivery if delivered during normal business hours, and, if not delivered during normal business hours, on the next business day following delivery, (ii) if by electronic communication, on the date of receipt of the electronic communication, and (iii) if solely by mail, on the date of receipt of the mailing. A party may change its address by notice to the other parties. 10.4 Amendment. No modification, amendment, addition to, or termination of this Agreement, nor waiver of any of its provisions, shall be valid or enforceable unless it is in writing and signed by all the parties hereto. 10.5 Waiver of Option Period. When any party to this Agreement has an option to purchase Shares hereunder exercisable for a specified period, and such party determines prior to the expiration of the option period that it will not exercise such option, the option holder may notify the Selling Shareholder in writing that it is waiving the option. From and after the date upon which such notice is effective, the option period shall be deemed to have expired for all purposes of this Agreement. 10.6 Successors and Assigns. A Shareholder may not assign any of his rights or obligations under this Agreement except in connection with transfers of his Shares made in accordance herewith. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and their heirs, legal representatives, successors and assigns. All such persons shall execute such instruments in writing and take such further actions as shall be necessary or appropriate to carry out the purposes of this Agreement. 10.7 Waiver of Breach. The waiver by any party to this Agreement of a breach or violation of any provision hereof shall not operate or be construed to be a waiver of any subsequent breach hereof. 10.8 Specific Performance. The parties hereto agree that it will be impossible to measure in money the damages suffered by a party hereto or by a decedent's personal representatives by reason of a failure by another party to perform any of such party's obligations under this Agreement. Therefore, if any party hereto or the decedent's personal representatives shall institute any action or proceeding to enforce the provisions hereof, any person (including the Company) against whom such action or proceeding is brought hereby waives the claim or defense therein that such party or any such personal representative has an adequate remedy at law, and the party instituting such action or proceeding shall be entitled to specific performance, injunctive relief and to such other relief as principles of equity may afford. 10.9 Legal Construction. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 10.10Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement (except that the master copy hereof maintained by the Company shall control in the event of discrepancies, as provided in Section 1.3 hereof). 10.11Headings. The paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed to be part of this Agreement. 10.12Gender. As used herein and when required by the context, the use of a masculine pronoun herein shall include the feminine. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first above written. The Company: M.G. PRODUCTS, INC. ___________________________________ By: Juan Pablo Cabrera Its: Chairman and Chief Executive Officer The Shareholders: The MICHAEL PATRICK FARRAH TRUST, _________________________ Michael P. Farrah, trustee Michael P. Farrah, in his individual capacity __________________________________ Shannon Ann Farrah, in her individual capacity The SHANNON ANN FARRAH TRUST, The 1996 MICHAEL P. FARRAH TRUST, _____________________________ _________________________________ Edward C. Kleim, Jr., trustee Barry R. Sheiar, trustee EXPORTADORA CABRERA, The 1996 SHANNON ANN FARRAH TRUST, S.A. de C.V. __________________________ _________________________________ By: Alejandro Cabrera Barry R. Shreiar, trustee Its: Chairman of the Board Schedule A Shareholders and Shares Subject to Agreement Shareholder Number Verifying Name and Address of Shares Signatures Exportadora Cabrera 7,245,144 _______________ Paraiso 1750 Title:_________ Colonia del Fresno _______________ Guadalajara, Jalisco Title: ________ Mexico, 44900 Michael Farrah 883,557 ______________ 8154 Bracken Creek Title: _______ San Antonio, Texas 78266 ______________ Title:________ Shannon Ann Farrah 100,000 ______________ 11730 E Lusitano Title: Tuscon, Arizona 85748 ______________ Title:________ The Shannon Ann Farrah Trust 779,547 ______________ Edward C. Kleim, Jr., trustee Title:________ 21671 Branta Circle ______________ Huntington Beach, CA 92646 Title:________ The 1996 Michael P. Farrah 939,930 Trust,Barry R. Shreiar, Trustee ______________ Lazof and Cos Attorneys at Law Title:________ 4590 MacArthur Blvd. Suite 390 ______________ Newport Beach, CA 92660 Title:________ The 1996 Shannon Ann Farrah 939,931 Trust,Barry R. Shreiar, Trustee ______________ Lazof and Cos Attorneys at Law Title:________ 4590 MacArthur Blvd. Suite 390 ______________ Newport Beach, CA 92660 Title: _______ Last modified on ________________, ______ Schedule B Valuation of Shares If shares are unlisted Price per Date Verifying Share Fixed Signatures President or Vice President Secretary EX-99 4 THE 1996 MICHAEL P. FARRAH TRUST dated September 29, 1996 * * * * * BARRY R. SHREIAR, Trustor BARRY R. SHREIAR, Trustee September 29, 1996 THE 1996 MICHAEL P. FARRAH TRUST dated September 29, 1996 THIS 1996 MICHAEL P. FARRAH TRUST dated September 29, 1996 (hereinafter referred to as the "Trust Agreement" or the "Trust") is made this 29th day of September, 1996, by and between BARRY R. SHREIAR, Trustor (hereinafter referred to as "Trustor"), and BARRY R. SHREIAR, Trustee in order to establish a separate trust for the benefit of MICHAEL P. FARRAH (herein "Beneficiary") under the terms and conditions herein stated. ARTICLE I. THE TRUST ESTATE Trustor, without any consideration on the part of Trustee, has delivered to Trustee money and property, as described in Exhibit "A", attached hereto as part of this Trust Agreement. Said property and the proceeds received by Trustee therefrom, and all money and property hereinafter held by or received by Trustee, as Trustee hereunder, shall constitute the Trust estate ("Trust Estate"). Trustee acknowledges delivery of said property and agrees to hold and manage the same, in trust, for the uses and in the manner hereinafter set forth. Trustor or any other legal person or entity shall have the right by Will or otherwise to add to this Trust any other property acceptable to Trustee, and such property shall become a part of the Trust Estate. The name of this Trust shall be "THE 1996 MICHAEL P. FARRAH TRUST dated September 29, 1996." I. ARTICLE IRREVOCABILITY Trustor hereby designates this Trust as an irrevocable trust and hereby irrevocably commits any and all funds and property listed on Exhibit "A" to the purposes set forth herein, to be held, administered, and distributed in accord with the herein provisions. No person shall have the power to alter, amend or revoke this Trust Agreement in whole or in part. I. ARTICLE POWER TO WITHDRAW TRUST ESTATE Trustee agrees, if Trustee accepts any additions, to hold and manage such additions in trust for the use and in the manner set forth in this Trust Agreement. In the event such addition constitutes a lifetime gift from Trustor, then the following shall apply: A. For a period of fifteen (15) days following any contribution to the Trust Estate by the Trustor or any other person, each Beneficiary shall have the right to withdraw from any part of the Trust Estate (including but not limited to the actual contribution) an amount equal to the lesser of: 1. The entire contribution; or 1. A portion of the contribution having a fair market value equal to the amount specified for gift tax exclusion in Internal Revenue Code Section 2503(b) as from time to time amended, determined as of the date of the contribution. If the donor is married at the time of the gift, this portion shall be doubled whether or not the donor's spouse joins in the gift pursuant to Internal Revenue Code Section 2513 as from time to time amended, except where married donors each make simultaneous gifts to the Trust Estate, then the exclusion in Internal Revenue Code Section 2503(b) shall be applied on a per donor basis. Provided, that the aggregate withdrawals with respect to contributions made by one donor during any single calendar year shall not exceed the fair market value of the foregoing Internal Revenue Code limitation determined as of the date of contribution. A. Withdrawals shall be by written request delivered to Trustee. A. If Beneficiary is under a legal disability during part or all of a withdrawal period, the guardian of Beneficiary may exercise such withdrawal on Beneficiary's behalf. A. Each time Beneficiary acquires a right of withdrawal as above provided, Trustee shall so notify Beneficiary or Beneficiary's guardian. A. On the death of Beneficiary, Beneficiary shall have the power to appoint the principal and any undistributed income of the Trust Estate, or any part thereof, to Beneficiary's spouse, to one or more of Beneficiary's issue then living, to one or more of Trustors' issue then living, or to a trust or trusts for their benefit. Such power of appointment shall be exercised only by a provision in the Last Will and Testament of Beneficiary expressly exercising such power. Unless within ninety (90) days after Beneficiary's death, Trustee has actual notice of the existence of a Will exercising such power, Trustee shall, without incurring any liability to any appointee, proceed as if such power had not been exercised; provided, however, that this sentence shall not bar any right which an appointee may have to enforce the appointment. I. ARTICLE DISTRIBUTION OF INCOME AND PRINCIPAL A. So long as Beneficiary is under the age of twenty-one (21), Trustee shall pay to or apply for the benefit of Beneficiary, as much of the net income and principal of the Trust as Trustee, in Trustee's discretion, deems necessary for the proper health, support, maintenance, and education of Beneficiary, after taking into consideration, to the extent Trustee deems advisable, any other income or resources of Beneficiary known to Trustee. Any net income not distributed shall be accumulated and added to the principal. A. When Beneficiary attains age twenty- one (21), Trustee shall pay to or apply for the benefit of Beneficiary the entire net income of Beneficiary's trust, quarter-annually or at more frequent intervals. Trustee may also pay to or apply for the benefit of Beneficiary as much of the principal of Beneficiary's trust as Trustee, in Trustee's discretion, deems necessary for the proper health, support, maintenance, and education of Beneficiary, after taking into consideration, to the extent Trustee deems advisable, any other income or resources of Beneficiary known to Trustee. A. At the time Beneficiary attains age forty (40), Trustee shall distribute to Beneficiary the remainder of the principal and any and all accumulated income on the principal of Beneficiary's trust as then constituted. A. If Beneficiary dies before becoming entitled to receive distribution of his or her entire trust, the undistributed balance of that Beneficiary's trust shall thereupon be divided into as many equal shares as there are living children of the deceased Beneficiary and Trustee shall distribute such shares outright and free of trust. If Beneficiary dies leaving no living children, the undistributed balance of that Beneficiary's trust shall be distributed to the then living brothers and sisters of Beneficiary in equal shares; provided, however, that if a brother or sister is then deceased leaving children then living, said deceased sibling's share shall be distributed to said living children in equal shares. Notwithstanding the above, if any part of that balance would otherwise be distributed to a person for whose benefit a trust is then being administered under this Trust Agreement, that part shall instead be added to that trust and shall thereafter be administered according to its terms. A. If at any time before full distribution of the Trust Estate, all persons described above are deceased but issue of Trustor are then living, the Trust Estate shall thereupon be distributed outright to said living issue based on the principal of representation, but if all Trustors' issue are deceased and no other disposition of the property is directed by this Trust, the Trust Estate or the portion of it then remaining shall thereupon be distributed to those persons who would then be Trustors' heirs, their identities and respective shares to be determined according to the laws of the State of California then in effect relating to the succession of separate property not acquired from a predeceased spouse, and assuming an equal share for each Trustor hereunder. A. With respect to any sum or property, whether income or corpus, which is required or permitted to be distributed out of any trust hereunder to or for the benefit of any person who, at the time, is a minor or whom Trustee of such trust, in Trustee's reasonable discretion, determines to be under any disability preventing such person from acting properly in his or her own behalf (irrespective of whether legally so adjudicated), Trustee of such trust may properly make distribution of the same in any one or more of the following ways as such Trustee, from time to time, in Trustee's sole discretion, shall deem to be most expedient in the best interests of such person; namely, by paying, distributing, or applying the same to: 1. Such person directly, 1. The legal guardian of such person, 1. An apparently qualified individual or bank who, in taking the same "as custodian for" such person "under the" appropriate state's "uniform gifts to minors act", indicates that such sum or property will be treated in all respects as "custodial property" for the benefit of such person in accordance with the provisions of the Uniform Gifts to Minors Act of such state (whether or not such act permits custodial property of such an origin), 1. The parent, spouse, or other individual having the care and custody of such person who, as such person's natural guardian, shall preserve the same for the immediate or ultimate benefit of such person (or such person's estate), but who shall not be obligated to qualify as a legal guardian or account to any probate court therefor, 1. Trustee or Trustees of any trust all of the assets of which are then fully and unqualifiedly withdrawable by such person, 1. The direct payment of any educational, medical, or other proper expense of such person (including expenses, such as taxes, repairs, etc., reasonably appropriate to preserving any assets belonging to such person) as long as such expense is not the legal obligation of any other person, 1. The purchase of stocks, bonds, insurance (the term "purchase" shall include any premium payment), or other properties of any kind, the ownership of which is registered in the sole name of such person, or 1. The making of a deposit into a bank, savings and loan association, brokerage, or other similar account in the sole name of such person; provided, if distribution in the manner described in subparagraphs (3) and (4) is made, Trustee may require legally enforceable indemnification in favor of such person against anyone other than such person (or his or her estate) benefiting thereby (even through the discharge of an obligation to support such person). The receipt for or evidence of any such payment, distribution, or application shall be a complete discharge and acquittance of Trustee to the extent of such payment, distribution, or application and, except for enforcement of any above described indemnification, Trustee shall have no duty to see to the actual application of amounts so paid or distributed to others. Even in the absence of minority or disability, distributions made in the manner provided in subparagraphs 1, 5, 6, 7, or 8 above shall be conclusively deemed to have been made for the "direct" benefit of such person. A. In exercising Trustee's discretion hereunder, Trustee shall be entitled to rely upon the written certification of Beneficiary or the parent or legal guardian of Beneficiary as to the nature and extent of Beneficiary's needs and the inadequacy of Beneficiary's resources apart from the Trust. When relying upon such certifications, Trustee shall not be required to make further inquiry into the authenticity of the need or to the availability of other resources to satisfy the need. It is Trustors' desire that Trustee consider the needs of Beneficiary in keeping with the standard of living that has been previously enjoyed by Beneficiary and that Trustee consider the needs of Beneficiary for support, care, maintenance, and education as the primary purposes of the Trust. I. ARTICLE POWERS OF TRUSTEE A. In order to carry out the purposes of this Trust and subject to any limitation stated elsewhere in this Trust, Trustee is vested with the following powers, in addition to those now or hereafter conferred by law, affecting the Trust and the Trust Estate: 1. To retain any property or business interest transferred, devised or bequeathed to Trustee, or any undivided interest therein, regardless of any lack of diversification, risk, or nonproductivity and regardless of whether or not such property be of a character authorized by the laws of the State of California for investment of Trust funds and to continue the operation of any such business interest at the risk of the Trust Estate as long as Trustee deems advisable. 1. To invest and reinvest the Trust Estate in any property or undivided interest therein, wherever located, including bonds, notes, (whether secured or unsecured), contracts of life insurance, stocks of corporations, interests in general or limited partnerships, real estate or any interest therein and interests in trusts, including but not limited to interests in any common trust fund or funds now or hereafter established and being administered by a corporate Trustee of this Trust solely for the investment of Trust funds. 1. To have all the rights, powers, and privileges of an owner with respect to securities held in trust, including, but not limited to the power to vote and give proxies and pay assessments or other charges, to participate in voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers and liquidations and in connection therewith to deposit securities with and transfer title to any protective or other committee under such terms as Trustee may deem advisable, and do all other acts which men of prudence, discretion and intelligence would do or take for their own account. 1. To manage, control, grant options on, sell (for cash or on deferred payments), convey, exchange, partition, divide, improve, and repair trust property and to margin, option, and deal with and in commodities, futures and all similar securities, as Trustee shall deem advisable, from time to time. 1. To lease Trust property for terms within or beyond the terms of the Trust and for any purpose, including exploration for and removal of gas, oil, and other minerals; and to enter into community oil leases, pooling and unitization agreements. 1. To borrow money, and to encumber or hypothecate Trust property by mortgage, deed of trust, pledge, or otherwise for the debts of the Trust or the joint debts of the Trust and others as co-owners of Trust property. 1. To loan or advance Trustee's own funds to the Trust for any Trust purpose, with interest at current rates; to receive security for such loans in the form of a mortgage, pledge, deed of trust, or other encumbrance of any assets of the Trust, to purchase assets of the Trust at their fair market value as determined by an independent appraisal of those assets; and to sell property to the Trust at a price not in excess of its fair market value as determined by an independent appraisal. 1. To keep any property in the name of Trustee or a nominee with or without disclosure of any fiduciary relationship. 1. To carry, at the expense of the Trust, insurance of such kinds and in such amounts as Trustee deems advisable to protect the Trust Estate and Trustee against any hazard. 1. To employ managers, agents, attorneys, accountants, auditors, depositories and proxies, with or without discretionary powers and to rely on the advice given by such advisors. 1. To commence or defend, at the expense of the Trust, such litigation with respect to the Trust or any property of the Trust Estate as Trustee may deem advisable, and to compromise or otherwise adjust any claims or litigation against or in favor of the Trust. 1. To take any action and to make any election, in Trustee's discretion, to minimize the tax liabilities of this Trust and its beneficiaries, and it shall have the power to allocate the benefits among the various beneficiaries, and Trustee shall have the power to make adjustments in the rights of any beneficiaries, or between the income and principal accounts, to compensate for the consequence of any tax election or any investment or administrative decision that Trustee believes has had the effect of directly or indirectly preferring one beneficiary or group of beneficiaries over others. 1. Except as otherwise specifically provided in this Trust, Trustee shall have the power, exercisable in Trustee's discretion, to determine what is principal or income of the Trust Estate and to apportion and allocate receipts and expenses and other charges between these accounts, including also the power to charge in whole or in part against principal, or to amortize out of or charge forthwith to income, premiums paid on the purchase of bonds or other obligations. Trustee shall not be required to establish a reserve for depreciation or to make charges against income therefor, but may do so if Trustee, in Trustee's discretion, so determines such reserve and charges to be established on such assumptions and in such amounts as Trustee shall determine. If the Trust shall be a member of a partnership, Trustee shall be entitled to accept, with respect to such partnership interest, any accounting methods used by the partnership, regardless of whether such methods shall include depreciation reserves, regardless of the assumptions on which any such reserve may be based, and regardless of whether such accounting methods are inconsistent with those methods used by Trustee with respect to other property of the Trust Estate. No inference of imprudence or partiality shall arise from the fact that Trustee, in exercising the discretion conferred here on Trustee, shall have allocated a receipt or expenditure in a manner contrary to any provision of the California Revised Uniform Principal and Income Act. Except insofar as Trustee shall exercise the discretion conferred on Trustee and except as otherwise provided in this Trust, matters relating to principal and income shall be governed by the provisions of the California Revised Uniform Principal and Income Act from time to time existing. 1. In any case in which Trustee is required pursuant to the provisions of the Trust, to divide any Trust property into parts or shares for the purpose of distribution, or otherwise, Trustee is authorized, in Trustee's absolute discretion, to make the division and distribution in kind, including undivided interests in any property, or partly in kind and partly in money, and for this purpose to make such sales of the Trust property as Trustee may deem necessary on such terms and conditions as Trustee shall see fit. 1. Early Termination. Trustee, or any Successor Trustee, shall have the power to terminate this Trust should the balance on hand decrease to an amount less than Twenty-Five Thousand Dollars ($25,000), which amount Trustee or the Successor Trustee deems could not be efficiently and economically administered by Trustee, or the Successor Trustee, or distribute free of Trust any property determined by the Trustee in the Trustee's sole and absolute reasonable discretion to be unproductive or under productive and not readily saleable. Included within the definition of unproductive or underproductive property shall be any Trust property which has been at any time subject to environmental contamination or hazard. 1. To comply fully with all present and future laws applicable to the Trust or the Trustee in the administration of the Trust whether enacted by federal, state or local authorities including all environmental laws, regulations and ordinances, at the sole expense of the Trust, including actions which require the Trust to be classified as a generator or transporter of environmentally hazardous or suspect materials. 17. The enumeration of certain powers of Trustee shall not limit Trustee's general powers, Trustee, subject always to the discharge of Trustee's fiduciary obligations, being vested with and having all the rights, powers and privileges which an absolute owner of the same property would have. A. From the income and principal of the Trust Estate Trustee shall pay and discharge all expenses incurred in the administration of this Trust and the protection of this Trust against legal or equitable attack, including counsel fees and a reasonable fee for his own services as such Trustee, which compensation and expenses constitute a first lien on the Trust Estate. II. ARTICLE REGULATION OF TRUSTEE 6.1 Successor Trustees. BARRY R. SHREIAR is hereby designated as Trustee of this Trust. He shall have the right to appoint any person to act with him as Co-Trustee or as sole Trustee, remove such appointed Trustee, reinstate himself as Trustee, and designate Successor Trustees. Upon the death, resignation or inability of BARRY R. SHREIAR to act or to continue to act as Trustee, and no Successor Trustee is designated, then TED CHRISTENSEN is hereby designated to act as Successor Trustee with all of the same powers of appointment, removal, and designation as above granted to the original Trustee. Upon the death, resignation or inability of TED CHRISTENSEN to act or to continue to act as Trustee, and no Successor Trustee is designated, then WELLS FARGO BANK is hereby designated to act as Successor Trustee with all of the same powers of appointment, removal, and designation as above granted to the original Trustee. In the event of any vacancy in the office of Trustee which is not filled as above provided, a court of competent jurisdiction shall appoint a Trustee upon the application of any Beneficiary, present or contingent, interested in this Trust. No bond shall be required of any Trustee or Successor Trustee. All references to "Trustee" or "Trustees" hereunder shall include the Successor Trustee. 6.2 Powers of Successor Trustees. The Successor Trustee shall have all the powers, rights, discretions, obligations, and immunities of Trustee hereunder, to the same effect as though such Successor Trustee was originally named herein as Trustee, except that such Successor Trustee shall be chargeable only with the assets delivered to it by the preceding Trustee, and shall not be under any obligation to investigate or be accountable for any act or omission of any prior Trustee in the administration of this Trust. 6.3 Compensation of Trustees. For his or her ordinary services an individual Trustee shall receive reasonable compensation and a Corporate Trustee shall receive annual compensation in accordance with its fees schedule in effect at the time such fees are taken. It is understood and agreed that said Trustee may adopt different fee schedules from time to time relating to trusts of a type similar to the trust created by this Trust Agreement and that said Trustee's annual compensation hereunder for ordinary services shall as aforesaid be based upon the fee schedule in effect at the time that fees are taken. At the time that said Trustee adopts a new fee schedule which would affect the amount of fees which said Trustee is entitled to receive in administering this Trust, it shall mail a copy of same to Trustors and to all of the then income Beneficiaries. In the event that said Trustee performs services of an extraordinary nature, it shall be entitled to reasonable compensation for such services in addition to the annual compensation for its ordinary services. 6.4 Resignation of Trustee. A Trustee may at any time resign from the Trust hereby created by depositing in the United States mail, postage prepaid, a notice of such resignation addressed to the persons or person then entitled to receive payments hereunder at the addresses of such persons or person last known to Trustee, and such resignation shall take effect at the expiration of sixty (60) days from the date of mailing of such notice and the affidavit of any officer of the Corporate Trustee, as to the date of mailing of such notice, shall be conclusive evidence of its mailing. 6.5 Removal of Trustee. Whenever Trustee hereunder is a trust company or bank, a majority of the then living adult income beneficiaries (or if none of the beneficiaries is an adult, then the guardian or guardians of the estate of the minor beneficiaries), shall have the power to designate a Successor Trustee in the place of the then acting Trustee. Such Successor Trustee must be a trust company or bank qualified to do a trust business and may be located in any state of the United States. Such designation shall be in writing addressed to the then acting Trustee, and shall include the written consent of the named Successor Trustee to act as Trustee hereunder. As soon as practicable after the receipt of such designation, the then acting Trustee shall deliver all assets of the Trust to such Successor Trustee. The Successor Trustee shall have all the powers, rights, discretions, obligations and immunities of Trustee hereunder, to the same effect as though such Successor Trustee were originally named herein as Trustee. 6.6 Liability of Trustee. Trustee shall be exonerated and indemnified by the Trust, to the full extent or its assets, from any and all liability, loss, cost or damage incurred by Trustee in its individual or fiduciary capacity for acts or omissions occurring in connection with the administration of the Trust, including acts believed reasonably necessary by Trustee in order to comply with all laws, including environmental laws relating to Trust property or former Trust property provided that Trustee shall not be exonerated or indemnified from his own grossly negligent actions or omissions. I. ARTICLE SPECIAL TAX PROVISIONS 7.1 Restrictions Relating to Trustor. Without exception of any kind or nature, Trustor hereby renounces all interests, either vested or contingent, including reversionary interests and possibilities of reverter or appointment, which Trustor might at any time otherwise be held to have in the income and/or corpus of this Trust. Notwithstanding anything herein contained to the contrary, no powers enumerated herein or accorded to Trustee generally pursuant to law, singly or as a whole, shall be construed: 1. To enable Trustor (i) to vote any stock which may at any time be directly or indirectly given to this Trust, or (ii) to exercise any power of appointment with respect to this Trust, 1. To enable Trustor to borrow any part of the assets or funds of any trust hereunder, directly or indirectly, unless such loan provides for at least such security and such interest as a commercial bank would deem to be adequate under the then circumstances or unless such loan is made by and with the continuing consent of a then acting Trustee of such trust who is "independent" (i.e., one who is neither Trustor nor related to Trustor in any of the following classifications: spouse, ancestor, lineal descendant, brother, or sister; nor an employee of Trustor; nor a corporation or an employee of any corporation, firm, or partnership in which Trustor is an executive or in which Trustor and/or any trust hereunder has stock or other holdings which are significant from the viewpoint of control), 1. To permit any Trust distribution which would have the effect of discharging any legal obligation of Trustor (including any obligation which Trustor may have at any time relating to the support and/or education of any Beneficiary hereunder), 1. To permit any Trust income of any kind to at any time be applied to the payment of any premium on any policy of insurance on the life of Trustor (or Trustor's spouse), or 1. To enable Trustor to reacquire any Trust property by substituting other property of equal value. If at any time any person other than Trustor makes any additional gift in Trust hereunder, such person shall be deemed thereafter to be an additional "Trustor" with respect to such addition for the purposes of the enunciation and restriction provisions referring to "Trustor" contained in this Article and for the purposes of all limitations, exceptions, restrictions, and exclusions referring to "Trustor" contained in other provisions of this Trust Agreement. 7.2 Restrictions on Fiduciary Actions. It is intended that all Trustees hereunder shall act as fiduciaries and not as the holders of powers for their own benefit. Accordingly and in order to eliminate the negative tax implications which might otherwise be drawn from various broadly worded provisions of this Trust Agreement, the following specific restrictions shall apply to all fiduciaries acting hereunder: 1. Except as otherwise expressly provided herein, each fiduciary, in the exercise of the powers and discretions conferred upon such fiduciary by this Trust Agreement, shall be guided by the best interests, as a whole and in a broad sense, of any Beneficiary hereunder, both present and contingent. 2. Notwithstanding the broad generality of the administrative powers granted to the fiduciaries hereunder by the terms of this Trust Agreement nor of any powers which may be accorded to Trustee generally pursuant to law, neither Trustee nor any other person or persons shall purchase, exchange, or otherwise deal with or dispose of any of the assets held in trust hereunder for less than an adequate consideration in money or money's worth. The foregoing shall not, however, be construed to prohibit any fiduciary hereunder from abandoning property reasonably deemed by such fiduciary to be of insufficient value to warrant the expense of retention. 3. Any fiduciary who is under a legal obligation to support and/or educate any Beneficiary shall under no circumstances partake in any decisions relating to any discretionary distributions which might be used for the support and/or education of such Beneficiary. 4. No person acting in a nonfiduciary capacity shall have any power to either vote or direct the voting of any stock or other securities constituting any part of the property of any trust hereunder or to direct investments or veto proposed investments as to any trust hereunder. 5. Any power which any one Trustee may have to remove another Trustee is likewise to be exercised only in furtherance of Trust purposes and not as a means of improperly influencing the manner in which discretions granted exclusively to that other Trustee are to be exercised. Thus, if one Trustee removes another under circumstances which indicate to the removed Trustee that a substantial purpose of such removal was to improperly influence or change the way in which some Trustee discretion (held exclusively by the thus removed Trustee) is or may be exercised, such Trustee, within thirty (30) days of receipt of the notice of removal, shall deliver to Trustee who gave such notice an affidavit substantiating those circumstances, in which event the removal shall be void for all purposes unless and until a court of proper jurisdiction has determined that such alleged improper influence was not in fact a substantial purpose of such removal. I. ARTICLE GENERAL PROVISIONS 8.1 Prohibition Against Assignment. No interest in the principal or income of any trust created under this Trust Agreement shall be anticipated, assigned, or encumbered, or subject to any creditor's claim or to legal process, prior to its actual receipt by Beneficiary. 8.2 Termination. Unless sooner terminated in accordance with other provisions herein contained, each trust created hereunder shall terminate twenty- one (21) years after the later of the death of the last survivor of Trustors or the death of all Trustors' issue living on the date of execution of this Trust, and upon such termination, Trustee shall pay and distribute the undistributed income and principal of the Trust Estate to the person or persons, for whom said trust is held hereunder. 8.3 Notice of Events. It shall be the duty of the several persons interested herein to notify Trustee and furnish Trustee with reasonable proof of any fact or the happening of any event calling for any change in the administration or distribution of the Trust Estate, and any and all action taken or suffered hereunder by Trustee in good faith in the absence of such notice and proof shall be deemed to be in the proper discharge of the Trust. 8.4 Statements. Trustee shall mail annual statements of account to the persons or person then entitled to receive payments hereunder, and unless such persons or person notify Trustee to the contrary within thirty (30) days from the date of such mailing, such statements shall be conclusively deemed to be correct. 8.5 Definition of "Issue" and "Children". As used in this Trust Agreement, the term "issue" shall refer to lineal descendants of all degrees, and the terms "child," "children," and "issue" shall include adopted persons. As used in this Trust Agreement, the masculine, feminine, or neuter gender, and the singular or plural number, shall each be allowed to include the others whenever the context so indicates. 8.6 Definition of "Education". Whenever provision is made in this Trust Agreement for payment for the "education" needs of Beneficiary, the terms "educational" or "education" shall be construed to include any accredited trade school, college, and postgraduate study, so long as pursued to advantage by Beneficiary, at an institution of Beneficiary's choice; and in determining the payments to be made for such trade school, college or postgraduate education, Trustee shall take into consideration Beneficiary's related living expenses to the extent that they are reasonable. 8.7 Governing Law. This Trust will be administered in the State of California, and its validity, construction, and all rights thereunder, shall be governed by the laws of the State of California. If any provision of this Trust Agreement shall be invalid or unenforceable, the remaining provisions thereof shall continue to be fully effective. Trustors and Trustee have executed this Trust Agreement as of and on the date above first written. TRUSTOR: SUCCESSOR TRUSTEE: _______________________________ ______________________________ BARRY R. SHREIAR TED CHRISTENSEN TRUSTEE: _______________________________ BARRY R. SHREIAR SCHEDULE "A" One Hundred Dollars ($100) Nine hundred thirty nine thousand nine hundred thirty (939,930) shares of M.G. Products, Inc. ACKNOWLEDGEMENTS STATE OF CALIFORNIA ) )ss. COUNTY OF ______________ ) On ___________________ before me, ___________________________ personally appeared ______________________________, /____/ personally known to me or /___/ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. ____________________________________ ____________________________________ Name (Typed or Printed) CAPACITY CLAIMED BY SIGNER: _____ individual signing for oneself/themselves. _____ corporate officer(s) ___________________________(Titles) _____ partner(s) _____________________________Limited _____________________________General _____ attorney-in-fact _____ trustee(s)/trustor(s) _____ guardian/conservator _____ other:_______________________________________________ __ SIGNER IS REPRESENTING: Name of Person(s) or Entity(ies) _____________________________________________________ __ _____________________________________________________ __ _____________________________________________________ __ STATE OF CALIFORNIA ) )ss. COUNTY OF ______________ ) On ___________________ before me, ___________________________ personally appeared ______________________________, /____/ personally known to me or /___/ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. ____________________________________ ____________________________________ Name (Typed or Printed) CAPACITY CLAIMED BY SIGNER: _____ individual signing for oneself/themselves. _____ corporate officer(s) ___________________________(Titles) _____ partner(s) _____________________________Limited _____________________________General _____ attorney-in-fact _____ trustee(s)/trustor(s) _____ guardian/conservator _____ other:_______________________________________________ __ SIGNER IS REPRESENTING: Name of Person(s) or Entity(ies) _____________________________________________________ __ _____________________________________________________ __ _____________________________________________________ __ EX-99 5 THE 1996 SHANNON ANN FARRAH TRUST dated September 29, 1996 * * * * * BARRY R. SHREIAR, Trustor BARRY R. SHREIAR, Trustee September 29, 1996 THE 1996 SHANNON ANN FARRAH TRUST dated September 29, 1996 THIS 1996 SHANNON ANN FARRAH TRUST dated September 29, 1996 (hereinafter referred to as the "Trust Agreement" or the "Trust") is made this 29th day of September, 1996, by and between BARRY R. SHREIAR, Trustor (hereinafter referred to as "Trustor"), and BARRY R. SHREIAR, Trustee in order to establish a separate trust for the benefit of SHANNON ANN FARRAH (herein "Beneficiary") under the terms and conditions herein stated. ARTICLE I. THE TRUST ESTATE Trustor, without any consideration on the part of Trustee, has delivered to Trustee money and property, as described in Exhibit "A", attached hereto as part of this Trust Agreement. Said property and the proceeds received by Trustee therefrom, and all money and property hereinafter held by or received by Trustee, as Trustee hereunder, shall constitute the Trust estate ("Trust Estate"). Trustee acknowledges delivery of said property and agrees to hold and manage the same, in trust, for the uses and in the manner hereinafter set forth. Trustor or any other legal person or entity shall have the right by Will or otherwise to add to this Trust any other property acceptable to Trustee, and such property shall become a part of the Trust Estate. The name of this Trust shall be "THE 1996 SHANNON ANN FARRAH TRUST dated September 29, 1996." I. ARTICLE IRREVOCABILITY Trustor hereby designates this Trust as an irrevocable trust and hereby irrevocably commits any and all funds and property listed on Exhibit "A" to the purposes set forth herein, to be held, administered, and distributed in accord with the herein provisions. No person shall have the power to alter, amend or revoke this Trust Agreement in whole or in part. I. ARTICLE POWER TO WITHDRAW TRUST ESTATE Trustee agrees, if Trustee accepts any additions, to hold and manage such additions in trust for the use and in the manner set forth in this Trust Agreement. In the event such addition constitutes a lifetime gift from Trustor, then the following shall apply: A. For a period of fifteen (15) days following any contribution to the Trust Estate by the Trustor or any other person, each Beneficiary shall have the right to withdraw from any part of the Trust Estate (including but not limited to the actual contribution) an amount equal to the lesser of: 1. The entire contribution; or 1. A portion of the contribution having a fair market value equal to the amount specified for gift tax exclusion in Internal Revenue Code 2503(b) as from time to time amended, determined as of the date of the contribution. If the donor is married at the time of the gift, this portion shall be doubled whether or not the donor's spouse joins in the gift pursuant to Internal Revenue Code 2513 as from time to time amended, except where married donors each make simultaneous gifts to the Trust Estate, then the exclusion in Internal Revenue Code 2503(b) shall be applied on a per donor basis. Provided, that the aggregate withdrawals with respect to contributions made by one donor during any single calendar year shall not exceed the fair market value of the foregoing Internal Revenue Code limitation determined as of the date of contribution. A. Withdrawals shall be by written request delivered to Trustee. A. If Beneficiary is under a legal disability during part or all of a withdrawal period, the guardian of Beneficiary may exercise such withdrawal on Beneficiary's behalf. A. Each time Beneficiary acquires a right of withdrawal as above provided, Trustee shall so notify Beneficiary or Beneficiary's guardian. A. On the death of Beneficiary, Beneficiary shall have the power to appoint the principal and any undistributed income of the Trust Estate, or any part thereof, to Beneficiary's spouse, to one or more of Beneficiary's issue then living, to one or more of Trustors' issue then living, or to a trust or trusts for their benefit. Such power of appointment shall be exercised only by a provision in the Last Will and Testament of Beneficiary expressly exercising such power. Unless within ninety (90) days after Beneficiary's death, Trustee has actual notice of the existence of a Will exercising such power, Trustee shall, without incurring any liability to any appointee, proceed as if such power had not been exercised; provided, however, that this sentence shall not bar any right which an appointee may have to enforce the appointment. I. ARTICLE DISTRIBUTION OF INCOME AND PRINCIPAL A. So long as Beneficiary is under the age of twenty-one (21), Trustee shall pay to or apply for the benefit of Beneficiary, as much of the net income and principal of the Trust as Trustee, in Trustee's discretion, deems necessary for the proper health, support, maintenance, and education of Beneficiary, after taking into consideration, to the extent Trustee deems advisable, any other income or resources of Beneficiary known to Trustee. Any net income not distributed shall be accumulated and added to the principal. A. When Beneficiary attains age twenty- one (21), Trustee shall pay to or apply for the benefit of Beneficiary the entire net income of Beneficiary's trust, quarter-annually or at more frequent intervals. Trustee may also pay to or apply for the benefit of Beneficiary as much of the principal of Beneficiary's trust as Trustee, in Trustee's discretion, deems necessary for the proper health, support, maintenance, and education of Beneficiary, after taking into consideration, to the extent Trustee deems advisable, any other income or resources of Beneficiary known to Trustee. A. At the time Beneficiary attains age forty (40), Trustee shall distribute to Beneficiary the remainder of the principal and any and all accumulated income on the principal of Beneficiary's trust as then constituted. A. If Beneficiary dies before becoming entitled to receive distribution of his or her entire trust, the undistributed balance of that Beneficiary's trust shall thereupon be divided into as many equal shares as there are living children of the deceased Beneficiary and Trustee shall distribute such shares outright and free of trust. If Beneficiary dies leaving no living children, the undistributed balance of that Beneficiary's trust shall be distributed to the then living brothers and sisters of Beneficiary in equal shares; provided, however, that if a brother or sister is then deceased leaving children then living, said deceased sibling's share shall be distributed to said living children in equal shares. Notwithstanding the above, if any part of that balance would otherwise be distributed to a person for whose benefit a trust is then being administered under this Trust Agreement, that part shall instead be added to that trust and shall thereafter be administered according to its terms. A. If at any time before full distribution of the Trust Estate, all persons described above are deceased but issue of Trustor are then living, the Trust Estate shall thereupon be distributed outright to said living issue based on the principal of representation, but if all Trustors' issue are deceased and no other disposition of the property is directed by this Trust, the Trust Estate or the portion of it then remaining shall thereupon be distributed to those persons who would then be Trustors' heirs, their identities and respective shares to be determined according to the laws of the State of California then in effect relating to the succession of separate property not acquired from a predeceased spouse, and assuming an equal share for each Trustor hereunder. A. With respect to any sum or property, whether income or corpus, which is required or permitted to be distributed out of any trust hereunder to or for the benefit of any person who, at the time, is a minor or whom Trustee of such trust, in Trustee's reasonable discretion, determines to be under any disability preventing such person from acting properly in his or her own behalf (irrespective of whether legally so adjudicated), Trustee of such trust may properly make distribution of the same in any one or more of the following ways as such Trustee, from time to time, in Trustee's sole discretion, shall deem to be most expedient in the best interests of such person; namely, by paying, distributing, or applying the same to: 1. Such person directly, 1. The legal guardian of such person, 1. An apparently qualified individual or bank who, in taking the same "as custodian for" such person "under the" appropriate state's "uniform gifts to minors act", indicates that such sum or property will be treated in all respects as "custodial property" for the benefit of such person in accordance with the provisions of the Uniform Gifts to Minors Act of such state (whether or not such act permits custodial property of such an origin), 1. The parent, spouse, or other individual having the care and custody of such person who, as such person's natural guardian, shall preserve the same for the immediate or ultimate benefit of such person (or such person's estate), but who shall not be obligated to qualify as a legal guardian or account to any probate court therefor, 1. Trustee or Trustees of any trust all of the assets of which are then fully and unqualifiedly withdrawable by such person, 1. The direct payment of any educational, medical, or other proper expense of such person (including expenses, such as taxes, repairs, etc., reasonably appropriate to preserving any assets belonging to such person) as long as such expense is not the legal obligation of any other person, 1. The purchase of stocks, bonds, insurance (the term "purchase" shall include any premium payment), or other properties of any kind, the ownership of which is registered in the sole name of such person, or 1. The making of a deposit into a bank, savings and loan association, brokerage, or other similar account in the sole name of such person; provided, if distribution in the manner described in subparagraphs (3) and (4) is made, Trustee may require legally enforceable indemnification in favor of such person against anyone other than such person (or his or her estate) benefiting thereby (even through the discharge of an obligation to support such person). The receipt for or evidence of any such payment, distribution, or application shall be a complete discharge and acquittance of Trustee to the extent of such payment, distribution, or application and, except for enforcement of any above described indemnification, Trustee shall have no duty to see to the actual application of amounts so paid or distributed to others. Even in the absence of minority or disability, distributions made in the manner provided in subparagraphs 1, 5, 6, 7, or 8 above shall be conclusively deemed to have been made for the "direct" benefit of such person. A. In exercising Trustee's discretion hereunder, Trustee shall be entitled to rely upon the written certification of Beneficiary or the parent or legal guardian of Beneficiary as to the nature and extent of Beneficiary's needs and the inadequacy of Beneficiary's resources apart from the Trust. When relying upon such certifications, Trustee shall not be required to make further inquiry into the authenticity of the need or to the availability of other resources to satisfy the need. It is Trustors' desire that Trustee consider the needs of Beneficiary in keeping with the standard of living that has been previously enjoyed by Beneficiary and that Trustee consider the needs of Beneficiary for support, care, maintenance, and education as the primary purposes of the Trust. I. ARTICLE POWERS OF TRUSTEE A. In order to carry out the purposes of this Trust and subject to any limitation stated elsewhere in this Trust, Trustee is vested with the following powers, in addition to those now or hereafter conferred by law, affecting the Trust and the Trust Estate: 1. To retain any property or business interest transferred, devised or bequeathed to Trustee, or any undivided interest therein, regardless of any lack of diversification, risk, or nonproductivity and regardless of whether or not such property be of a character authorized by the laws of the State of California for investment of Trust funds and to continue the operation of any such business interest at the risk of the Trust Estate as long as Trustee deems advisable. 1. To invest and reinvest the Trust Estate in any property or undivided interest therein, wherever located, including bonds, notes, (whether secured or unsecured), contracts of life insurance, stocks of corporations, interests in general or limited partnerships, real estate or any interest therein and interests in trusts, including but not limited to interests in any common trust fund or funds now or hereafter established and being administered by a corporate Trustee of this Trust solely for the investment of Trust funds. 1. To have all the rights, powers, and privileges of an owner with respect to securities held in trust, including, but not limited to the power to vote and give proxies and pay assessments or other charges, to participate in voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers and liquidations and in connection therewith to deposit securities with and transfer title to any protective or other committee under such terms as Trustee may deem advisable, and do all other acts which men of prudence, discretion and intelligence would do or take for their own account. 1. To manage, control, grant options on, sell (for cash or on deferred payments), convey, exchange, partition, divide, improve, and repair trust property and to margin, option, and deal with and in commodities, futures and all similar securities, as Trustee shall deem advisable, from time to time. 1. To lease Trust property for terms within or beyond the terms of the Trust and for any purpose, including exploration for and removal of gas, oil, and other minerals; and to enter into community oil leases, pooling and unitization agreements. 1. To borrow money, and to encumber or hypothecate Trust property by mortgage, deed of trust, pledge, or otherwise for the debts of the Trust or the joint debts of the Trust and others as co-owners of Trust property. 1. To loan or advance Trustee's own funds to the Trust for any Trust purpose, with interest at current rates; to receive security for such loans in the form of a mortgage, pledge, deed of trust, or other encumbrance of any assets of the Trust, to purchase assets of the Trust at their fair market value as determined by an independent appraisal of those assets; and to sell property to the Trust at a price not in excess of its fair market value as determined by an independent appraisal. 1. To keep any property in the name of Trustee or a nominee with or without disclosure of any fiduciary relationship. 1. To carry, at the expense of the Trust, insurance of such kinds and in such amounts as Trustee deems advisable to protect the Trust Estate and Trustee against any hazard. 1. To employ managers, agents, attorneys, accountants, auditors, depositories and proxies, with or without discretionary powers and to rely on the advice given by such advisors. 1. To commence or defend, at the expense of the Trust, such litigation with respect to the Trust or any property of the Trust Estate as Trustee may deem advisable, and to compromise or otherwise adjust any claims or litigation against or in favor of the Trust. 1. To take any action and to make any election, in Trustee's discretion, to minimize the tax liabilities of this Trust and its beneficiaries, and it shall have the power to allocate the benefits among the various beneficiaries, and Trustee shall have the power to make adjustments in the rights of any beneficiaries, or between the income and principal accounts, to compensate for the consequence of any tax election or any investment or administrative decision that Trustee believes has had the effect of directly or indirectly preferring one beneficiary or group of beneficiaries over others. 1. Except as otherwise specifically provided in this Trust, Trustee shall have the power, exercisable in Trustee's discretion, to determine what is principal or income of the Trust Estate and to apportion and allocate receipts and expenses and other charges between these accounts, including also the power to charge in whole or in part against principal, or to amortize out of or charge forthwith to income, premiums paid on the purchase of bonds or other obligations. Trustee shall not be required to establish a reserve for depreciation or to make charges against income therefor, but may do so if Trustee, in Trustee's discretion, so determines such reserve and charges to be established on such assumptions and in such amounts as Trustee shall determine. If the Trust shall be a member of a partnership, Trustee shall be entitled to accept, with respect to such partnership interest, any accounting methods used by the partnership, regardless of whether such methods shall include depreciation reserves, regardless of the assumptions on which any such reserve may be based, and regardless of whether such accounting methods are inconsistent with those methods used by Trustee with respect to other property of the Trust Estate. No inference of imprudence or partiality shall arise from the fact that Trustee, in exercising the discretion conferred here on Trustee, shall have allocated a receipt or expenditure in a manner contrary to any provision of the California Revised Uniform Principal and Income Act. Except insofar as Trustee shall exercise the discretion conferred on Trustee and except as otherwise provided in this Trust, matters relating to principal and income shall be governed by the provisions of the California Revised Uniform Principal and Income Act from time to time existing. 1. In any case in which Trustee is required pursuant to the provisions of the Trust, to divide any Trust property into parts or shares for the purpose of distribution, or otherwise, Trustee is authorized, in Trustee's absolute discretion, to make the division and distribution in kind, including undivided interests in any property, or partly in kind and partly in money, and for this purpose to make such sales of the Trust property as Trustee may deem necessary on such terms and conditions as Trustee shall see fit. 1. Early Termination. Trustee, or any Successor Trustee, shall have the power to terminate this Trust should the balance on hand decrease to an amount less than Twenty-Five Thousand Dollars ($25,000), which amount Trustee or the Successor Trustee deems could not be efficiently and economically administered by Trustee, or the Successor Trustee, or distribute free of Trust any property determined by the Trustee in the Trustee's sole and absolute reasonable discretion to be unproductive or under productive and not readily saleable. Included within the definition of unproductive or underproductive property shall be any Trust property which has been at any time subject to environmental contamination or hazard. 1. To comply fully with all present and future laws applicable to the Trust or the Trustee in the administration of the Trust whether enacted by federal, state or local authorities including all environmental laws, regulations and ordinances, at the sole expense of the Trust, including actions which require the Trust to be classified as a generator or transporter of environmentally hazardous or suspect materials. 17. The enumeration of certain powers of Trustee shall not limit Trustee's general powers, Trustee, subject always to the discharge of Trustee's fiduciary obligations, being vested with and having all the rights, powers and privileges which an absolute owner of the same property would have. A. From the income and principal of the Trust Estate Trustee shall pay and discharge all expenses incurred in the administration of this Trust and the protection of this Trust against legal or equitable attack, including counsel fees and a reasonable fee for his own services as such Trustee, which compensation and expenses constitute a first lien on the Trust Estate. II. ARTICLE REGULATION OF TRUSTEE 6.1 Successor Trustees. BARRY R. SHREIAR is hereby designated as Trustee of this Trust. He shall have the right to appoint any person to act with him as Co-Trustee or as sole Trustee, remove such appointed Trustee, reinstate himself as Trustee, and designate Successor Trustees. Upon the death, resignation or inability of BARRY R. SHREIAR to act or to continue to act as Trustee, and no Successor Trustee is designated, then TED CHRISTENSEN is hereby designated to act as Successor Trustee with all of the same powers of appointment, removal, and designation as above granted to the original Trustee. Upon the death, resignation or inability of TED CHRISTENSEN to act or to continue to act as Trustee, and no Successor Trustee is designated, then WELLS FARGO BANK is hereby designated to act as Successor Trustee with all of the same powers of appointment, removal, and designation as above granted to the original Trustee. In the event of any vacancy in the office of Trustee which is not filled as above provided, a court of competent jurisdiction shall appoint a Trustee upon the application of any Beneficiary, present or contingent, interested in this Trust. No bond shall be required of any Trustee or Successor Trustee. All references to "Trustee" or "Trustees" hereunder shall include the Successor Trustee. 6.2 Powers of Successor Trustees. The Successor Trustee shall have all the powers, rights, discretions, obligations, and immunities of Trustee hereunder, to the same effect as though such Successor Trustee was originally named herein as Trustee, except that such Successor Trustee shall be chargeable only with the assets delivered to it by the preceding Trustee, and shall not be under any obligation to investigate or be accountable for any act or omission of any prior Trustee in the administration of this Trust. 6.3 Compensation of Trustees. For his or her ordinary services an individual Trustee shall receive reasonable compensation and a Corporate Trustee shall receive annual compensation in accordance with its fees schedule in effect at the time such fees are taken. It is understood and agreed that said Trustee may adopt different fee schedules from time to time relating to trusts of a type similar to the trust created by this Trust Agreement and that said Trustee's annual compensation hereunder for ordinary services shall as aforesaid be based upon the fee schedule in effect at the time that fees are taken. At the time that said Trustee adopts a new fee schedule which would affect the amount of fees which said Trustee is entitled to receive in administering this Trust, it shall mail a copy of same to Trustors and to all of the then income Beneficiaries. In the event that said Trustee performs services of an extraordinary nature, it shall be entitled to reasonable compensation for such services in addition to the annual compensation for its ordinary services. 6.4 Resignation of Trustee. A Trustee may at any time resign from the Trust hereby created by depositing in the United States mail, postage prepaid, a notice of such resignation addressed to the persons or person then entitled to receive payments hereunder at the addresses of such persons or person last known to Trustee, and such resignation shall take effect at the expiration of sixty (60) days from the date of mailing of such notice and the affidavit of any officer of the Corporate Trustee, as to the date of mailing of such notice, shall be conclusive evidence of its mailing. 6.5 Removal of Trustee. Whenever Trustee hereunder is a trust company or bank, a majority of the then living adult income beneficiaries (or if none of the beneficiaries is an adult, then the guardian or guardians of the estate of the minor beneficiaries), shall have the power to designate a Successor Trustee in the place of the then acting Trustee. Such Successor Trustee must be a trust company or bank qualified to do a trust business and may be located in any state of the United States. Such designation shall be in writing addressed to the then acting Trustee, and shall include the written consent of the named Successor Trustee to act as Trustee hereunder. As soon as practicable after the receipt of such designation, the then acting Trustee shall deliver all assets of the Trust to such Successor Trustee. The Successor Trustee shall have all the powers, rights, discretions, obligations and immunities of Trustee hereunder, to the same effect as though such Successor Trustee were originally named herein as Trustee. 6.6 Liability of Trustee. Trustee shall be exonerated and indemnified by the Trust, to the full extent or its assets, from any and all liability, loss, cost or damage incurred by Trustee in its individual or fiduciary capacity for acts or omissions occurring in connection with the administration of the Trust, including acts believed reasonably necessary by Trustee in order to comply with all laws, including environmental laws relating to Trust property or former Trust property provided that Trustee shall not be exonerated or indemnified from his own grossly negligent actions or omissions. I. ARTICLE SPECIAL TAX PROVISIONS 7.1 Restrictions Relating to Trustor. Without exception of any kind or nature, Trustor hereby renounces all interests, either vested or contingent, including reversionary interests and possibilities of reverter or appointment, which Trustor might at any time otherwise be held to have in the income and/or corpus of this Trust. Notwithstanding anything herein contained to the contrary, no powers enumerated herein or accorded to Trustee generally pursuant to law, singly or as a whole, shall be construed: 1. To enable Trustor (i) to vote any stock which may at any time be directly or indirectly given to this Trust, or (ii) to exercise any power of appointment with respect to this Trust, 1. To enable Trustor to borrow any part of the assets or funds of any trust hereunder, directly or indirectly, unless such loan provides for at least such security and such interest as a commercial bank would deem to be adequate under the then circumstances or unless such loan is made by and with the continuing consent of a then acting Trustee of such trust who is "independent" (i.e., one who is neither Trustor nor related to Trustor in any of the following classifications: spouse, ancestor, lineal descendant, brother, or sister; nor an employee of Trustor; nor a corporation or an employee of any corporation, firm, or partnership in which Trustor is an executive or in which Trustor and/or any trust hereunder has stock or other holdings which are significant from the viewpoint of control), 1. To permit any Trust distribution which would have the effect of discharging any legal obligation of Trustor (including any obligation which Trustor may have at any time relating to the support and/or education of any Beneficiary hereunder), 1. To permit any Trust income of any kind to at any time be applied to the payment of any premium on any policy of insurance on the life of Trustor (or Trustor's spouse), or 1. To enable Trustor to reacquire any Trust property by substituting other property of equal value. If at any time any person other than Trustor makes any additional gift in Trust hereunder, such person shall be deemed thereafter to be an additional "Trustor" with respect to such addition for the purposes of the enunciation and restriction provisions referring to "Trustor" contained in this Article and for the purposes of all limitations, exceptions, restrictions, and exclusions referring to "Trustor" contained in other provisions of this Trust Agreement. 7.2 Restrictions on Fiduciary Actions. It is intended that all Trustees hereunder shall act as fiduciaries and not as the holders of powers for their own benefit. Accordingly and in order to eliminate the negative tax implications which might otherwise be drawn from various broadly worded provisions of this Trust Agreement, the following specific restrictions shall apply to all fiduciaries acting hereunder: 1. Except as otherwise expressly provided herein, each fiduciary, in the exercise of the powers and discretions conferred upon such fiduciary by this Trust Agreement, shall be guided by the best interests, as a whole and in a broad sense, of any Beneficiary hereunder, both present and contingent. 2. Notwithstanding the broad generality of the administrative powers granted to the fiduciaries hereunder by the terms of this Trust Agreement nor of any powers which may be accorded to Trustee generally pursuant to law, neither Trustee nor any other person or persons shall purchase, exchange, or otherwise deal with or dispose of any of the assets held in trust hereunder for less than an adequate consideration in money or money's worth. The foregoing shall not, however, be construed to prohibit any fiduciary hereunder from abandoning property reasonably deemed by such fiduciary to be of insufficient value to warrant the expense of retention. 3. Any fiduciary who is under a legal obligation to support and/or educate any Beneficiary shall under no circumstances partake in any decisions relating to any discretionary distributions which might be used for the support and/or education of such Beneficiary. 4. No person acting in a nonfiduciary capacity shall have any power to either vote or direct the voting of any stock or other securities constituting any part of the property of any trust hereunder or to direct investments or veto proposed investments as to any trust hereunder. 5. Any power which any one Trustee may have to remove another Trustee is likewise to be exercised only in furtherance of Trust purposes and not as a means of improperly influencing the manner in which discretions granted exclusively to that other Trustee are to be exercised. Thus, if one Trustee removes another under circumstances which indicate to the removed Trustee that a substantial purpose of such removal was to improperly influence or change the way in which some Trustee discretion (held exclusively by the thus removed Trustee) is or may be exercised, such Trustee, within thirty (30) days of receipt of the notice of removal, shall deliver to Trustee who gave such notice an affidavit substantiating those circumstances, in which event the removal shall be void for all purposes unless and until a court of proper jurisdiction has determined that such alleged improper influence was not in fact a substantial purpose of such removal. I. ARTICLE GENERAL PROVISIONS 8.1 Prohibition Against Assignment. No interest in the principal or income of any trust created under this Trust Agreement shall be anticipated, assigned, or encumbered, or subject to any creditor's claim or to legal process, prior to its actual receipt by Beneficiary. 8.2 Termination. Unless sooner terminated in accordance with other provisions herein contained, each trust created hereunder shall terminate twenty- one (21) years after the later of the death of the last survivor of Trustors or the death of all Trustors' issue living on the date of execution of this Trust, and upon such termination, Trustee shall pay and distribute the undistributed income and principal of the Trust Estate to the person or persons, for whom said trust is held hereunder. 8.3 Notice of Events. It shall be the duty of the several persons interested herein to notify Trustee and furnish Trustee with reasonable proof of any fact or the happening of any event calling for any change in the administration or distribution of the Trust Estate, and any and all action taken or suffered hereunder by Trustee in good faith in the absence of such notice and proof shall be deemed to be in the proper discharge of the Trust. 8.4 Statements. Trustee shall mail annual statements of account to the persons or person then entitled to receive payments hereunder, and unless such persons or person notify Trustee to the contrary within thirty (30) days from the date of such mailing, such statements shall be conclusively deemed to be correct. 8.5 Definition of "Issue" and "Children". As used in this Trust Agreement, the term "issue" shall refer to lineal descendants of all degrees, and the terms "child," "children," and "issue" shall include adopted persons. As used in this Trust Agreement, the masculine, feminine, or neuter gender, and the singular or plural number, shall each be allowed to include the others whenever the context so indicates. 8.6 Definition of "Education". Whenever provision is made in this Trust Agreement for payment for the "education" needs of Beneficiary, the terms "educational" or "education" shall be construed to include any accredited trade school, college, and postgraduate study, so long as pursued to advantage by Beneficiary, at an institution of Beneficiary's choice; and in determining the payments to be made for such trade school, college or postgraduate education, Trustee shall take into consideration Beneficiary's related living expenses to the extent that they are reasonable. 8.7 Governing Law. This Trust will be administered in the State of California, and its validity, construction, and all rights thereunder, shall be governed by the laws of the State of California. If any provision of this Trust Agreement shall be invalid or unenforceable, the remaining provisions thereof shall continue to be fully effective. Trustors and Trustee have executed this Trust Agreement as of and on the date above first written. TRUSTOR: SUCCESSOR TRUSTEE: _______________________________ ______________________________ BARRY R. SHREIAR TED CHRISTENSEN TRUSTEE: _______________________________ BARRY R. SHREIAR SCHEDULE "A" One Hundred Dollars ($100) Nine hundred thirty nine thousand nine hundred thirty one (939,931) shares of M.G. Products, Inc. ACKNOWLEDGEMENTS STATE OF CALIFORNIA ) )ss. COUNTY OF ______________ ) On ___________________ before me, ___________________________ personally appeared ______________________________, /____/ personally known to me or /___/ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. ____________________________________ ____________________________________ Name (Typed or Printed) CAPACITY CLAIMED BY SIGNER: _____ individual signing for oneself/themselves. _____ corporate officer(s) ___________________________(Titles) _____ partner(s) _____________________________Limited _____________________________General _____ attorney-in-fact _____ trustee(s)/trustor(s) _____ guardian/conservator _____ other:_______________________________________________ __ SIGNER IS REPRESENTING: Name of Person(s) or Entity(ies) _____________________________________________________ __ _____________________________________________________ __ _____________________________________________________ __ STATE OF CALIFORNIA ) )ss. COUNTY OF ______________ ) On ___________________ before me, ___________________________ personally appeared ______________________________, /____/ personally known to me or /___/ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. ____________________________________ ____________________________________ Name (Typed or Printed) CAPACITY CLAIMED BY SIGNER: _____ individual signing for oneself/themselves. _____ corporate officer(s) ___________________________(Titles) _____ partner(s) _____________________________Limited _____________________________General _____ attorney-in-fact _____ trustee(s)/trustor(s) _____ guardian/conservator _____ other:_______________________________________________ __ SIGNER IS REPRESENTING: Name of Person(s) or Entity(ies) _____________________________________________________ __ _____________________________________________________ __ _____________________________________________________ __ -----END PRIVACY-ENHANCED MESSAGE-----