Zalman Melnik and Lea Melnik - Page 12

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          liens against Clend’s property, including the HouTex stock.15               
          The stock purchase agreements were signed by the Melniks and Lea            
          and by William Maycock, a Bermuda Trust trust manager, as                   
          director of Clend16 “to be effective as of” November 8, 1996.               
          However, as of November 8, 1996, Clend had not yet held its first           
          shareholders’ or directors’ meeting, had not yet appointed Mr.              
          Maycock as a director, and had no assets to fund the purchase of            
          the HouTex shares.17  Clend did not participate in any                      
          negotiations regarding the terms of the stock purchase agreement,           
          including any negotiations regarding the consideration to be paid           
          for the HouTex stock it was allegedly purchasing.                           
               On or about November 22, 1996, Clend held its first board of           
          directors meeting.  The minutes of that meeting purport to show             
          that Mr. Maycock and Stanley Wright were appointed directors of             
          Clend at that meeting.18  The minutes also purport to show that,            

               15Clend had no other assets when it entered into the stock             
          purchase agreements with the Melniks and Lea.                               
               16Although Mr. Maycock was not formally appointed a director           
          of Clend until Nov. 22, 1996, or later in a resolution backdated            
          to Nov. 7, 1996, Arawak authorized Mr. Maycock to sign the stock            
          purchase agreements on behalf of Clend.  That resolution was                
          forwarded to Mr. Maycock on Dec. 12, 1996, so it is likely that             
          Mr. Maycock was not authorized to sign and did not sign the                 
          resolution until on or after Dec. 12, 1996.                                 
               17It is also probable that, on Nov. 8, 1996, the Rashi and             
          Rambam Trusts had not yet acquired Clend.                                   
               18The minutes of the first board of directors meeting at               
          which Mr. Maycock and Mr. Wright were allegedly appointed                   
                                                             (continued...)           





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