TRUST AGREEMENT
TRUST AGREEMENT (the "Agreement"), made as of the 14th day of May,
1997 by and among the individuals set forth in the signature pages hereof
(collectively referred to herein as the "Shareholders"), and Xx. Xxxxxx Xxx
as trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Shareholders wish to enter into a trust agreement with
respect to 2,500,000 shares of Class B Common Stock of PepsiCola Puerto
Rico Bottling Company, a Delaware Corporation, (the "Corporation")
currently owned by the Shareholders ("the "Settlement Shares") and as to
certain other matters with respect to such Settlement Shares.
WHEREAS, the Shareholders own the number of Settlement Shares set
forth opposite their names in the signature pages hereof, as well as other
shares not listed thereon;
WHEREAS, the Shareholders have agreed upon the person who shall act as
Trustee of such trust (the "Trustee"); and
WHEREAS, it is intended that the Trust qualify as a grantor trust for
federal income tax purposes with the Shareholders as grantors and that the
Shareholders shall be treated as the owners for federal income tax purposes
of the Settlement Shares held by the Trust; and
WHEREAS, the Corporation and some of its directors are defendants in
certain class action securities lawsuits (the "Litigation") and the
Corporation's counsel, Xxxxxx, Xxxx & Xxxxxxxx, has recommended a possible
settlement agreement (the "Settlement Agreement") with the plaintiffs in
such Litigation to settle the Litigation, and said Agreement would call for
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the payment of $2,500,000 cash and 2,500,000 of Class B stock of the
Corporation;
WHEREAS, the potential settlement with the Company's Directors and
Officer's insurance carrier, AIU, may be insufficient to fully fund (1) the
$2,500,000 cash settlement payment which would be due to plaintiffs, (2)
the Corporation's defense costs of approximately $2,500,000 and (3)the
additional funds representing the value of 2,500,000 shares of the
Corporation's stock, and the Corporation does not have the resources
sufficient to fund the recommended settlement;
WHEREAS, the Shareholders and the original organizers of the
Corporation own a major stake in the Corporation and have a definite
interest in seeing that the Corporation survives and prospers;
WHEREAS, the Shareholders of the Corporation wish to protect their
interests as shareholders in the Corporation; and
WHEREAS, because the Shareholders believe that the business of the
Corporation is viable and that it should be preserved on an ongoing basis,
the Shareholders have a substantial interest in the Corporation as
shareholders and the Shareholders are willing to incur some short-term loss
in their investment in order to xxxxxx the long-term financial health
of the Corporation and to preserve their remaining interests in the
Corporation as shareholders;
WHEREAS, the Corporation shall benefit by the availability of the
2,500,000 of Class B Stock through the exercise of the Option under the
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Stock Option Agreement executed on this same date by the parties hereof and
a Special Committee of the Corporation.
NOW, THEREFORE, in consideration of the premises, it is hereby agreed
as follows:
1. TRANSFER OF STOCK TO TRUSTEE
A. The Shareholders hereby create an irrevocable trust (the "Trust")
under the following terms and conditions:
(i) Each Shareholder hereby assigns and transfers to the
Trustee all rights, title and interest in the Settlement Shares owned and
held by each of them, subject to the terms and conditions of this
Agreement. Each Shareholder agrees to deliver to the Trustee,
simultaneously with the execution of this Agreement, stock certificates
representing its ownership of the Settlement Shares, together with a duly
executed stock power for the transfer of the Settlement Shares to the
Trustee.
(ii) The Settlement Shares transferred and delivered to the
Trustee shall be recorded in the stock ledger of the Corporation in the
name of "Xx. Xxxxxx Xxx, Trustee".
(iii) The Trustee shall receive and hold the Settlement
Shares in trust for the benefit of the Shareholders in accordance with the
terms of this Agreement.
2. TRUSTEE: IN GENERAL; POWERS
A. The Trustee is hereby expressly authorized and entitled to do any
and all acts which he deems necessary or advisable in order to successfully
carry out the terms of the Settlement Agreement including, without
limitation, the exercise of the Option (as such term is defined under the
Stock Option Agreement) under the Stock Option Agreement with respect to
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the Settlement Shares and the transfer of the Option to the Corporation.
B. During such time as the Settlement Shares are in the Trust, the
Trustee shall be entitled to vote the Settlement Shares and to give any
consent for any purpose as fully as any Shareholder might do, and to waive
any of the Shareholders' rights or privileges in respect thereof, and to
consent to any act of the Corporation, as though he were the absolute owner
of such Settlement Shares, but shall not have any right to sell or
otherwise dispose of the Settlement Shares, or receive dividends, other
than as provided in Section 2.A hereunder. The right to vote shall
include, without being limited to, the right to vote in favor or against
the dissolution, reorganization, merger, consolidation, or recapitalization
of the Corporation or the sale, lease, exchange or disposition of
substantially all of the assets of the Corporation. The Trustee shall pay
the amount of any dividends received by him to the Settling Shareholders,
pro rata in accordance with their contributions to the Trust, immediately
after the receipt thereof.
C. The interpretation by the Trustee of the terms, provisions and
conditions of this Agreement shall be conclusive and binding upon all
holders of the Settlement Shares and on all other interested parties.
3. TRUSTEE; PROCEDURE
The Trustee may exercise any power or perform any act under this
Agreement by an agent or attorney, appointed in writing.
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4. TERMINATION
A. In the event of the death or disability of the Trustee, or at his
sole discretion, this Agreement shall terminate.
B. This Agreement shall terminate in the event the court with
competent jurisdiction over the Litigation does not grant or otherwise
denies approval of the Settlement Agreement, or if the Stock Option
Agreement is terminated.
C. If not sooner terminated, as provided in Section 4.A or 4.B, this
Agreement shall terminate on December 31, 1997.
5. ENTIRE AGREEMENT
This Agreement and the Stock Option Agreement constitutes the
entire agreement between the parties on the subject matter of this
Agreement, and supersedes any and all prior negotiations, correspondence,
agreements and understandings.
6. SEVERABILITY
If any provision of this Agreement is held to be unenforceable,
the remainder of this Agreement shall not be affected thereby.
7. AMENDMENTS
This Agreement may not be amended or modified except by a written
agreement signed by the affected parties hereto.
8. CONFIDENTIALITY
The parties to this Agreement will keep confidential the terms of
this Agreement unless the disclosure thereof becomes mandatory by
application of law or regulation or by a court order, or if the
Corporation's securities counsel, considering the occurrence of any
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circumstances deems it appropriate or advisable to undertake such
disclosure.
9. ASSIGNMENT
This Agreement may not be assigned by any party without the
consent of the other parties hereto. This Agreement shall be binding
upon the heirs, successors, administrators, executors and assigns of each
of the parties hereto.
10. NO WAIVER
Any waiver by a party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any other provision of this Agreement. The
failure of a party to insist on strict adherence to any term of this
Agreement shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
11. GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Puerto Rico and, with respect to
matters covered by the Delaware General Corporation Law, including without
limitation the validity of this Trust Agreement and the formalities related
thereto, by the Delaware General Corporation Law.
12. CAPTIONS
The captions of the various sections of the Agreement are
included for convenience of reference only and shall in no way affect the
construction or interpretation of this Trust Agreement.
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13. INDEMNITIES AND COOPERATION FROM SHAREHOLDERS
A. The Shareholders will, severally, in proportion to the number of
shares beneficially owned by them which are subject to this Trust
Agreement, indemnify and hold the Trustee harmless from any and all claims,
demands, causes of action, losses, liabilities, damages, judgments or
charges of any kind, including, without limitation, the cost of defending
any action against him, together with any reasonable attorneys' fees and
investigation costs incurred in connection therewith or in connection with
any potential claim or loss, or any other expenses, fees or charges of any
character or nature, arising in connection with this Trust Agreement,
unless and until it is determined in a final unappealable judgment that
such claim, demand, damage or expense arises as a direct result of the
willful misconduct or gross negligence of the Trustee. To the extent that
the Trustee is unable to enforce this indemnity against any Shareholder,
the Corporation shall indemnify the Trustee to the same extent required
from such Shareholder.
B. The Shareholders agree to cooperate fully with the Trustee and to
do all further acts and things requested by the Trustee to more fully carry
out and give effect to this Agreement and to permit the Trustee to comply
with applicable laws and regulations in all matters related to the shares
deposited with the Trustee, including without limitation, the execution of
proxies in favor of the Trustee, the execution of any public deeds that may
be required under applicable law and the preparation and filing of any
reports required by any applicable law or regulation.
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C. The Trustee shall be entitled to reimbursement from the
Corporation for all expenses incurred in connection with this Agreement,
but shall not be otherwise entitled to any compensation for his services as
Trustee.
14. NOTICES
All notices which may or are required to be given under this
Agreement or with respect to it shall be in writing and shall be given by
personal delivery or by certified or registered mail, and shall be deemed
to have been given or made when personally delivered on five business days
after being deposited in the mail, return receipt requested, in the case of
notice by certified or registered mail, to the following addresses:
(a) If to the Trustee:
0 Xxxxxxxxx Xxxxxx, Xxx. 0
Xxxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
(b) If to the Corporation:
XX Xxx 0000
Xxxx Xxx, Xxxxxx Xxxx 00000
Attention: President
(c) If to any Shareholder, to the address set forth below their
names on the signature pages hereof.
The parties may, by written notice given hereunder, designate any
further or different address to which subsequent notices shall be sent or
persons to whose attention the same shall be directed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
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TRUST
NUMBER OF SHARES
NAME OF SHAREHOLDERS AND BEING DEPOSITED IN
ADDRESS FOR NOTICE THE TRUST SIGNATURE
---------------------------- ------------------- -----------------------
Xxxxxxx X. and
Xxxxxxxx Xxxxx 988,435 /s/ Xxxxxxx X. Beach
/S/ XXXXXXXX XXXXX
Xxxxxxx X. Xxxxxxx
Investment Ltd. 183,721 /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx 150,126 /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
Irrevocable Trust 17,307 /S/ XXXXX X. XXXXXXX
Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxx Irrevocable Trust 17,307 /s/ Xxxxxxxxx Xxxxx
XXXXXXX XXXXX
Xxxx Xxxxxxx 60,573 /S/ XXXX XXXXXXX
Xxxxx X. Xxxxxxx Trustee
Trust #1 11,538 /S/ XXXXX X. XXXXXXX
Xxxxx X. & Xxxxx X. Xxxxxxx 31,729 /s/ Xxxxx X. Xxxxxxx /S/ XXXXX X.
XXXXXXX
Xxxxx X. Xxxxxxx, Trustee
for Xxxxx X. Xxxxxxx
Irrevocable Generation
Skipping Trust 5,769 /S/ X.X. XXXXXXX
Xxxxx X. Xxxxxxx, Trustee
for Xxxxx X. Xxxxxxx
Irrevocable Generation
Skipping Trust 5,769 /S/ XXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx 2,704 /S/ XXXXXX X. XXXXXXX
Xxxxxx Xxxxxxxx 2,704 /S/ XXXXXX XXXXXXXX
Xxxxxxx X. Xxxxxx 2,704 /S/ XXXXXXX X. XXXXXX
Xxxxx X. X'Xxxxx Estate 2,704 /S/ XXXXX X'XXXXX, III
Lumiye International SA 126,195 /S/ XXXXX XXXXXXXXXXX
Girasol Enterprises 54,083 /s/ Xxxx de X.
XXXXXXXXXXX
Xxxxxxx Family Investment
Ltd. 120,186 /S/ XXXXXXX XXXXXXX
Xxxxxx Family Investment /S/ XXXX X. XXXXXX
Ltd. 120,186
Xxxxxxx X'Xxxxxx 120,186 /S/ XXXXXXX X'XXXXXX
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NUMBER OF SHARES
NAME OF SHAREHOLDERS AND BEING DEPOSITED IN
ADDRESS FOR NOTICE THE TRUST SIGNATURE
---------------------------- ------------------- -----------------------
Xxxx Xx. Xxxx 162,251 /S/ XXXX XX. XXXX
Xxxx Financial Corp. 90,139 /S/ XXXXXX XXXX
Xxxxxx Xxx 55,921 /S/ XXXXXX XXX
Xxxxxx & Xxxxxxxxx Xxxxxx 55,921 /S/ XXXXXX XXXXXX
Xxxxx Xxxxxxx-Xxxxxxx 111,842 /s/ Xxxxx Xxxxxxx
XXXXXXXX
/S/ XXXXXX XXX
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Xxxxxx Xxx, as Trustee
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