Exhibit 1.2
BY-LAWS
CHAPTER FIRST
DENOMINATION, DOMICILES, PURPOSE AND DURATION
FIRST
The name of the Company is "ICA-FLUOR DANIEL". This denomination is followed by
the words Sociedad de Responsabilidad Limitada de Capital Variable, or its
abbreviation "S. de R.L. de C.V."
SECOND
The purpose of the company is:
1.- The exploitation of diverse branches of engineering in all of the aspects of
pure and applied research, comprising therefore the projection and the
construction of all kinds of works and civil, industrial, electromechanic,
maritime installations; especially, engineering in industrial processes, design
and assembly of plants for the petrochemical, food, and automotive industries
and in general industrial processes; mechanical studies and works and subsurface
treatments; furnishing of all kinds of services, technical, economic and
feasibility studies; planning, promotion and exploration, exploitation and use
of natural resources and all kinds of development; the purchase and sale of
instruments, machinery and equipment, parts and supplies for the industry.
2.- The provision of management services of projects, comprising the direction,
supervision and coordination of works and of all the services inherent to same,
such as supplying, subcontracts, administration and evaluation of works and in
general control of the engineering and of the project and the construction;
study, assessment and consulting in engineering, construction, marketing and
financing, as well as the specific supply of basic and detailed engineering;
design, calculation, planning and programming of all kinds of construction; the
instrumentation of control systems and operation of plants and management
systems.
3.- Integration of systems that comprise:
a) The provision of assessment, consulting and research services for the partial
or total installation of equipment and computer systems for telecontrol,
instrumentation, automation, testing and supervision of machinery and industrial
processes in general.
b) The provision of consulting and technical, economic and feasibility studies
related with the equipment and systems mentioned above and in the processes of
production and testing of same, its parts and components, as well as the
installation, adaptation, repair and testing of the equipment referred above.
c) The design, fabrication, installation, adaptation, training and instruction,
sale, purchase, distribution, representation, importation, exportation and in
general the commercialization of
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the equipment mentioned above, as well as the peripheral equipment, computer
programs, electrical appliances and material, nuclear, mechanical, metallurgic
and plastics, related with the industrial processes mentioned herein.
d) Carry out all kinds of activities for the research and technological
development in the areas of electronics, computers, telecommunications and
associated scientific and technical areas.
e) Provide classes, edit books, brochures, films and other means of
communication, regarding technological information of any kind.
4.- The maintenance, operation, preservation and administration of all kinds of
public works and services granted by concession whether municipal, state or
federal.
5.- The representation or to act as a commissioned agent of Mexican or foreign
civil or commercial entities related with any of the purposes mentioned herein,
as well as the exportation and importation of goods, services and technologies.
6.- The execution of all acts or contracts that are necessary or useful to
accomplish its purposes, including contracts of association and subscription of
shares or partnership interests in civil or commercial entities, domestic or
foreign, dedicated to any of the activities enumerated or that are related to
same; as well as the financing for execution of works, on its own behalf or in
association with associations or companies or financial or credit institutions,
domestic or foreign.
7.- The issuance, acceptance and endorsement of all kinds of credit instruments
and documents, including the granting of guarantees, endorsements and bonds as
well as to guarantee the obligations of individuals or legal entities with whom
it has commercial relations or common interest; the negotiation and execution of
loan agreements and related products (including letters of credit), according to
he prevailing commercial conditions of the market, with national and foreign
financial institutions, the negotiation and execution of leasing and factoring
agreements as deemed appropriate, purchase and sale of other currencies,
including the placement of options or futures in connection with the same, and
in general, any other transactions with financial resources similar to the ones
mentioned above, including the placement of shares and other securities in the
stock market, prior the authorization of the board of directors, if applicable.
8.- The acquisition of real and personal property necessary for its purposes, as
well as the purchase and sale of all other property required therefore.
9.- To acquire by any means, use, exploit or grant by any instrument, patent
rights, industrial designs and models, trademarks, and other rights of
industrial or intellectual property, and in general perform any lawful
industrial or commercial activity that does not require special authorization.
THIRD
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The domicile of the Company is Mexico City, Federal District, Mexico; however,
it may establish offices, agencies and branches within the United Mexican States
or abroad, and submit itself to conventional domiciles.
FOURTH
The duration of the company is ninety nine years.
CHAPTER SECOND
CAPITAL STOCK, PARTNERSHIP INTERESTS
FIFTH
The capital stock is variable, with a minimum fixed capital of N$270,000.00 (TWO
HUNDRED SEVENTY THOUSAND NEW PESOS), Mexican Currency, fully subscribed and
paid, and with an unlimited variable portion.
Both the fixed minimum capital as well as the variable capital shall be
represented by partnership interests, which in no event shall be less than two
and a maximum equivalent to the number of partners which may not exceed fifty.
SIXTH
I. The capital stock of the Company shall be divided in partnership interests,
all of which shall be ordinary.
II. The partnership interests representative of the capital stock shall be
divided into two series, Series "A" and Series "B". The Series "A" shall be
subscribed by Mexican citizens or entities while the Series "B" may be freely
subscribed. Since there are no restrictions on foreign investment that apply to
the Company, any foreign person or entity may acquire 100% of its capital. In
the event a foreign person or entity acquires partnership interests of the
Series "A", from that moment on, such partnership interests shall be considered
partnership interests of the Series "B".
III. The documents representing the partnership interests shall indicate the
corresponding Series, and may be of a different value according to the capital
each partner owns, and shall not be considered as negotiable instruments, and
may only be assigned according to the provisions set forth herein, and those
provided by the General Law of Commercial Companies, and shall be signed by the
Chairman of the Board of Directors and by the Secretary of same, or in their
absence, by any two directors.
In the event any of the partners assign or acquire the partnership
interest of another partner, or a portion thereof, or its value increase or
decrease due to increases or decreases in the capital of the Company, according
to the provisions set forth herein, the partnership interests shall reflect the
new value.
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IV. The Company shall maintain a special partners book in which the name,
nationality, domicile and address of each one, indicating their contributions
and the transmission of the partnership interests or portions thereof, including
any lien on same or options granted regarding said partnership interests; the
transmissions shall not have effect with regard to third parties until recorded
in said book.
V. In order for partners to assign their partnership interests, as well as
for the admission of new partners, the approval by the Partnership Meeting
pursuant to the sixth clause of these by-laws shall be necessary.
The partners may not offer, sell, assign, mortgage, pledge, or encumber
their partnership interests, or transfer any portion thereof without prior
consent of the other partners, granted at a Partnership Meeting, pursuant to
clauses fourteenth and fifteenth of these by-laws.
Likewise, for the transmission of a partnership interest by a partner, the
following provisions shall be followed:
a) Those related with foreign investment and these by-laws, concerning
the distribution of the capital, and shall obtain any applicable
authorizations.
b) No transfer of partnership interests shall be considered effective
unless it is registered in the partnership registry and ratified in
writing, by the Secretary of the Board of Directors, according to
the provisions set forth herein.
c) Notwithstanding the above, either partner may, without any
restriction, sell or transfer its partnership interests to the other
Partner, as well as to any of its Affiliates, subject to the other
Partner's approval, which shall not to be unreasonably withheld;
provided, however, such approval may be withheld if any interest in
such Affiliate is owned by a competitor of such other Partner or any
of its Affiliates and provided further that such Affiliate
transferee shall agree that it will not cease to be an Affiliate of
such transferor Partner unless, prior to ceasing to be an Affiliate,
such Affiliate transferee transfers the partnership interest in
favor of the previous partner or any of its Affiliates. If either
Partner hereto sells or otherwise transfers all or any part of its
partnership interests to an Affiliate pursuant to this paragraph,
such selling Partner shall cause the party acquiring such
partnership interests, as a condition of such acquisition, to agree
to be bound by any agreements executed by the partners.
d) In the event that Series "B" partners acquire Series "A" partnership
interests, they must obtain, if necessary, the corresponding
authorizations pursuant to the provisions in the area of foreign
investment and other applicable provisions, or else, they must
appoint a person that meets all applicable requirements, pursuant to
the applicable provisions, so that this person acquires the
partnership interests of the Series "A".
e) It is expressly understood that any transfer of partnership
interests, in violation of the provisions of this Section V, shall
not be effective with respect to the
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company nor the partners, and therefore the acquirer shall not be
acknowledged as a partner.
SEVENTH
The increases and reductions of the capital of the company shall be subject to
the following rules:
I. In capital increases:
A) Those provided for in the area of foreign investment and these by-laws shall
be met, regarding the person or entity entitled to acquire or own the
partnership interests representative of the capital.
B) The fixed minimum capital shall be increased in accordance with the
provisions of the General Law of Commercial Companies.
C) The variable capital, in accordance with Articles 213 and 216 of the General
Law of Commercial Companies, shall be increased, with no other formality than
those provided by the Partners' Meeting, by means of affirmative vote of 100% of
the capital, which minutes will not require certification.
D) In all cases, the partners shall have a pre-emptive right to subscribe said
increases, in proportion to the percentage of their participation in the
capital.
E) New increases may not be declared if the partnership interests previously
issued are not fully paid.
II. In the reductions of capital:
A) Those provided for in the area of foreign investment and these by-laws shall
be met, regarding the person or entity entitled to acquire or own the
partnership interests representative of the capital.
B) The fixed minimum capital shall be decreased in accordance with the
provisions of the General Law of Commercial Companies.
C) The variable portion shall be decreased upon resolution of the Partners,
which minutes will not require certification.
D) The decreases in capital, in all cases, shall be carried out pursuant to the
following proceeding:
1) Shall be made by whole portions, with a nominal value of N$100 (One Hundred
New Pesos), at the value the respective Meeting resolves, taking into
consideration the opinion of the external auditors of the company;
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2) Once the reduction has been approved, the partners shall have the right to be
reimbursed in proportion to the number of fractions of N$100 (One Hundred New
Pesos) that comprise each partnership interest which they own, such right must
be exercised within a term of 15 (fifteen) calendar days, counted as of the date
in which the resolution was adopted, if they were present or represented, or of
the publication in the Federal Official Gazette and in the newspaper in which
such publication must be made, in accordance with these by-laws;
3) The notice referred to in the previous paragraph, shall be published in the
Federal Official Gazette, and in the newspaper of widest circulation in the
domicile of the company, when such domicile is not Mexico, Federal District;
4) If, within the stipulated term, a number of fractions of partnership
interests are requested for reimbursement equal to the capital stock to be
reduced, the reimbursement shall be made to those requesting same, complying at
all times with the pre-emptive right mentioned above;
5) If requests for reimbursement by one or more partners exceed the approved
reduction of capital stock, and after compliance with the pre-emptive right
indicated in paragraph 2., the capital stock is still not reduced in the
approved amount, then the reimbursements shall be made in proportion to the
number of fractions of partnership interests offered in excess by each partner
for such purpose, in the understanding that the reduction shall only be made in
the approved amount;
6) If the requests for reimbursement are insufficient to complete the number of
fractions of partnership interests which must be reimbursed, then those
partnership interests whose reimbursement was requested, shall be reimbursed,
and as concerns those who did not request such reimbursement or did not request
same in the proportion corresponding to the number of fractions of partnership
interests owned by them, they shall be designated by drawing made before a
Notary or Licensed Broker, until the amount of the reduced capital stock is met.
All increase or reduction of the capital stock shall be recorded in the registry
book which the Company shall keep for such purpose.
CHAPTER THIRD
DIRECTORS, EXECUTIVE COMMITTEE AND OFFICERS OF THE COMPANY
EIGHTH
The administration of the Company shall be entrusted to a Board of Directors,
which shall be formed by six members and their respective Alternates. The
partnership interests of Series "A" at all times shall have the right to appoint
three members of the Board of Directors and their respective Alternates, the
partnership interests of Series "B" at all times shall have the right to appoint
the other three members of the Board of Directors and their respective
Alternates. The Directors appointed by the partners of a specific Series may
only be replaced by the Alternate Directors appointed by the partners of such
Series.
The Board of Directors shall designate from among its members the Director who
shall serve as
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Chairman, a position which he shall hold for one year through June 30, 1994 and
which will be decided by partners of the Series "A"; the following twelve month
period the position will be held by a Director appointed by the partners of the
Series "B". In subsequent twelve month periods, the position of Chairman shall
alternate annually between a Director named by Series "A" and a Director named
by Series "B".
The Secretary shall also be named by the Board of Directors, and may be one of
the Directors or not.
The Directors and their Alternates may be partners or not.
The members of the Board of Directors and their Alternates shall be designated
by the Partnership Meeting and shall remain in office until their successors
have been elected and take charge of their office.
NINTH
The Board of Directors as a corporate body shall be entrusted with each and all
of the business of the corporation; it shall perform all operations, acts and
contracts related to the corporate purposes of same and shall represent the
corporation before all persons and authorities, administrative, judicial and
legislative, either civil, labor, criminal, or of any other nature; federal,
local or municipal, with the following authority:
I. For lawsuits and collections, in terms of the first paragraph of article 2554
of the Civil Code for the Federal District and the corresponding articles of the
Civil Codes of all the States of the Mexican United States, being authorized to
exercise the authority which requires special clause under the law, in terms of
article 2587 of the abovementioned Code and the corresponding articles of the
Civil Codes of all the States of the Mexican United States, including but not
limited to: desist, even from injunction (amparo) proceedings; to negotiate,
compromise and submit to arbitration; to pose and answer interrogatories; to
assign property, to recuse magistrates; to receive payments; to file criminal
accusations and charges and to desist therefrom; and for any other acts
expressly determined by the law.
II. To administer property in accordance with the second paragraph of article
2554 of the Civil Code for the Federal District and the corresponding articles
of the Civil Codes of all the States of the Mexican United States.
III. To issue and execute all types of credit instruments, in terms of article 9
of the General Law of Negotiable Instruments and Credit Transactions.
IV. For acts of ownership, in terms of the third paragraph of article 2554 of
the Civil Code for the Federal District and the corresponding articles of the
Civil Codes of all the States of the Mexican United States.
V. In general, the authority and rights conferred by these by-laws or by the
law, which are not reserved expressly to the partners.
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VI. The Board of Directors may appoint a Delegate from among its members for the
execution of concrete acts and may grant on behalf of the company, to any
person, whether a member or not of the Board of Directors, general and special
powers of attorney, having the authority to revoke in whole or in part the
delegations made and powers granted, reserving always for itself the exercise of
said powers of attorney.
TENTH
The Board of Directors' Meetings shall be held at the domicile of the Company,
or in any other place determined by the Board. The Board of Directors' Meetings
shall be held, ordinarily, on the dates designated by the Board of Directors
itself, or by the Partnership Meeting which elects the Board of Directors and,
extraordinarily, as frequently as necessary, when convened by the Chairman, the
Secretary of the Board of Directors or two of the Directors.
Calls shall be made, with at least 5 (five) calendar days prior to the meeting,
by written communication at the domicile of each Director or sent by registered
mail, return receipt requested, by telegram, telex or telecopy, stipulating the
hour, date, place and Agenda.
To constitute quorum, at least four of the members of the Board of Directors
must be present and the resolutions shall be adopted by the favorable vote of at
least four of the Directors, including the case in which the approval of the
following matters is required:
(a) Adoption of any resolution with respect to any of the items listed
in clause fourteenth;
(b) Adoption or approval of and/or modification to any operating,
capital or cash budget(s);
(c) Adoption or approval of and/or modification to the Company's
responsibility and authority matrix for employees and officers;
(d) Bids for any project on a turnkey, lump sum or guaranteed maximum
price basis for projects valued in excess of US $20 million;
(e) Any project where there exists the potential for liability for
consequential damages;
(f) Sale/disposition or purchase of real property;
(g) Granting of any powers of attorney to act on behalf of the Company;
(h) Adoption or modification of the Company's internal policies and
regulation including but not limited to changes of management
organization;
(i) Adoption or modification of strategic plans of the Company;
(j) Entering into an agreement or a commitment for the Company to borrow
money,
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execute negotiable instruments or otherwise encumber property or
incur debt, provided, however, the Executive Committee may authorize
the execution of negotiable instruments with respect to matters in
the ordinary course of business;
(k) Entering into an agreement to bind the Company on any surety or
guaranty contract;
(l) Establishing or terminating any bank accounts, provided, however,
the Executive Committee may authorize the execution of necessary
bank accounts with respect to matters in the ordinary course of
business;
(m) Selection and change of any legal consultants to the Company,
provided, however, the Executive Committee may select and/or change
any legal consultants with respect to matters in the ordinary course
of business;
(n) Election and/or modification of any tax or accounting methods,
policies and practices;
(o) Discussion of tax strategies involving the Company and its
Affiliates;
(p) Approval of the terms of any agreement between the Company and a
Party hereto or its Affiliate, or waiver of the terms thereof;
(q) The nature and amount of officer compensation;
(r) The investment of the Company's capital in excess of the Company's
necessary working capital;
(s) Purchase or sale of any asset valued in excess of US $500,000;
(t) The appointment or removal of the Chief Executive Officer or other
senior officers;
(u) Pursuing any business opportunities which are outside of the
Geographical Area and Markets that in such case are agreed upon by
the partners in writing;
(v) Purchase or sale of real property.
If the number of Directors do not constitute a quorum, the meeting may be
postponed periodically until a quorum is available.
Minutes shall be prepared, of all meetings of the Board of Directors, which
shall be recorded in the corresponding Minutes' Book and shall be signed by the
Chairman, the Secretary and the Examiner or Examiners who must be convened to
all Meetings, as well as by a Director of the Series "A" and the Series "B"
respectively.
ELEVENTH
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The day-to-day management of the Company shall be under the direction of an
executive committee, which shall consist of four (4) or six (6) members (the
"Executive Committee"). The Directors designated by the partners of the Series
"A" shall designate half of the Executive Committee members and the Directors
designated by the partners of the Series "B" shall designate the other half of
the Executive Committee members.
The Executive Committee shall have such specific powers, duties and
responsibilities as the Board of Directors may assign to it from time to time.
Without in any manner diminishing or altering the powers, duties and
responsibilities of the Executive Committee, such powers, duties and
responsibilities shall include, but not be limited to, the following:
(a) The Executive Committee shall be responsible for the general state
of the business of the Company. The chief executive officer of the
Company shall be responsible to the Executive Committee.
(b) The Executive Committee shall have general authority for contracts
with labor unions.
(c) The Executive Committee shall approve employment contracts with
managers, directors and senior officers of the Company prior to
execution thereof by the Company.
(d) The Executive Committee shall be responsible for making
recommendations and rendering periodic progress reports concerning
the Company as appropriate to the Board of Directors.
(e) The Executive Committee shall designate persons who may draw against
all bank accounts established pursuant to authorization by the Board
of Directors.
The decisions of the Executive Committee shall be by unanimous vote with a
majority present. In the event the Executive Committee is unable to reach a
decision on a matter, then the members of the Executive Committee shall present
the matter to the Board of Directors, who shall resolve the matter. The
Executive Committee shall meet a minimum of four (4) times per year, and
additionally at the call of any member of the Executive Committee or the Board
of Directors. It is anticipated that the Executive Committee will meet monthly
during the first year and in subsequent years pursuant to the schedule indicated
by the Board of Directors.
The call for the Executive Committee meetings shall be given by the Board of
Directors to each member at least two days in advance of said meeting by
telegram, telex or facsimile transmission. Any member of the Executive
Committee, the chief executive officer, or any director may submit items for
inclusion in the agenda of the Executive Committee.
TWELFTH
The partners or the Board of Directors may appoint the officers, employees and
attorneys-in-fact which they deem convenient and determine, broaden or reduce
their authority, duties and rights,
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with the understanding that the appointment or removal of the General Directors
of the Company shall be reserved to the Partnership Meeting.
CHAPTER FOURTH
THIRTEENTH
SURVEILLANCE OF THE COMPANY
The surveillance of the Company shall be entrusted to one or more Inspectors and
their corresponding Alternates, who may be partners or not, who shall have by
analogy the rights and obligations conferred in articles 166 et seq. of the
General Law of Commercial Companies and shall be in office until their
successors have been elected and take charge of their offices.
CHAPTER FIFTH
PARTNERS' MEETING
FOURTEENTH
The Partnership Meeting is the supreme authority of the Company, which may hold
Meetings of a single nature, having the authority to resolve on the matters
listed in article 78 of the General Law of Commercial Companies and which are
listed below:
(a) Increases or reductions of capital;
(b) Authorization or issuance of additional partnership interests and
assignment or other transfer of partnership interests by the
Company;
(c) Creation, alteration, adjustment or amendment to the partnership
interests, creation of new partnership interests or special rights,
privileges or conditions of the partnership interests;
(d) Nomination and appointment of Directors, subject to the provisions
of these By-Laws regarding the number of Directors and who appoints
them;
(e) Removal of any Director;
(f) Declaration of dividends;
(g) Purchase or sale of all or substantially all of the Company's
assets;
(h) Any amendment of these By-Laws;
(i) Payment of any Director fees and/or reimbursement of Director
expenses;
(j) Appointment of the Company's examiner and selection and change of
any tax and accounting consultants to the Company;
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(k) Any partnership decision overriding the decision of the Board of
Directors on any of the matters specified in the clause tenth of
these By-Laws.
FIFTEENTH
In order for a Meeting to be considered legally convened, it shall be necessary
that more than 50% (fifty percent) of the capital stock be represented, and for
its resolutions to be considered valid, the favorable vote of the majority of
the capital represented shall be necessary, except that when the Meeting that
has been convened resolves on the matters listed in the clause fourteenth, when
the favorable vote of 100% of the capital shall be necessary.
SIXTEENTH
Partners' Meetings shall be held in accordance with the following provisions:
I. They shall be held at the corporate domicile, except in case of force majeure
or Acts of God; they shall be convened by the Chairman or the Secretary of the
Board of Directors, by the Inspector or as provided in the General Law of
Commercial Companies, by means of the publication of a call in the Official
Daily of the Federation and, also, in the official newspaper or in the newspaper
of widest circulation in the domicile of the company when such domicile is not
Mexico, Federal District, with an anticipation of not less than 10 (ten)
calendar days and not more than 60 (sixty) calendar days. In all cases, the call
shall contain the date, hour, place of meeting, and the Agenda. A copy of the
call shall be sent to the domicile of each partner, by telex, telecopy or
telegram or registered mail with return receipt requested.
In the event of second or subsequent call, said call must be published after the
date in which the meeting should have been held, pursuant to first or subsequent
call, as may be the case, and with, at least, 15 (fifteen) calendar days
anticipation to the new date for the Meeting, and the new call shall be sent to
each partner in the terms mentioned above.
II. When the totality of the partnership interests that represent the capital
stock are represented, no call shall be necessary, neither shall it be required
in the event a Meeting is postponed for any reason, to be continued at a
different date and hour. In any one of these two cases, the circumstances
relating thereto shall be set forth in the minutes.
III. All partners shall have the right to participate in the decisions of the
meetings, with the voting limitations that these By-Laws set forth, they shall
have one vote for every N$100 of participation and may be represented by proxy
with a general or a special power of attorney, a proxy signed by the partner
shall be sufficient, in the latter case.
IV. In order to be admitted to a Meeting, the partners must appear registered as
such in the Special Partnership Book maintained by the Company pursuant to that
set forth in the article 73 of the General Law of Commercial Companies.
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V. The Meeting shall be presided by the Chairman of the Board of Directors and,
in his absence, by one of the Directors present and in the absence of any of the
latter, by the person appointed by the Meeting. The Secretary of the Board shall
act as Secretary for the meeting and in his absence, the Assistant Secretary,
and in the absence of both, the person appointed by the president.
VI. Before the Meeting, the person presiding the same shall appoint one or more
tellers, who shall certify the amount of the capital represented and prepare the
list of attendance setting forth therein the amount of capital stock that each
partner represents.
VII. After certifying that a quorum is present, the person presiding the meeting
shall declare the Meeting convened and shall proceed with the Agenda.
VIII. The Secretary shall prepare minutes of each Meeting and the file thereof.
Such file shall contain:
a) A copy of the Federal Official Gazette and of the newspaper or newspapers
where the call was published, if such was the case;
b) The list of attendance of partners;
c) If such is the case, the proxies or extracts certified by the Secretary or by
the Teller, of the documents evidencing the right to vote of the person
attending;
d) A copy of the minutes of the Meeting;
e) The opinions and reports of the Examiner; and,
f) All other documents reviewed during the Meeting, which the Secretary may
consider necessary.
IX. If, for any reason, a duly convened Meeting is not held, a minute shall also
be prepared, describing such circumstances and the reasons and a file must be
prepared in accordance with subparagraph VIII above.
X. Resolutions adopted in terms of the provisions of these By-Laws, are
obligatory for all partners, even those absent or dissenting; such resolutions
shall be final and without recourse, and in view thereof, the Board of Directors
shall perform all such acts as may be necessary in order to enforce said
resolutions.
CHAPTER SIXTH
THE PROFITS AND LOSSES AND THE RESERVE FUND
SEVENTEENTH
At the end of each fiscal year the General Balance shall be prepared and a
report of the financial
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condition of the Company that should contain at least the points listed in
paragraphs A) to G) and those set forth in article 172 of the General Law of
Commercial Companies, including the Examiner's report, regarding the veracity,
sufficiency and reasonableness of the information presented by the Board of
Directors to the Partnership Meeting.
From the net profits, after the financial statements and the income statement
have been approved by the Partners' Meeting, the following distribution shall be
made:
a) At least 5% (five percent) shall be applied to the legal reserve fund, in
accordance with the provisions of article 20 of the General Law of
Commercial Companies;
b) Any other amount to be applied to any fund approved at a Partners' Meeting
by the unanimous vote of 100% (one hundred percent) of the capital of the
Company; and
c) The remaining profits shall be applied as follows:
A. The first four periods of the Company shall be as follows: First Period
(18 months) beginning June 1, 1993 to December 31, 1994; Second Period (12
months) from January 1, 1995 to January 31, 1995; Third Period (12 months)
from January 1, 1996 to January 31, 1996, and Fourth Period (six months)
from January 1, 1997 to June 30, 1997 (the "Specified Years"). For each of
the Specified Years the Adjusted Net Income, as adjusted pursuant to
paragraph D hereof, shall be distributed in equal portions among the
partners of the Series "A" and the partners of Series "B". Such net income
shall either be retained (as capital surplus) or paid to the partners (as
a dividend) in accordance with the provisions of these By-Laws. In the
event the Company has an Adjusted Net Loss during any of the Specified
Dates, such losses shall equally correspond to the partners of the Series
"A" and "B".
B. All Net Income or any Net Loss in periods subsequent to the Specified
Years shall be distributed in equal portions among the partners of the
Series "A" and the partners of Series "B", and such net income shall
either be retained (as capital surplus) or paid to the partners (as a
dividend) by the Board of Directors, in accordance with the resolution of
the Partners' Meeting.
C. Adjusted Net Income (Loss) shall be determined annually by external
auditors of the company, as promptly as possible following the end of each
Specified Year.
D. As used herein, "Adjusted Net Income" or "Adjusted Net Loss", as
applicable for any Specified Year shall mean the net income or net loss of
the Company ("Net Income" or "Net Loss", as applicable) for such period
determined in accordance with Mexican generally accepted accounting
principles (except to the extent of changes required by such accounting
principles), except when the partners in a Meeting where the totality of
the capital is represented, and by a unanimous vote, resolve otherwise.
d) The dividends declared and not collected by the partners within a period
of 5 (five) years shall be credited in favor of the Company.
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The books and registries of the Company shall be prepared according to the
Mexican general accounting principles ("Mexican GAAP"), and the financial
statements prepared according to Mexican GAAP shall be reexpressed according to
the general accounting principles of the US ("US GAP"), and shall be as specific
as necessary in order to reflect accounting and fiscal variations of the United
States of America, if applicable; such books and registries shall reflect the
financial position of the Company. Such registries and documents shall be made
available to any of the Partners, or the persons appointed by them, at all
reasonable time. The Board of Directors shall make available to the Partners'
Meeting, for its approval, the audited financial statements, that shall include
a balance statement, a report regarding the origin and destiny of the funds and
a statement regarding the profits or losses; and shall submit an inform of their
content, within three months after the end of the fiscal year.
CHAPTER SEVENTH
DISSOLUTION AND LIQUIDATION OF THE COMPANY
EIGHTEENTH
The company shall be dissolved in the following cases:
1. Upon expiration of the term indicated in these By-Laws.
2. For impossibility to perform the corporate purpose of the Company, or for
completion of the corporate purpose.
3. By resolution adopted by the Partner' Meeting.
4. If there are less than two partners.
5. For the loss of two thirds of the capital.
6. If any of the partners breaches any of its obligations hereof, and such
breach is not cured within 60 days following the date of notice of the
other partner.
7. If any of the partners, during a period of 180 days, is incapable of
performing its obligations hereunder due to an act of god or force
majeure.
8. In the event of liquidation, bankruptcy, concurso or dissolution of the
partners, or if 90 days pass by without resolution of a lawsuit against
any of the partners by any of its creditors or a third party, requesting
liquidation, bankruptcy, concurso or dissolution of the company, or if the
partner is incapable of paying its liabilities when due, or if it has
generally suspended the payment of its debts, explicitly or implicitly
(except those debts contested in court in good faith); or if its
liabilities exceed its assets or if its creditors have taken control of
its administration; or if any material portion of its liabilities or
assets is intervened, expropriated or confiscated in full or in part by a
government, in the understanding that the corresponding partner shall have
a term of 360 days to resolve the claim, and as long as it provides to the
other partner (i) a letter of credit for an amount equal to the greater
of: the capital investment of such partner or the book value of its
partnership interest at the time when the suit is filed; or (ii) an
opinion of a legal advisor satisfactory to both parties, in the form
acceptable to the other partners, stating that the legal proceeding in
question has no merits.
a) In the event that the dissolution of the company is requested for
any of the reasons mentioned above, except the one provided in item 6, the
partners shall negotiate the possibility to transfer each of its
partnership interests. If it is not possible to reach an
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agreement in that respect, they will dissolve and liquidate the company.
The termination of its operations will be conducted in the best possible
manner. It will not be possible to commence new projects and the partners
will make their best efforts to conclude any existing projects before the
liquidation takes place.
b) In the event any of the partners requests dissolution of the
company for the cause set forth in item 6. above, the partner not in
breach shall have the right to (a) request the other partner to sell its
partnership interest in its favor, or in favor of the party appointed by
it, at the value determined by the independent appraisers appointed by
each of the partners. Each partner shall appoint an appraiser, and each of
the appraisers shall appoint a third appraiser. In case the appraisers
appointed by the partners are not capable of reaching an agreement
regarding the third appraiser, or if any partner fails to make such
appointment, the external auditors of the company or the partner not in
breach will make such appointment; (c) request the dissolution and
liquidation of the company.
c) In the event any of the partners requests the dissolution of the
company for the cause set forth in item 6. above, or if such partner
requests the dissolution of the company for the reason set forth in item
(a) above, the assets of the company shall be offered initially to the
partner who did not request the dissolution (upon termination of the
company's projects due to its liquidation) and such partner will have the
right to purchase any of the assets of the company at the market price,
upon notice and offer of payment provided to the company and its
liquidators.
d) Each of the partners shall be responsible to the other partner,
and shall indemnify and defend the other partner for any loss, damage or
liability in connection with unauthorized or illegal actions of the other
partner.
NINETEENTH
Upon dissolution of the corporation, its liquidation shall commence, and one or
more liquidators shall be appointed, with each of the partners that represent
25% (twenty five percent) of the capital having, in all cases, the right to
appoint one liquidator. The liquidator or liquidators shall liquidate the
corporation and distribute the proceeds among the partners, in direct proportion
to each partners' participation in the capital of the Company. The liquidators
shall have the broadest authority for the liquidation, in accordance with
article 242 et seq. of the General Law of Commercial Companies.
CHAPTER EIGHTH
GENERAL PROVISIONS
TWENTIETH
The incorporators do not reserve for themselves any special participation in the
profits of the corporation.
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TWENTY FIRST
In accordance with that provisions of paragraph I of Article 27 of the Political
Constitution of the Mexican United States, and article 2 of the Organic Law of
Paragraph I of Article 27 of the General Constitution of the Mexican United
States, any foreigner who, upon incorporation of the company or at any time
thereafter, acquires an interest or participation in the capital of the company,
formally obligates himself with the Ministry of Foreign Relations to consider
himself as a Mexican national with respect to the partnership interest of the
company which he may acquire or own, as well as in connection with the property,
rights, concessions, participations or interest of which the company is a
holder, or of the rights and obligations deriving from the contracts to which
the company and the Mexican government are a party, and therefore he agrees not
to invoke the protection of his government, under the penalty, upon failure to
comply with said agreement, of losing such interest or participation to the
benefit of the Mexican Nation.
TWENTY SECOND
The Company and the partners shall indemnify and release at their expense the
Directors, Examiners, Officers, external auditors and corporate attorneys of the
personal liabilities incurred by them in the discharge of their duties, provided
that such liability does not derive from fault or negligence imputable to the
person involved.
TWENTY THIRD
In all matters not specifically provided for in these By-Laws, the General Law
of Commercial Companies shall apply.
For any controversy arising from the interpretation or compliance of these
By-Laws or from its future amendments, including furthermore all those involving
the Company, the partners, Directors and Inspectors, it is agreed to submit it
to arbitration decision and resolution, pursuant to the terms indicated below.
In case any of the provisions contained in the by-laws is null, illegal or
unenforceable for any reason whatsoever, such nullity, illegality or
unenforceability shall not affect the other terms of the by-laws, which shall
remain valid and effective as if the unenforceable term did not from part of the
by-laws. In case such invalidation materially affects any of the rights of the
partners, the partners shall negotiate and try to reach an agreement to resolve
such situation. If it is not possible to reach an agreement, the affected party
may request the dissolution of the company, prior written notice, in terms of
article eighteenth hereof.
The arbitration shall be governed by the Regulations for Conciliation and
Arbitration of the International Chamber of Commerce (CCI), and the term for the
arbitration procedures shall be of 90 (ninety) business days, counted from the
date on which the arbitrators, having accepted their appointments, initiate the
arbitration proceeding.
There shall be three arbitrators, one appointed by each of the parties and the
third shall be appointed by the two arbitrators elected by the parties. If one
of the parties does not appoint his
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arbitrator within 30 (thirty) days following the date on which the notice in
which the other party requested arbitration, is serviced, or if the arbitrators,
within 30 (thirty) days following their appointment, do not appoint the third
arbitrator, or if the latter does not accept his appointment, then the
Arbitration Court of the CCI shall appoint the arbitrator who was not appointed
by the failing party, or shall appoint the third arbitrator, as the case may be,
in accordance with said Regulations.
The place of arbitration shall be in Toronto, Canada; therefore, for all the
purposes of the arbitration -and of the legal jurisdiction, in its case- the
parties expressly waive to the jurisdiction that may correspond to them by
virtue of their present or future domiciles.
The parties will decide in each case if the arbitrational decision shall be in
accordance with the law or in amicable settlement. The decision shall be solved
in amicable settlement, except otherwise set forth by the laws, or in the
absence of agreement among the parties.
In all the cases of resolution in accordance with the law, the resolution shall
be based on the laws of the Mexican United States.
The proceeding shall be conducted in accordance with procedural law of the place
of arbitration and, in absence thereof or in lack of procedural provisions, the
Regulations of the ICC shall be applied.
The language of the arbitration shall be English.
The award or arbitrational decision shall be final and binding for the parties,
and therefore the latter not subject to appeal.
In the event the losing party in the arbitration does not voluntarily comply
with the award within 15 (fifteen) calendar days following the date on which the
award was notified, the other party may request its enforcement before any
competent court.
TWENTY FOURTH
Each of the partners is the beneficial owner of its respective brands,
trademarks, logos and names, in the understanding that each of the parties may
grant a license in favor of the company for their use, in order to promote its
commercial opportunities. For such purposes, and in case the company is
dissolved for any reason whatsoever, suspends its operations or enters into a
liquidation proceeding, or a change of law or interpretation that adversely
affects in a material way the rights and obligations of any of the partners in
connection with its intellectual property rights takes place, the trademark,
name and logo corresponding to each of the partners shall be removed as soon as
possible, but in any case within three months following the respective notice,
from all of the company's documentation, and their use will be strictly
prohibited thereon. In the event the company continues to use the name of the
corresponding partner, the company shall be dissolved and liquidated according
to the by-laws."
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