AMENDMENT
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3){*}
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
- --------------------------------------------------------------------------------
(Name of Issuer)
CLASS B COMMON STOCK
- --------------------------------------------------------------------------------
(Title Class of Securities)
713434 10 8
-----------------------------------------------------
(CUSIP Number)
RAFAEL NIN, C/O PEPSI-COLA PUERTO RICO BOTTLING COMPANY, CARRETERA #2, KM 19.4,
BARRIO CANDELARIA, TOA BAJA, PUERTO RICO 09949, (787) 251-2000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
JULY 10, 1997
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box <square>.
Check the following box if a fee is being paid with the statement <square>. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent or
less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
{*} The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SEC 1746(12-91)
PAGE
<PAGE>
SCHEDULE 13D
CUSIP NO. 713434 10 8 Page 2 of 4 Pages
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RAFAEL NIN
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP{*} (A) <square>
(B) <square>
3 SEC USE ONLY
4 SOURCE OF FUNDS{*}
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) <square>
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
7 SOLE VOTING POWER
NUMBER OF
7,712,500 SHARES OF COMMON STOCK
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,212,500 SHARES OF COMMON STOCK
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,712,500 SHARES OF COMMON STOCK
1,706,667 SHARES OF COMMON STOCK BENEFICIALLY OWNED PURSUANT TO GRANTS OF OPTIONS
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES{*} <square>
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.87%
14 TYPE OF REPORTING PERSON{*}
IN
</TABLE>
{*}SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
PAGE
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 3 to Schedule 13D is being filed to amend the
initial Schedule 13D filed by Rafael Nin on October 9, 1996 relating to his
ownership of shares of Class A Common Stock, par value $0.01 per share ("Class
A Shares") and shares of Class B Common Stock, par value $0.01 per share
("Class B Shares", together with the Class A Shares, the "Common Stock") of
Pepsi-Cola Puerto Rico Bottling Company, a Delaware corporation (the
"Company"). Except as specifically indicated in this Amendment No. 3, the
information contained in the original filing of the Schedule 13D, as amended by
Amendment's No. 1 and No. 2 thereto, remains unchanged.
ITEM 2. IDENTITY AND BACKGROUND.
No Change.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In connection with a proposed settlement of certain class action
securities lawsuits (the "Litigation") in which the Company and some of its
directors are defendants, a number of the Company's shareholders, including the
original organizers of the Company, transferred in July 1997 2,500,000 Class B
Shares to Mr. Rafael Nin, acting as trustee pursuant to the terms of a Trust
Agreement dated as of May 14, 1997 (the "Trust Agreement"). In connection with
their deposit of shares under the Trust Agreement, these shareholders, pursuant
to a Stock Option Agreement dated as of May 14, 1997 (the "Litigation
Settlement Option Agreement"), granted to a special committee (the "Special
Committee") of the Company's Board of Directors an option on behalf of the
Company or its designee to purchase all of the 2,500,000 Class B Shares (the
"Option Shares") for use by the Company to pay a portion of the Litigation
settlement payment. See "Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer" for a description of
the Trust Agreement and the Litigation Settlement Option Agreement.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the deposit of the Option Shares under the Trust
Agreement and the grant of the stock options on the Option Shares to the
Special Committee pursuant to the Litigation Settlement Option Agreement is to
provide to the Company a portion of the consideration required to consummate
the settlement of the Litigation.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Nin beneficially owns the following amounts and
percentages of each class of securities identified pursuant to Item 1 (the
Class A Shares and Class B Shares are treated as one class for this purpose
because each Class A Share is exchangeable for a Class B Share):
<TABLE>
<CAPTION>
CLASS OF SHARES AGGREGATE NUMBER OF SHARES PERCENTAGE OF CLASS
<S> <C> <C>
Class A Shares (held as trustee) 5,000,000 23.26%
Class B Shares (held as trustee) 2,500,000 11.63%
Class B Shares (held individually) 212,500 0.98%
Options to Acquire Class B Shares 1,706,667 N/A{*}
<FN>
_______________
{*} If all 1,706,667 Class B Shares were issued pursuant to the exercise
of these options they would represent 7.35% of the then outstanding
shares of Common Stock.
</TABLE>
The 5,000,000 Class A Shares are held under a voting trust
agreement and are disposable upon the exercise of the outstanding stock options
granted under a stock option agreement (see the Schedule 13D as originally
filed). The options to acquire 1,706,667 Class B Shares were granted under a
Stock Option Agreement and the Company's qualified Stock Option Plan (See
Amendment No. 1 and Amendment No. 2 to the Schedule 13D previously filed).
(b) There have been no transactions involving any class of
shares during the past sixty days other than the transactions described in Item
3 above.
PAGE
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
The information contained in the Trust Agreement and the
Litigation Settlement Option Agreement (which are filed as exhibits to this
Schedule 13D), which describes their respective terms, is incorporated herein
by reference.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
1. Trust Agreement dated as of May 14, 1997 among certain
shareholders of the Company and Rafael Nin, as trustee.
2. Stock Option Agreement dated as of May 14, 1997 among
certain shareholders of the Company, a special committee of the
Company's Bord of Directors and Rafael Nin.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
/S/ RAFAEL NIN
--------------------------
Rafael Nin
August 12, 1997
<PAGE>
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 Mr. Rafael Nin
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, Gibson, Dunn & Crutcher, 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 foster 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 "Mr. Rafael Nin, 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:
1 Cervantes Street, Apt. 2
Condado
San Juan, Puerto Rico 00907
(b) If to the Corporation:
PO Box 1709
Hato Rey, Puerto Rico 00919
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.
8
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TRUST
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF SHAREHOLDERS AND BEING DEPOSITED IN
ADDRESS FOR NOTICE THE TRUST SIGNATURE
- ---------------------------- ------------------- -----------------------
<S> <C> <C>
Charles H. and
Patricia Beach 988,435 /s/ Charles H. Beach
/S/ PATRICIA BEACH
Michael J. Gerrits
Investment Ltd. 183,721 /S/ MICHAEL J. GERRITS
Patrick T. Gerrits 150,126 /S/ PATRICK T. GERRITS
Patrick T. Gerrits
Irrevocable Trust 17,307 /S/ DAVID P. GERRITS
Christine Marie Gerrits
Kline Irrevocable Trust 17,307 /s/ Christine Marie
GERRITS KLINE
Anne Gerrits 60,573 /S/ ANNE GERRITS
Anita F. Gerrits Trustee
Trust #1 11,538 /S/ ANITA F. GERRITS
James C. & Laure L. Keavney 31,729 /s/ James C. Keavney /S/ LAURE L.
KEAVNEY
James C. Keavney, Trustee
for Laure L. Keavney
Irrevocable Generation
Skipping Trust 5,769 /S/ J.C. KEAVNEY
Laure L. Keavney, Trustee
for James C. Keavney
Irrevocable Generation
Skipping Trust 5,769 /S/ LAURE L. KEAVNEY
Thomas J. Lawless 2,704 /S/ THOMAS J. LAWLESS
Ronald Robinson 2,704 /S/ RONALD ROBINSON
William A. Proulx 2,704 /S/ WILLIAM A. PROULX
James J. O'Brien Estate 2,704 /S/ JAMES O'BRIEN, III
Lumiye International SA 126,195 /S/ ANTON SCHEDLBAUER
Girasol Enterprises 54,083 /s/ Ines de S.
SCHEDLBAUER
Krauser Family Investment
Ltd. 120,186 /S/ CHARLES KRAUSER
Goltra Family Investment /S/ JOHN R. GOLTRA
Ltd. 120,186
Dorothy D'Angelo 120,186 /S/ DOROTHY D'ANGELO
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF SHAREHOLDERS AND BEING DEPOSITED IN
ADDRESS FOR NOTICE THE TRUST SIGNATURE
- ---------------------------- ------------------- -----------------------
<S> <C> <C>
John Wm. Beck 162,251 /S/ JOHN WM. BECK
Haas Financial Corp. 90,139 /S/ GEORGE HAAS
Rafael Nin 55,921 /S/ RAFAEL NIN
Sumner & Micheline Kramer 55,921 /S/ SUMNER KRAMER
Angel Collado-Schwarz 111,842 /s/ Angel Collado
SCHWARTZ
</TABLE>
/S/ RAFAEL NIN
----------------------
Rafael Nin, as Trustee
10
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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of May 14, 1997, between the persons
and entities listed under "Grantors" in the signature pages hereof (the
"Grantors"), the Special Committee created by the Board of Directors of the
Corporation (as defined below) pursuant to the resolution of such Board of
April 3, 1997 represented herein by MESSRS. RICHARD REISS AND SUTTON KEANEY
(the "Optionee"), PEPSI-COLA PUERTO RICO BOTTLING COMPANY, a Delaware
corporation (the "Corporation"), and MR. RAFAEL NIN (in his capacity as
"Trustee" of the Trust, as defined below).
WHEREAS the Grantors own the 2,500,000 shares of Class B Common Stock
of the Corporation set forth opposite their names on the signature pages
hereof, or beneficial interests in a trust (the "Trust") holding such
shares (the "Option Shares") and other shares not reflected thereon;
WHEREAS the Corporation and some of its directors are defendants in
certain class action securities lawsuits (the "Litigation") (the titles of
which are listed herein on Exhibit "A" attached hereto) and the
Corporation's counsel, Gibson, Dunn & Crutcher, has recommended a possible
settlement agreement (the "Settlement Agreement") with the plaintiffs in
such Litigation to settle the Litigation, and
WHEREAS, said agreement would call for the payment of $2,500,000 and
2,500,000 class B Corporation shares;
WHEREAS, the potential settlement with the Corporation's Directors and
Officers 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
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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 common stock, and the Corporation does not have the resources
sufficient to fund the recommended settlement;
WHEREAS, the Grantors are the original organizers of PCPR own a major
stake in the Corporation and have a definite interest in seeing that the
Corporation survives and prospers;
WHEREAS, the Grantors wish to protect their interests as shareholders
in the Corporation; and
WHEREAS because the Grantors believe that the business of the
Corporation is viable and that it should be preserved on an ongoing basis,
the Grantors have a substantial interest in the Corporation as shareholders
and the Grantors are willing to incur some short-term loss in their
investment in order to foster the long-term financial health of the
Corporation, and to preserve their remaining interests in the Corporation
as shareholders;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each of the parties herein, intending to be legally bound,
agrees to grant to the Trustee an option on certain Class B shares of the
Corporation owned by them as follows:
1. GRANT OF OPTION.
(a) Subject to Section 3 hereof, the Grantors hereby grant to
the Optionee an option on behalf of the Corporation or its designees (the
"Option") to buy all of the option Shares at a price per share equal to (i)
the aggregate amount, if any, in excess of $5,000,000 (the "Minimum
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Recovery Amount") obtained by the Corporation under its existing "Directors
and Officers" liability policy divided by (ii) 2,500,000, as such price may
be adjusted from time to time in accordance with Section 4 below (the
"Exercise Price"). The parties agree that to the extent the amount
recovered by the Corporation under such "Directors and Officers" liability
policy does not exceed the "Minimum Recovery Amount", the Exercise Price
shall be 0. An Exercise Price of 0 shall not in any manner impair the
Optionee's ability to exercise the Option hereunder. Anything herein to the
contrary notwithstanding, the Exercise Price shall never be greater than
the sales price of Class B shares of the Corporation as quoted on the New
York Stock Exchange on the close of business on the date such option is
exercised.
(b) Notwithstanding anything to the contrary in paragraph 1(a)
above, if by the time the Corporation files its 10-Q corresponding to the
second quarter of its current fiscal year with the Securities and Exchange
Commission the Corporation has not reached a settlement with the
Corporation's insurance carrier under its existing "Directors and Officers"
Liability policy, the Minimum Recovery Amount shall be increased by the
amount of attorneys fees and other related expenses incurred by the
Corporation with respect to the prosecution (or the defense) of any claims,
demands, or lawsuits in respect of such insurance carrier, including,
without limitation, attorneys fees incurred in the negotiation and
preparation of a settlement arrangement with such carrier after the date
such 10-Q is filed.
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2. EXERCISE OF OPTION. The Option may be exercised by the Optionee
at the request of the Corporation by delivery of a written notice to the
Optionee by the Corporation. The Optionee shall also have the right to
transfer the Option (with all of the rights thereunder) to the Corporation
or as otherwise directed by the Corporation. In the event the Option is
exercised by the Optionee or the Corporation, as the case may be, the
Corporation (in either case) shall promptly thereafter notify all the
Grantors of the exercise of the Option and of the applicable Exercise Price
and the date of consummation of the sale (the "Closing Date") which shall
not be later than ten business days after receipt of such notice by the
Grantors. On the Closing Date the Trustee of the Trust shall deliver to
the Secretary of the Corporation the certificates evidencing the Option
shares, endorsed in the name of the Corporation, and the Corporation or the
Optionee, as the case may be, shall deliver the Exercise Price (if greater
than 0) to the Grantors. In the event the Exercise Price is 0, the
Optionee or the Corporation, as the case may be, shall so advise the
Grantors. The parties further agree and understand that recovery under the
"Directors and Officers" liability policy may not be sufficient upon the
exercise of the Option to provide for an Exercise Price above 0.
Notwithstanding the foregoing, if at any time subsequent to the exercise of
the Option any additional recovery under such "Directors and Officers"
liability policy is obtained, such additional recovery amount shall be
computed in the Exercise Price.
3. CONDITIONS TO THE EXERCISE OF THE OPTION. The Optionee shall not
have the right to exercise the Option, as set forth in Section 2 hereof,
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until and unless the Litigation is settled pursuant to final and
unappealable court order approving the Settlement Agreement, which shall
include the terms providing for the release of the Grantors as set forth in
Paragraph 9(c) of this Agreement. The Optionee shall have 30 days from the
date such court order is notified by the court within which to exercise the
Option. Further, upon exercise of the Option, the Option Shares may be
used solely for purposes of effectuating the consummation of the Settlement
Agreement. In the event the court with competent jurisdiction over the
Litigation does not grant or otherwise denies its approval of the
Settlement Agreement, this Agreement shall terminate.
4. RESTRICTIONS ON EXERCISE OR TRANSFERABILITY.
(a) The Optionee may only exercise the Option for the benefit of
the Corporation and may only transfer the Option to the Corporation or its
designee.
(b) This Option may not be transferred unless a registration
statement under the Securities Act of 1933 is in effect with respect
thereto or the Corporation shall have received an opinion of counsel to the
effect that such registration is not required.
5. SHARE AND PRICE ADJUSTMENTS. In the event of any stock split,
extraordinary dividend, combination, reclassification, exchange, or any
other transaction or event that changes the character or amount of the
common stock outstanding prior to the Expiration Time, the parties hereto
agree that adjustments shall be made in (x) the character and number of
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Option Shares and (y) the Exercise Price thereof, if any, to make the
Options equivalent to the Options existing prior to such event (it being
understood and agreed that in the event of any merger, consolidation, or
other business combination involving the Corporation, or the partial or
complete liquidation thereof, the Optionee shall be entitled to receive,
upon exercise of its Options, the kind and amount of securities or other
consideration that the Optionee would have received had the Optionee
exercised such Options immediately prior to such event).
6. ACCEPTANCE OF TRUSTEE. The Trustee hereby agrees to the terms
and conditions of the Option and shall undertake any such acts and do all
things within its control as may be necessary to permit the consummation of
the transactions contemplated hereunder; provided that the Trustee shall
not be required to do anything unless and until he shall be satisfied that
he has received adequate indemnity against any liability arising from such
action.
7. COVENANTS. The Grantors agree not to sell, pledge or otherwise
transfer or encumber any of their Option Shares.
8. INDEMNITY.
(a) The Corporation will 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, and including any tax
imposed on the Trustee arising from this agreement, or any other expenses,
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fees, or charges of any character or nature, arising in connection with
this 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.
(b) (i) In consideration of the fact that the Corporation would
solely benefit from the exercise of the Option, and upon the exercise of
the Option the Corporation shall indemnify any Grantor who is made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of the corporation) by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interest of the Corporation, and, with respect
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to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(ii) Upon the exercise of the Option, the Corporation agrees to
indemnify any Grantor who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent
that the Court of Chancery of the state of Delaware or the court in which
such action or suit was brought shall determine upon application that
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery of the state of Delaware or such
other court shall deem proper.
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(iii) To the extent that a Grantor has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) above, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(iv) In connection with the indemnification provided hereunder,
any expenses incurred by any Grantor in defending a civil or criminal
action, suit or proceeding shall be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Grantor to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Section.
(v) Nothing contained in this Section is intended to or shall
limit in any manner the breath or scope of (x) the indemnity contained in
Section 8(c) or (y) the releases contained in Section 9.
(c) In consideration of the fact that the Corporation would
solely benefit from the exercise of the option, the Corporation will
indemnify and hold the Grantors 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 any such Grantor, together with any reasonable attorney's fees and
investigation costs incurred in connection therewith or in connection with
any potential claim or loss, or any other expense (other than taxes imposed
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on the Grantors) arising in connection with this agreement except that, if
any such claim, demand, damage or expense arises out of the willful
misconduct or gross negligence of any such Grantor, and such condition is
determined in a final and unappealable judgment, then such Grantor shall
not have the benefit of the provisions hereunder.
(d) Nothing in this Agreement will supersede impair or otherwise
affect the indemnification provisions in the Corporation's by-laws (and any
such related decisions of the Corporation or resolutions of the Board of
Directors of the Corporation in respect thereof) which inure to the benefit
of officers and directors (current and former) of the Corporation.
9. RELEASES.
(a) In consideration for the granting of the Option by each
Grantor, and effective upon the exercise of such Option, the Corporation
agrees to forever discharge, waive and release each Grantor and their
successors and assigns, from and against all demands, direct or derivative
claims, actions, or causes of actions, assessments losses, damages,
liabilities, cost and expense, interest, and penalties, asserted against,
could have been asserted, or could in the future be asserted by the
Corporation against any Grantor, in connection with, arising out of, or in
any way related, directly or indirectly, to any act, failure to act,
omissions, misrepresentations, facts, events, circumstances, transaction,
occurrences with respect to the subject matters alleged, set forth or
otherwise comprised or referred to in the Litigation, or that could have
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been added by amendment, including without limitation, claims for
indemnification, contribution, violation of federal, state, common or other
law, all torts including but not limited to defamation, fraud, fault,
malpractice, misrepresentation, negligence, breach of duty, loyalty or
care, breach of fiduciary responsibility and recklessness or tortious
interference.
(b) In consideration of the terms and conditions of this
Agreement, and upon the exercise of the Option, the Corporation releases
and forever discharges, and covenants to forever refrain from prosecuting,
on behalf of itself, its successors and assigns, and any person it
represents, all of the Grantors, and each of them, and their respective
past and present agents, employees, attorneys, heirs, executors,
representatives, successors, and assigns, from each and every direct and
derivative claim, known or unknown, which could have been asserted against
the Grantors in connection with, arising out of, or in any way relating to
any acts, facts, transactions, representations, omissions or other subject
matters that relate, directly or indirectly, to the service of any Grantor
as an officer and/or director of the Corporation, including but not limited
to claims under the laws, statutes, regulations, common law or civil law of
the United States, any state law, the Commonwealth of Puerto Rico, or any
foreign jurisdiction, which the Corporation had, now has or may hereafter
have, against any of the aforementioned released persons, or any of them,
(except for the right to enforce the terms of this Agreement), if with
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respect to any such claim such Grantor acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
Corporation.
(c) As amongst each other and effective upon the exercise of the
Option, the Grantors agree to forever discharge, waive and release each
other and their successors and assigns, from and against all demands,
claims, actions, or causes of actions, assessments losses, damages,
liabilities, cost and expense, interest, and penalties, asserted against,
could have been asserted, or could in the future be asserted by a Grantor
against any other Grantor, in connection with, arising out of, or in any
way related, directly or indirectly, to any act, failure to act, omissions,
misrepresentations, facts, events, circumstances, transaction, occurrences
with respect to the subject matters alleged, set forth or otherwise
comprised or referred to in the Litigation, or that could have been added
by amendment, including without limitation, claims for indemnification,
contribution, violation of federal, state, common or other law, all torts
including but not limited to defamation, fraud, fault, malpractice,
misrepresentation, negligence, breach of duty, loyalty or case, breach of
fiduciary responsibility and recklessness or tortious interference.
(d) In further consideration of the Option granted by Grantors,
the Corporation agrees that the Settlement Agreement shall contain all such
terms and conditions as are necessary to effectively cause the full and
unconditional release and discharge from any and all liabilities that have
been and may have been asserted by virtue of the Litigation against the
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Grantors pursuant to terms and conditions that are to the reasonable
satisfaction of the Grantors. In the event that any such settlement
agreement does not contain such terms and conditions, this Agreement shall
terminate without any liability to any of the parties herein.
10. REPRESENTATIONS AND WARRANTIES. Each of the parties represents
that he, she or it is duly authorized to execute, deliver and perform this
agreement and has duly authorized, executed and delivered this agreement,
and that this agreement, including, without limitation, its provision for
release of the Grantors, is the valid, binding and enforceable obligation
of such person or entity and does not conflict with any agreement or other
document binding on such person or entity.
11. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors,
assigns, and legal representatives.
12. SPECIFIC PERFORMANCE. The parties recognize and agree that if
any of the provisions of this Agreement, including without limitation, its
provisions and the release of the Grantors are not performed in accordance
with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages will not
be an adequate remedy. Accordingly, each party agrees that, in addition to
other remedies, the non-breaching parties shall be entitled to an
injunction restraining any violation or threatened violation of the
provisions of this Agreement or to specific performance or other equitable
relief to enforce the provisions of this Agreement. In the event that any
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action is brought in equity to enforce the provisions of this Agreement, no
party will allege, and each party hereby waives the defense, that there is
an adequate remedy at law. Anything herein to the contrary
notwithstanding, the parties agree that the remedies provided herein, or
any other remedies at law, shall not be available nor shall apply with
respect to the conditions set forth in Section 9(d) hereof and the remedy
for non-compliance thereof shall be limited to the termination of this
Agreement as set forth in Section 9(d).
13. ENTIRE AGREEMENT. This Agreement, in conjunction with the Trust
Agreement executed simultaneously herewith, constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
14. FURTHER ASSURANCES. Each party will execute and deliver all such
further documents and instruments and take all such further action as may
be necessary to give effect to this agreement and consummate the
transactions contemplated hereby.
15. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. 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
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any circumstances, deems it appropriate or advisable to undertake such
disclosure.
17. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Puerto Rico, without
regard to Puerto Rico's conflict of laws rule.
18. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same instrument.
19. AMENDMENTS. This Agreement may not be amended or modified except
by a written agreement signed by the affected parties hereto.
20. 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
either by personal delivery or by certified or registered mail, and shall
be deemed to have been given or made when personally delivered or 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:
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If to the Optionee:
Mr. Richard Reiss
PO Box 190998
San Juan, PR 00919-0998
Mr. Sutton Keaney
Winthrop, Stimpson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
If to the Corporation:
PO Box 1709
Hato Rey, Puerto Rico 00919
Attention: President
If to the Trustee:
Mr. Rafael Nin
Cervantes No. I
Apt. #2
Condado
Santurce, Puerto Rico 00907
If to any Grantor, 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, including addresses of counsel, to which
subsequent notices shall be sent or persons to whose attention the same
shall be directed.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDERS AND ADDRESS FOR NUMBER OF SHARES NOTICES IN THE TRUST SIGNATURE
BEING DEPOSITED
<S> <C> <C>
Charles H. and Patricia Beach 988,435 /s/ Charles H. Beach
/S/ PATRICIA BEACH
Michael J. Gerrits 183,721 /S/ MICHAEL J. GERRITS
Investment Ltd.
Patrick T. Gerrits 150,126 /S/ PATRICK T. GERRITS
Investment Ltd.
Patrick T. Gerrits 17,307 /S/ DAVID P. GERRITS
Irrevocable Trust
Christine Marie Gerrits 17,307 /s/ Christine Marie
Kline Irrevocable Trust GERRITS
Anne Gerrits 60,573 /S/ ANNE GERRITS
Anita F. Gerrits Trustee 11,538 /S/ ANITA F. GERRITS
of Anita F. Gerrits Trust #1
James C. & Laure L. Keavney 31,729 /s/ James C. Keavney
/S/ LAURE L. KEAVNEY
James C. Keavney, Trustee for 5,769 /S/ JAMES C. KEAVNEY
Laure L. Keavney Irrevocable Generation
Skipping Trust
Laure L. Keavney, Trustee for James C. 5,769 /S/ LAURE L. KEAVNEY
Keavney Irrevocable Generation
Skipping Trust
Thomas J. Lawless 2,704 /S/ THOMAS J. LAWLESS
Ronald Robinson 2,704 /S/ RONALD ROBINSON
William A. Proulx 2,704 /S/ WILLIAM A. PROULX
James J. O'Brien Estate 2,704 /S/ JAMES O'BRIEN, III
Lumiye International SA 126,195 /S/ ANTON SCHEDLBAUER
Girasol Enterprises 54,083 /s/ Ines de S.
SCHEDLBAUER
Krauser Family Investment Ltd. 120,186 /S/ CHARLES KRAUSER
</TABLE>
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<TABLE>
<CAPTION>
NAME OF SHAREHOLDERS AND ADDRESS FOR NUMBER OF SHARES NOTICES IN THE TRUST SIGNATURE
BEING DEPOSITED
<S> <C> <C>
Goltra Family Investment Ltd. 120,186 /S/ JOHN R. GOLTRA
Dorothy D'Angelo 120,186 /S/ DOROTHY D'ANGELO
John Wm. Beck 162,251 /S/ JOHN WM. BECK
Haas Financial Corp. 90,139 /S/ GEORGE HAAS
Rafael Nin 55,921 /S/ RAFAEL NIN
Sumner & Micheline Kramer 55,921 /S/ SUMNER KRAMER
Angel Collado-Schwarz 111,842 /S/ ANGEL COLLADO-SCHWARZ
</TABLE>
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THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
By: /S/ RICHARD REISS
_________________________________________________
/S/ SUTTON KEANY
_________________________________________________
PEPSI-COLA PUERTO RICO BOTTLING COMPANY
By:/S/ RAFAEL NIN
---------------------------------------------------
Name: Rafael Nin
Title: Chief Executive Officer
/S/ RAFAEL NIN
--------------------------------------------------
RAFAEL NIN
TRUSTEE
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EXHIBIT "A"
1. ROBERT AND ILENE WEISS V. PEPSI-COLA PUERTO RICO BOTTLING CO., CHARLES H.
BEACH AND RAFAEL V. FARACE
2. THE GREAT NECK CAPITAL APPRECIATION INVESTMENT PARTNERSHIP, L.P. AND SAM
TAVE V. CHARLES H. BEACH, RAFAEL V. FARACE AND PEPSI-COLA PUERTO RICO
BOTTLING COMPANY
3. ANNABELLA SYKES RAY, ON BEHALF OF HERSELF AND ALL OTHER SIMILARLY SITUATED
V. PEPSI-COLA PUERTO RICO BOTTLING COMPANY, A DELAWARE CORPORATION,
CHARLES H. BEACH AND RAFAEL V. FARACE
4. LOUIS GOLDSTEIN V. PEPSI-COLA PUERTO RICO BOTTLING COMPANY, CHARLES H.
BEACH, MICHAEL J. GERRITS AND RAFAEL V. FARACE
5. JOSEPH SHAKEN, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED V.
PEPSI-COLA PUERTO RICO BOTTLING COMPANY, CHARLES H. BEACH, MICHAEL J.
GERRITS AND RAFAEL V. FARACE
6. LUIS A. RIVERA POMALES; ROSA I. QUINTANA; FRANK FERN<a'>NDEZ; TALLABOA
HEAVY EQUIPMENT CORP.; NELSON CAPOT<e'>; MYRTA OCEGUERA; EVENCIO
RODR<i'>GUEZ V. PEPSI-COLA PUERTO RICO BOTTLING COMPANY; PAINEWEBBER,
INCORPORATED; OPPENHEIMER & CO. INC. KMPG PEAT MARWICK, KPMG PEAT MARWICK
LLP; KPMG FINSTERBUSCH PICKENHAYN SIBILLE; CHARLES H. BEACH; MICHAEL
GERRITS; JAMES C. KEAVNEY; JOHN W. BECK; CHARLES R. KRAUSER; ANTON
SCHEDLBAUER; C. LEON TIMOTHY; RAYMOND ULRICH; ABC, INC., DEF, INC.; MR.
AND MRS. Y
7. SWEETWATER INVESTMENTS V. CHARLES H. BEACH, MICHAEL J. GERRITS, RAFAEL V.
FARACE AND PEPSI-COLA PUERTO RICO BOTTLING COMPANY
8. JOSEPH SINGER V. CHARLES H. BEACH, MICHAEL J. GERRITS, RAFAEL V. FARACE
AND PEPSI-COLA BOTTLING COMPANY
9. TURABO MEDICAL CENTER; HARZAN MORTGAGE; SARA PONS; VIRGILIO CARDONA DE LA
OBRA, CHARLIE LA COSTA; MIGUEL A. ORTIZ FLORES, TRUSTEE OF MIGUEL A. ORTIZ
FLORES KEOGH PLAN; HIPOLITO MIRANDA; C<e'>SAR A. CRUZ; DAVID W. TSAO AND
VIVIEN CHEN; LUZ CORREA; H<e'>CTOR V<e'>LEZ; PADRE ZERVIGON; ELSA CASTRO
P<e'>REZ; DR. ROBERTO RODRIGUEZ V<e'>LEZ; OSCAR RIVERA AND ANABEL A.
RIVERA; DIANA NAZARIO; KAU SHING FUNG AND MUI CHUN WONG; ORLANDO MARRERO
SANTIAGO; MARCOS BANDRICH; ALFREDO GARC<i'>A SASCO AND WILMA BORDOY OTERO,
ERNESTO IGLESIAS, RODFAM INVESTMENTS, INC., V. CHARLES H. BEACH; MICHAEL
J. GERRITS; RAFAEL V. FARACE; AND PEPSI-COLA PUERTO RICO BOTTLING COMPANY
20
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