FORM 10-Q
Exhibit 2.2(e)
FIRST AMENDMENT TO
JOINT VENTURE AGREEMENT
FIRST AMENDMENT, dated as of June 14 , 1995, to the Joint
Venture Agreement, dated as of June 25, 1993 (the
"Agreement"), between Compania Industrial de Parras, S.A. de
C.V. ("CIPSA"), a sociedad anonima de capital variable
organized under the laws of the United Mexican States, and
Cone Mills (Mexico), S.A. de C.V. ("Cone"), a sociedad anonima
de capital variable organized under the laws of the United
Mexican States. Capitalized terms used herein without
definition shall have the meanings given to them in the
Agreement.
RECITALS
A. CIPSA and Cone have formed Parras Cone de Mexico, S.A. de
C.V. ("JV"), a sociedad anonima de capital variable
organized under the laws of the United Mexican States for
the purpose of carrying out the Project, as contemplated
by the Agreement.
B. CIPSA and Cone desire that JV borrow from Morgan Guaranty
Trust Company of New York the principal amount of
US$7,000,000 pursuant to a promissory note dated the date
hereof (as amended from time to time, the "Initial
Note"), the Initial Note to be guaranteed by Cone.
C. In order to obtain financing that will enable it to make
additional capital contributions to JV, CIPSA desires to
sell certain shares of JV Stock owned by CIPSA (the
"CIPSA Stock") to a special purpose financing vehicle
(the "SMM") established by JP Morgan & Co. Incorporated
or a subsidiary thereof. Cone desires for CIPSA to sell
the CIPSA Stock to the SMM.
D. In order to meet the foregoing objectives, CIPSA and Cone
desire to amend certain terms and provisions of the Joint
Venture Agreement, as provided herein.
NOW, THEREFORE, CIPSA and Cone hereby agree to each of
the following amendments to the Agreement:
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FORM 10-Q
Exhibit 2.2(e) (continued)
1. Amendment of Section 1.2. Clause (iii) of Section
1.2(a) is hereby amended by inserting after the
word "foregoing" in the fifth line thereof the
following:
", other than any capital increase or issuance of
securities in connection with an Additional
Contribution pursuant to Section 5.2"
2. Amendment of Section 1.3. Section 1.3 is hereby
amended and restated in its entirety as follows:
1.3. Deadlock. If (a) so long as there are only
two Stockholders and each Stockholder holds 50% of
the outstanding shares of JV Stock, the
Stockholders are unable to reach agreement on any
proposed Ordinary Action or (b) at any time, the
Stockholders are unable to reach agreement on any
proposed Extraordinary Action (including, without
limitation, as a result of the failure by any
Stockholder to attend any Stockholders' meeting),
then in either case such matter shall be deemed to
be a Disputed Action for purposes of this Agreement
and shall be referred for resolution pursuant to
Article IV.
3. Amendment of Section 2.3. Section 2.3 is hereby
amended by appending the following to the end
thereof:
If at any time any Stockholder shall have a greater
number of designees on the Board of Directors than
the number of Directors to which such Stockholder
is entitled under this Section 2.3, then such
Stockholder shall forthwith cause to resign or
otherwise remove one or more of its designees so as
to comply with this Section 2.3.
4. Amendment of Section 3.1. Section 3.1(a) is hereby
amended by deleting from the fifth through seventh
lines thereof the following: ", including without
limitation any decision to draw upon the Letters of
Credit in accordance with Article V".
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FORM 10-Q
Exhibit 2.2(e) (continued)
5. New Section 3.5. Article III is hereby amended and
supplemented by adding to Article III the following
new Section 3.5:
3.5. Secretary of the Board of Directors. Cone
and CIPSA shall consult and agree upon a nominee
for Secretary of the Board of Directors, which
Secretary shall be an independent Mexican attorney.
Each Stockholder shall cause its designees on the
Board of Directors, if any, to take such actions as
are necessary so as to appoint and continue in
office the person so designated as the Secretary of
the Board of Directors. Cone and CIPSA shall
jointly have the right to replace such
designee at any time by notice to the Board of
Directors and the other Stockholders and, in such
event, Cone and CIPSA shall cause their respective
designees on the Board of Directors, if any, to
take such actions as are necessary in order to
elect such replacement as promptly as practicable,
including without limitation by convening and
holding a meeting of the Board of Directors.
6. New Section 3.6. Article III is hereby amended and
supplemented by adding to Article III the following
new Section 3.6:
3.6. Signatures. Any agreement or transaction or
group of related agreements or transactions
involving an expenditure or incurrence of
indebtedness or other liability by JV in an amount
exceeding US$1,000,000 shall require the signatures
of both the Chief Executive Officer and the Chief
Financial Officer.
7. Amendment of Section 5.2. Section 5.2 of the
Agreement is hereby amended by (i) inserting after
"Contribution Notice"), in the third line thereof
the following: "which Contribution Notice may be
issued by the Chief Financial Officer,"; and (ii)
deleting the amount of "US$20,000,000" from the
last line thereof and replacing it with the amount
of "US$32,000,000". Section 5.2 is hereby further
amended by appending the following to the end
thereof:
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FORM 10-Q
Exhibit 2.2(e) (continued)
If either Stockholder shall not, within 10 days
following receipt of the Contribution Notice or by
such later date specified therein, contribute such
Additional Contribution or agree to pay such amount
in the future in a form satisfactory to the other
Stockholder, the shareholders as of May 1, 1995 of
such Stockholder shall have the right, within two
days following such date, to contribute such
Additional Contribution. In the event that the
shareholders of such Stockholder shall not
contribute such Additional Contribution within such
two days, the other Stockholder shall have the
right to contribute such Additional Contribution
and purchase the shares of JV Stock issuable in
connection with such Additional Contribution.
8. Amendment of Section 6.1. Clause (ii) of Section
6.1(a) is hereby amended to read as follows:
"(ii) to a Permitted Transferee of such Stockholder
upon compliance with Section 6.1(b) and subject to
Section 6.1(d),".
Section 6.1 is hereby further amended and
supplemented by adding thereto the following new
Section 6.1(d):
(d) Notwithstanding anything to the contrary in
this Section 6.1 or in any other provision of
this Agreement, in the event that any
Stockholder transfers any shares of JV Stock
to a Permitted Transferee pursuant to Section
6.1(a)(ii), such Stockholder shall cause such
Permitted Transferee to continue to qualify as
a Permitted Transferee as defined herein for
so long as such Permitted Transferee holds any
shares of JV Stock
9. Amendment of Article VII. Article VII is hereby
amended and supplemented by adding to Article VII
the following new Section 7.6:
7.6. Call Right upon Parras Change of Control or
CIPSA Bankruptcy Event. Upon the occurrence of a
Parras Change of Control or a CIPSA Bankruptcy
Event (as such term is defined below), Cone shall
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FORM 10-Q
Exhibit 2.2(e) (continued)
have the right to elect, by notice to CIPSA, to
purchase from CIPSA all of the shares of JV Stock
held by CIPSA at a price per share equal to the
book value per share of JV Stock, as such book
value is set forth in the balance sheet prepared in
accordance with U.S. GAAP delivered pursuant to
Section 7.1 (the "Book Value Price") provided,
however, that each party to the Support Agreement,
dated as of June 25, 1993, who was a stockholder of
CIPSA as of May 1, 1995 (collectively, the "Offeree
Stockholders") shall have the right to purchase
from CIPSA, within ten days of delivery of such
notice to CIPSA, at the Book Value Price, a
percentage of the shares of JV Stock held by CIPSA
equal to the percentage of shares of CIPSA common
stock held by such Offeree Stockholder as of May 1,
1995. CIPSA shall, within one day after receipt of
such notice from Cone, deliver to each such Offeree
Stockholder a notice setting forth (i) the number
of JV Shares that such Offeree Stockholder is
entitled to purchase, (ii) the applicable Book
Value Price and (iii) the date by which such right
must be exercised. Within five days of the
expiration of such period, CIPSA shall sell to Cone
all such JV Shares that have not been purchased by
such Offeree Stockholders by delivery of all
documents necessary to transfer such shares of JV
Stock, free and clear of all Liens, against payment
of cash in the amount of the Book Value Price for
each such share.
10. Definition of "Agreement". Section 8.1(b) of the
Agreement is hereby amended and supplemented by
adding the following definition:
"Agreement" means the Agreement, as amended by the
First Amendment and as may otherwise be amended
from time to time.
11. Definition of "CIPSA Bankruptcy Event". Section
8.1(b) of the Agreement is hereby amended and
supplemented by adding the following definition:
"CIPSA Bankruptcy Event" means the occurrence of
any of the following: (i) a decree or order for
relief in respect of CIPSA or any of its material
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FORM 10-Q
Exhibit 2.2(e) (continued)
subsidiaries shall have been entered under any
bankruptcy, reorganization, insolvency or similar
law (herein called a "Bankruptcy Law"); (ii) CIPSA
shall have petitioned to any tribunal for, or
consented to, the appointment of, or taking
possession by, a trustee, receiver or other similar
official in respect of CIPSA or of any substantial
part of its assets or shall otherwise have
commenced a voluntary case or other similar
proceeding under any Bankruptcy Law or any such
petition shall have been filed, or any such
proceedings shall have been commenced, against
CIPSA or any of its material subsidiaries; or (iii)
CIPSA or any of its material subsidiaries shall
have become insolvent or generally unable to
satisfy its obligations to creditors as they become
due.
12. Amendment of Definition of "Parras Change of
Control". The definition of "Parras Change of
Control" contained in Section 8.1(b) of the
Agreement is hereby amended by deleting the amount
"50%" and replacing it with the amount "30%".
13. Amendment of Definition of "Permitted Transferee".
The definition of "Permitted Transferee" contained
in Section 8.1(b) of the Agreement is hereby
amended and restated in its entity as follows:
"Permitted Transferee" means (i) with respect to
any Stockholder, any direct or indirect wholly-
owned subsidiary of such Stockholder, any Person of
which such Stockholder is the direct or indirect
wholly-owned subsidiary, and any Person which is a
direct or indirect wholly-owned subsidiary of a
Person of which such Stockholder is the direct or
indirect wholly-owned subsidiary, and (ii) with
respect to CIPSA, the SMM and any transferee or
purchaser of the CIPSA Stock or of beneficial
interests in the SMM, to the extent and as
contemplated by the agreements or instruments
relating to the creation of the SMM. For purposes
of determining whether a subsidiary is wholly-
owned, directors' or other statutory qualifying
shares shall not be taken into account.
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FORM 10-Q
Exhibit 2.2(e) (continued)
14. Amendment of Definition of "Senior Officers". The
definition of "Senior Officers" contained in
Section 8.1(b) of the Agreement is hereby amended
and restated in its entirety as follows:
"Senior Officers means the Chief Executive Officer,
the Chief Financial Officer, the director of
marketing, the director of manufacturing, the
Secretary of the Board of Directors and such other
officers as may be specified from time to time by
the Board of Directors.
15. Miscellaneous. Except as amended by this First
Amendment, the terms, covenants and conditions of
the Agreement (as amended by this First Amendment)
are in all respects ratified and confirmed and,
except as amended hereby, shall continue in full
force and effect. This First Amendment may be
executed in any number of counterparts, each of
which shall be an original, but all of which
together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be duly executed as of the date first above
written.
COMPANIA INDUSTRIAL DE PARRAS,
S.A. DE C.V.
By s/s RODOLFO GARCIA MURIEL
Name: Rodolfo Garcia Muriel
Title: Director General
CONE MILLS (MEXICO), S.A. DE C.V
By s/s JOHN L. BAKANE
Name: John L. Bakane
Title: Presidente
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