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direct Bermuda Trust to retain and hold any amounts in a separate
trust. The Melniks’ respective trust indentures further provided
that when the Melniks die, subject to the terms of effectively
exercised powers of appointment, Bermuda Trust must divide the
remaining portions of their respective trusts into separate
shares for the Melniks’ children or their children’s
descendants.10
Acquisition of Clend by the Trusts and the Stock Purchase
Agreements
As part of the overall transaction, Mr. Pennoni planned for
the trusts to acquire a company with which the Melniks would
exchange a portion of their HouTex stock for a deferred private
annuity. No earlier than in November 1996,11 the Rashi and
Rambam Trusts acquired Clend, a British Virgin Islands holding
10The sixth page of the Rashi Trust indenture as it appears
in the record is incomplete. The missing section contains the
first few sentences directing the division of the remaining
portion of the Rashi Trust after Zalman Melnik’s death. Though
we can conclude from the seventh page of the trust indenture that
Zalman Melnik’s children or their descendants were to receive
separate shares, we cannot conclude whether his spouse was also
allocated a share.
11Again, the exact date does not appear in the record. On
Nov. 22, 1996, “Further to instructions received earlier today
from Mr. Bob Colvin of Chamberlin Hrdlicka”, Ethlyn George, a
trust administrator at Arawak Trust, faxed a copy of inaugural
minutes for Clend that appointed Mr. Maycock a director. On Dec.
12, 1996, Ms. George faxed to Mr. Maycock a resolution of Clend’s
directors dated Nov. 7, 1996, that authorized him to sign the
Nov. 8, 1996, stock purchase agreements.
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