**Exhibit1**

 

**BYLAWS**

**GRUMA, S.A.B. DE C.V.**

 

**NAME, PURPOSE, DOMICILE, DURATION AND NATIONALITY**

 

**ARTICLE FIRST.**           **NAME.** The Company’s legal name is: “GRUMA”, whichshall always be followed by the words SOCIEDAD ANÓNIMA BURSÁTIL DE CAPITALVARIABLE (PUBLICLY-HELD STOCK COMPANY) or by its abbreviation “S. A. B. DEC.V.”

 

**ARTICLESECOND. PURPOSE.**TheCompany’s purpose is to: (a) purchase, sell, import, export, as well as tomanufacture and assemble all kinds of goods or trade products; (b) purchase,sale, manage, negotiate, subscribe, issue, amortize, encumber, and transfer byany legal means, shares or partnership interests, unsecured debt, mortgages orof any other type, securities, derivative financial instruments and any kind ofcredit instruments; (c) create, organize and manage all types ofbusinesses; (d) grant guaranties, endorsements, sureties, bonds, pledges,mortgages, trust funds and any other credit operation, either real or personal,on its own behalf or on behalf of third parties with which the Company hasshare, financial or commercial relationships; (e) purchase, sell,encumber, rent or lease, whether as lessor or as lessee, all types of personalproperty and real estate as may be necessary and/or convenient to achieve theCompany’s purposes; (f) provide and receive all types of administrative ortechnical consulting and advisory services to or from any individual orcorporation, whether Mexican or foreign; (g) establish branches, agenciesor representative offices and to act as intermediary, commission agent,representative, distributor or warehouse depositor for all types of Mexican orforeign businesses; (h) register, acquire, hold, market and transfer brandnames, trademarks, patents, copyrights, inventions, processes*,* and any other type of industrial property, as well as alltypes of concessions, rights and licenses; (i) grant and take loans; (j) subscribe,issue and negotiate, all types of credit instruments with the intervention ofany institution and/or authority, as may be required by the applicable legalregulations; (k) carry out all types of businesses and financial,commercial and industrial transactions which are directly or indirectly relatedto the Company’s purposes; and (l) carry out any actions and enter intocontracts permitted by applicable legal regulations, which may be necessary orconvenient to achieve the Company’s purposes.

 

**ARTICLETHIRD. DOMICILE.**       The Company’s domicile is Monterrey,Nuevo León, México; and the Company may establish agencies or branches anywherein the Mexican Republic or abroad and subject itself to conventional domicilesin all contracts executed by the same.

 

**ARTICLEFOURTH. DURATION.** Theduration of the Company shall be 99 (ninety nine) years, commencing on December 24(twenty four), 1971 (nineteen seventy one).

 

**ARTICLE FIFTH.**               **NATIONALITY**. The Company is of Mexican nationality. Allforeign nationals whom at the time of incorporation of the Company or at anyother time thereafter acquires a stock participation or an interest in saidCompany shall be considered, due to that fact, as Mexican, regarding saidparticipation or interest, as well as in respect to the property, rights,concessions, participations or interests owned by the Company, or to the rightsand duties derived from any agreements entered into by the Company, and saidforeign national 

 

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agreesnot to invoke therefore the protection of their governments, under the penaltyto forfeit, in favor of the Mexican Nation, any participation or interest theywould have acquired.

 

**CAPITAL STOCK, SHARES AND SHAREHOLDERS**

** **

**ARTICLE SIXTH.**          **CAPITAL STOCK.** TheCompany’s capital stock is variable; the fixed and non-redeemable fullysubscribed and paid portion of the capital stock is represented by 565’174,609(FIVE HUNDRED AND SIXTY FIVE MILLION ONE HUNDRED AND SEVENTY FOUR THOUSAND SIXHUNDRED NINE) Class I, Series “B”, common nominative shares, with nopar value; which shares amount to the sum of $7,004’909,811.09 (SEVEN BILLIONFOUR MILLION NINE HUNDRED AND NINE THOUSAND EIGHT HUNDRED AND ELEVEN PESOS09/100 MEXICAN CURRENCY), the variable part of the capital stock shall berepresented by Class II, Series “B” common shares with no par value.

 

Allof the shares shall confer the same rights and obligations to their holderswithin each one of its Series and Classes. Shares may have all otherfeatures determined by the General Shareholders’ Meeting that approves theirissuance thereof, according to the applicable legal regulations. Only theshares which value is fully paid are to be released.

 

TheCompany shall only recognize as shareholders those persons or entitiesregistered in the ledger referred to in Article Eighth of these Bylaws.

 

Thecorporate entities controlled by the Company may not directly or indirectly beshareholders of said Company, nor of any other corporate entity holding themajority of the shares of the Company.

 

**ARTICLESEVENTH. SHARE CERTIFICATES REPRESENTATIVE OF THE CAPITAL STOCK.**Share certificates representing the capitalstock may include one or more shares and shall be signed by 2 (two) members ofthe Board of Directors. Share certificates shall bare the provisions ofArticles Fifth and Eleventh hereof as well as to satisfy all the requirementsset forth in Article 125 of the Ley General de Sociedades Mercantiles (“MexicanCorporate Law”).

 

Whilethe definitive certificates representing the shares issued by the Company aredelivered to their holders, provisional share certificates may be issued whichshall be exchanged in time for the definitive share certificates.

 

Uponrequest and at the expense of its holder, provisional and definitive sharecertificates may be exchanged for certificates of different denominations.

 

Inthe event of loss, theft or destruction of the provisional or definitive sharecertificates, such certificates will be replaced at holder’s expense, inaccordance with the procedure set forth in the General Law of NegotiableInstruments and Credit Operations.

 

If the capital stock consists of sharecertificates representing more than one share, and for any reason whatsoeverthe original certificate has to be divided, any 2 (two) Directors shall signthe new divided share certificates issued to be exchanged for the originaldivided share 

 

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certificate.Any Director who signs a new share certificate shall be responsible forreceiving and for the cancellation of the old divided share certificate and theissuance of new certificates representing an identical number, class, andseries of shares as the original divided certificate. The ownership of theshares shall be transferred by endorsing the corresponding share certificate ortitle or by any other legal mean.

 

**ARTICLEEIGHTH.****REGISTRATION OF SHAREHOLDERS.**The Company shall keep a StockLedger, which may be kept by the Secretary of the Board of Directors, by anysecurities depository institution or by any credit institution. All informationdemanded by Article 128 of the Mexican Corporate Law shall be recorded insaid registry. Only those persons listed in the Company’s Stock Ledger will berecognized as shareholders by the Company, and upon request of the relevantholder, all annotations in respect to any transfer, limitation, lien andencumbrance of the shares must be recorded in said Stock Ledger.

 

**ARTICLENINTH. MODIFICATIONS TO THE CAPITAL STOCK.**In the event of increments or reductions of thecapital stock, and the amortization of shares with distributable earnings,exception made for transactions by Company to purchase or sell the Company’sown shares in market, in accordance to the dispositions of Article Tenthhereof, the following procedure shall be observed:

 

Theincrements or reductions of the fixed part of the capital stock as well as theamortization of shares with distributable earnings, representing the sameportion of the capital stock must be approved by the General ExtraordinaryShareholders’ Meeting.

 

Theincrements or reductions of the variable part of the capital stock, as well asthe amortization of shares with distributable earnings representing the samepart of the capital stock, should be approved by the General OrdinaryShareholders’ Meeting, and all corresponding minutes taken therein should beformalized before a Civil Law Notary, without having to register the Notarialdeed containing the registration of the corresponding resolution before thePublic Registry of Property and Commerce.

 

Theshareholders of the variable portion of the capital stock of the Company shallnot have the right to redeem shares referred in Article 220 of the MexicanCorporate Law.

 

Anyincrements or reductions of the capital stock should be recorded in theregistry kept by the Company for said purpose.

 

TheCompany may issue unsubscribed shares kept in the treasury to be subscribedthereafter by the investor public through public offering according to theapplicable legal regulations or to the conditions set forth by the GeneralExtraordinary Shareholders’ Meeting ordering said issuance.

 

TheCompany may make, at any time, a private offer of its shares according to thedates, terms, conditions and exemptions provided by the Ley del Mercado deValores (“Mexican Securities Law”) and any other applicable legalregulations.

 

The capital stock may be incremented also bycapitalizing Stockholders’ equity accounts referred to in Article 116 ofthe Mexican Corporate Law or by capitalizing debts.  In increments based upon the capitalizationof Stockholders’ equity accounts, all shares shall be 

 

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entitledto receive the proportional part of the shares issued to represent the relevantcapital stock increment.

 

Shareholdersshall have the preemptive right to subscribe all new shares issued in the eventof an increment of the capital stock, proportionate to the number of sharesthat they own at the time such increment is resolved. Such right must beexercised within the time period determined to that effect by the Shareholders’Meeting that resolved such increase of capital stock, however under no circumstanceshall such period be less than 15 (fifteen) days from the day following thepublication of the corresponding resolution in the Federal Official Gazette orin one of the newspapers of greater circulation of the Company’s domicile. Inthe event that after the expiration of the term set forth for the shareholdersto exercise their preemptive right mentioned in the prior paragraph, thereremain unsubscribed shares, these may be offered for their subscription andpayment at the conditions and terms determined by the Meeting that had approvedthe capital stock increase, or pursuant to the terms set forth by the Board ofDirectors or the delegates designated by the Meeting for such purposes.

 

Withoutaffecting the foregoing in any manner whatsoever, the preemptive right tosubscribe shall not apply regarding capital increases through public offeringsor by placing shares owned by the Company that has been previously acquired bythe same.

 

Thecapital stock may be reduced (i) to absorb losses; (ii) to reimbursecapital contributions to shareholders, (iii) due to the release granted tostockholder of non-paid exhibits, (iv) by repurchasing shares according tothe applicable legal regulations and to the Bylaws of the Company.

 

Thereductions of capital stock to absorb losses shall be made on a strictproportionate basis among the shareholders, without the need of canceling thecorresponding shares since they do not have a nominal value. In the event ofreductions of the capital stock for reimbursement to the shareholders, suchreimbursement shall be made on a proportionate basis among them, in theunderstanding that the price of the reimbursement may not be less than the bookvalue of the shares pursuant to the last statement of financial position thathad been approved by the Ordinary Shareholders’ Meeting.

 

TheGeneral Shareholders’ Meeting may decree the amortization of the Company’sshares with distributable earnings without reducing the capital stock,complying with the provisions of the Mexican Corporate Law and other applicablelegal regulations for the Company. The amortized shares shall be voided and thecorresponding certificates shall be cancelled.

 

**ARTICLETENTH. TRANSACTIONS WITH COMPANY’S OWN SHARES**. The Corporation may repurchase sharesrepresenting its capital stock or credit instruments representing said sharespursuant to the terms, conditions and exceptions established by the applicablelegal regulations, without the application of the prohibition established inthe first paragraph of Article 134 of the Mexican Corporate Law andprovided that:

 

I.                                         The repurchase takes place in any Mexican stockmarket where the shares of the Company are traded.

II.                                     The repurchase takes place at the prevailingmarket price, exception made for public offerings or biddings authorized by theComisión Nacional Bancaria y de Valores (Mexican Banking and SecuritiesCommission).

 

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III.                                 Thatthe repurchase be charged to the Stockholders’ equity being able to keep themin the power of the Company without having to reduce the capital stock or thatthe repurchase be charged to the capital stock converting them into treasuryshares, in which case no resolution from the Shareholders’ Meeting shall berequired.

IV.                                 TheGeneral Ordinary Shareholders’ Meeting expressly resolves, for each fiscalyear, the maximum amount of monetary resources that may be used for therepurchase of the Company’s stock or of the credit instruments representingsaid shares, with the only limitation that the aggregate of such amount ofresources under no circumstance shall be greater than the balance of the totalnet earnings of the Company, including retained earnings.

V.                                     TheCorporation has no pending obligations derived from debt instruments recordedin the Mexican Securities Registry, and

VI.                                 Thepercentages referred thereto in Article 54 of the Mexican Securities Laware not exceeded and the requisites to keep the listing in the stock marketwhere the shares operate are met.

 

The Companyshares owned by the Company or, in its case, the treasury shares referred to inthis Article, without affecting the provisions established by the MexicanCorporate Law, may be placed among the investor public pursuant to theapplicable legal regulations, without requiring the resolution of anyShareholders’ Meeting or of the Board of Directors

 

The Companyshares or credit instruments representing said shares owned by the Company maynot be represented, nor voted in the Shareholders’ Meeting nor any economic orcorporate rights of any kind may be exerted therefrom.

 

**ARTICLE ELEVENTH.****REQUIREMENTS FOR THE PURCHASE AND SALE OFCOMPANY’S SHARES.**The prior written approval from the Board ofDirectors of the Company as provided in this Article shall be required forany Person (as such term is defined below) that individually or jointly withany Related Party (as such term is defined below), intends to acquire commonShares (as such term is defined below), or rights over common Shares by anymeans or under any title, directly or indirectly, whether in a single event orin a set of consecutive events, regardless of the lapse of time between them,which consequence or effect be the following:

 

a) That itsshareholdings, individually or jointly with the Shares previously held, beingacquired or intended to be acquired in the future be equal or greater than 5%(five percent) of the total common Shares.

 

b) Theownership rights over common Shares, individually or jointly with any Sharespreviously held, being acquired or intended to be acquired, be equal or greaterthan 5% (five percent) of the total common Shares.

 

Such priorapproval from the Company’ Board of Directors must be obtained each time theshareholdings thresholds are intended to be exceeded as provided hereto, in apercentage equal to or greater than 5% (five percent) (and multiples thereof)of common Shares or ownership rights therefrom, except for Persons who directlyor indirectly are deemed to be Competitor (as such term is defined below) ofthe Company or of any of its Subsidiaries (as this term is defined bellow), inwhich case the Person in question must obtain the prior 

 

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approval ofthe Board of Directors for future acquisitions where a limit of 2% (twopercent) (or multiples thereof) of common Shares is intended to be exceeded.

 

For thepurposes hereof, the Person in question shall comply with the following:

 

I. Approval ofthe Board of Directors:

 

1 (one) ThePerson in question shall submit a written authorization request to the Board ofDirectors.  Such request must beindubitably delivered to the domicile of the Company and addressed to theChairman of the Board of Directors, with carbon copy to the Secretary and totheir respective Alternates of the same Board. The mentioned application shall set forth and enumerate the following:

 

(a)           thenumber, class or series of Shares that the Person in question or any Related Partythereto (i) owns or co-owns, whether directly or indirectly through anyPerson or through any relative by consanguinity, affinity or adoption, withinthe fifth degree or spouse under civil or common law marriage or by means of anintermediary, or (ii) in respect to which such Person has, Shares orenjoys any right, be it as a result of an agreement or by any other cause.

 

(b)           thenumber, class or series of Shares which the Person in question or any RelatedParty thereto intends to acquire, be it directly or through any Person in whichit should have an interest or participation, either in its capital stock or inthe direction, management or operation or otherwise, through any relative byconsanguinity, affinity or adoption, within the fifth degree or spouse undercivil or common law marriage or by means of an intermediary.

 

(c)           thenumber and class or series of Shares in respect to which such Person intends toacquire or share any right, be it as a result of an agreement or by any otherlegal means.

 

(d)           (i) theShares percentage referred to in the previous paragraph (a) represent thetotal Shares issued by the Company; (ii) the Shares percentage referred toin the previous paragraph (a) represent the class or series pertaining tothe same; (iii) the Shares percentage referred to in the previousparagraphs (b) and (c) represent the total Shares issued by theCompany, and; (iv) the Shares percentage referred to in the previousparagraphs (b) and (c) represent the class or series pertaining tothe same.

 

(e)           theidentity and nationality of the Person or group of Persons intending to acquirethe Shares, provided that if any of such Persons is a corporate entity, trustor its equivalent or any other means, enterprise, corporation or form ofeconomic or commercial association, the identity and nationality of thepartners or shareholders, settlors and trustees or their equivalent, members ofthe technical committee or their equivalent, successors, members or limitedpartners must also be identified, including the nationality and identity of thePerson or Persons that Control (as such term is defined below) directly orindirectly such corporate entity, trust or its equivalent or any other means,enterprise, corporation or form of economic or commercial association thereto,until the Persons maintaining any right, interest or participation of anynature with such corporate entity, trust or any other equivalent or any othermeans, entity, corporation or form of economic or commercial association can beidentified, including the documents evidencing economic solvency and goodstanding of such Person or Group of Persons.

 

 

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(f)            thereasons and purposes behind such acquisition of Shares, in particularmentioning if the purpose is to acquire directly or indirectly (i) additionalShares to those referred in the approval application, (ii) a SignificantParticipation (as this term is defined bellow) or; (iii) the Control ofthe Company.

 

(g)           ifsuch Person is, directly or indirectly, a Competitor of the Company or of anyother Subsidiary or Affiliate (as these terms are defined bellow) thereof andif such Person has the authority to legally acquire the Shares pursuant to theterms of these Corporate Bylaws and the applicable legal regulations.  Furthermore, the application must indicate ifthe Person intending to acquire the Shares has any relative by consanguinity,affinity or adoption, within the fifth degree or spouse under civil or commonlaw marriage that may be considered a Competitor of the Company or of anySubsidiary or Affiliate thereof or has an economic relationship with aCompetitor or any interest or participation, be it in the capital stock or inthe direction, management or operation of a Competitor, directly or through anyPerson or any relative by consanguinity, affinity or adoption, within the fifthdegree or spouse under civil or common law marriage.

 

(h)           theorigin of the funds intended to be used to pay the price of the Shares, subjectmatter of the application. In the event, the funds come from any financing arrangement, the identity andnationality of the one providing such funds should be specified and a documentissued by such funding Person accrediting and explaining the conditions of thefinancing arrangement should be delivered along with the authorization request.

 

(i)            ifthe Person in question is a part of any economic group formed by one or moreRelated Parties which as such, in a single event or in a set of consecutiveevents, intends to acquire Shares or rights over the same or, if applicable, ifsuch economic group is the owner of Shares or of rights over the same.

 

(j)            ifthe Person in question has received resources as a loan or for any otherconcept, from a Related Party or if such Person has provided funds as a loan orunder any other capacity to a Related Party for the purpose of paying the priceof the Shares.

 

(k)           theidentity and nationality of the financial institution that would act as broker,assuming that the  relevant transactionis to be carried through tender offer.

 

(l)            theaddress for receiving notices of the petitioner.

 

2 (two).  Within the 10 (ten) business days, followingthe date in which the request for authorization, referred to in the abovementioned section 1 (one), had been received, the Chairman or Secretary, or inabsence of the latter, his Alternate, shall convene the Board of Directors fora meeting to discuss and resolve the aforementioned authorization request.   For the purposes herein, the notices for themeetings of the Board of Directors shall be made in writing and they should bedelivered by the Chairman or Secretary, or in absence of the latter by hisalternate, by certified mail, private courier service, telegram or fax to eachone of the Proprietary Directors and their Alternates, at least 45 (forty five)days prior to the date set forth for  themeeting, to their domiciles or to the addresses given in writing by theDirectors for all matters referred to in this Article of the CorporateBylaws. The Alternate Directors may only discuss and vote in cases where theProprietary Directors are not present in the meeting 

 

 

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convenedupon.  The notices must contain the time,date and place of the meeting and the relevant agenda.

 

For thepurposes of this Article of the Corporate Bylaws, the resolutions takenwithout a meeting of the Board of Directors shall not be valid.

 

3 (three) Inorder for the Board to validly hold a meeting, at least the majority of theDirectors or their respective alternates shall be in attendance and itsdecision and resolutions, to be valid, shall be adopted by the favorable voteof the majority of the Directors in attendance. The Chairman of the Board shallhave a deciding vote, in the event of a tie.

 

The Meetingsof the Board of Directors convened to resolve over the above-mentionedauthorization request shall consider and adopt resolutions solely with regardsto the authorization request referred to in this section 1 (one).

 

4 (four). TheBoard of Directors shall resolve over each submitted request for authorizationwithin  60 (sixty) calendar daysfollowing the submission date.

 

The Board ofDirectors may request from the Person intending to acquire the Shares inquestion, the additional documents or clarifications deemed necessary to decideover the submitted authorization request, including the documents evidencingthe veracity of the information referred to in paragraphs “a” to “l” of theabove section 1 (one) of this Article. Assuming that the Board of Directorsrequests the abovementioned clarification or documents, the 60 (sixty) day termreferred to in the first paragraph of this section 4 (four) shall be consideredas of the date the aforementioned Person furnishes or delivers, as the case maybe, the documents or clarification requested by the Board of Directors throughits Chairman, Secretary or his or her alternate.

 

Assuming thatjointly, coordinated or by agreement, one or more Persons are intending toacquire Shares, regardless of the legal act originating the same, shall bedeemed as a single Person for the purposes of this Article of theCorporate Bylaws.

 

In the samemanner, for the purposes of this Article, it shall be understood as Sharesbelonging to the same Person, the Shares held by a Person plus the Shares: (i) heldby any consanguinity, affinity or adoption relative, within the fifth degree,or by any spouse under a civil or common law marriage of the Person holdingsuch Shares, or; (ii) Shares held by an entity, trust or its equivalent,means, enterprise or economic or commercial association, whenever such entity,trust or its equivalent, means, enterprise or economic or commercialassociation is Controlled by the abovementioned Person or; (iii)  Sharesheld by any Related Party (related) to such Person.

 

In theassessment of the authorization request referred to in this Article, the Boardof Directors shall take into account those factors deemed appropriate,considering the interests of the Company and of its shareholders, includingissues of financial nature, market, business and the moral and economicstandards of the potential buyers, whether the intended transaction representsa conflict of interests or not, if it leads to a change of Control of theCompany  or to an acquisition of aSignificant Participation of the common Shares, if the reports and/orauthorizations requests, referred to in this Article, were submitted on time,among others factors.

 

 

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The Board ofDirectors may deny the authorization request referred to in this Article, amongother reasons in connection to with the items provided by the precedingparagraph, for the following reasons:

 
| (a) | Due to  petitioner lack of economic solvency or good standing;                                                                                                                                                              |
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| (b) | When  financing is required to carry out the requested transaction;                                                                                                                                                         |
| (c) | When it  refers to a Competitor of the Company or of its Subsidiaries;                                                                                                                                                      |
| (d) | When the  petitioner’s interests are contrary to the ones of the Company or of its  Shareholders;                                                                                                                      |
| (e) | Due to the  object, cause, motive or purpose of the requested acquisition;                                                                                                                                                  |
| (f) | Due to the  existence of economic, family or similar ties with other shareholders of the Company  or with competitors of the same or of its Subsidiaries;                                                                   |
| (g) | When it  entails transactions with Related Parties;                                                                                                                                                                         |
| (h) | If the funds  required to carry out the intended transaction are of unknown or doubtful  origin;                                                                                                                            |
| (i) | When the  information furnished in the authorization request or any complementary  information thereof should prove deficient, doubtful, non verifiable,  erroneous, incomplete or be imprecise or incorrect, among others; |
| (j) | When it  entails the acquisition of a Significant Participation or its purpose is a  change of Control of the Company.                                                                                                      |
| (k) | The failure  to submit the information and/or notices provided in the last paragraph of  section II of this Article.                                                                                                        |

 

The requestfor authorization shall be deemed denied if the Board Meeting has been convenedupon the terms provided hereof, but said Board Meeting was unable to convenefor any reason whatsoever.

 

5 (five). Incase the Board of Directors approves the proposed acquisition of Shares andsuch acquisition should entail the acquisition of a Significant Participationwithout such acquisition exceeding half of the common Shares, then the Personintending to acquire the relevant Shares must make a public tender offer, at aprice payable in cash, for the percentage of Shares equivalent to thepercentage of common voting Shares that said Person is intending to acquire orby 10% (ten percent) of the Shares, whichever is greater, pursuant to the termsand conditions of the Mexican Securities Law.

 

The publictender offer referred to in this section five (5) must be madesimultaneously in Mexico’s and United State’s stock markets, as long as the stockof the Company continues to be traded in said countries.

 

Effective fromthe time the public tender offer is made and until the conclusion of the same,the Company, as well as its Directors and senior officers shall refrain frommaking or closing transactions which, in detriment to the minority investors,are aimed to hinder the development of said offer.

 

Notwithstandingthe foregoing, the Board of Directors shall, within 10 (ten)  business days following the commencement ofthe public tender offer, prepare, under the advise of the Corporate GovernanceCommittee and disclose to the investor public through SEDI (ElectronicInformation Carriage and Disclosure System, as authorized to the applicableStock 

 

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Exchange bythe Mexican Banking and Securities Commission, or whichever system substitutesSEDI for this purposes), its opinion in connection with the public tenderoffer.  If the Board of Directors shouldface a situation where it may create a conflict of interest or when more thanone offer is made at conditions not directly comparable to those contained inthe opinion, then the opinion may be coupled with another opinion issued by anindependent expert retained for such purposes by the Company at the request ofthe Corporate Governance Committee.

 

Directors whomay also be shareholders of the Company shall disclose to Bolsa de Valores,S.A. de C.V. (Mexican Stock Exchange), to be circulated through SEDI network(Electronic Information Carriage and Disclosure System, as authorized to theapplicable Stock Exchange by the Mexican Banking and Securities Commission, orwhichever system substitutes SEDI for this purposes), not later than thebeginning of the last business day of the public tender offer period, whichdecision they will take as to their Shares in connection with the public tenderoffer.

 

Theshareholders, in the event of any public tender offer, shall have the right tohear more competitive offers.

 

6 (six). Anapproval of the Board of Directors will not be necessary for any Person thatwishes to acquire, directly or indirectly, a participation of more than 50%(fifty percent) of the common Shares or the Control of the Company, in whichcase, the Person shall make a public tender offer for 100% (one hundredpercent) minus 1 (one) of the common Shares issued by the Company, according tothe provisions of the Mexican Securities Law and other applicable legalregulations. Nevertheless, if in such public tender offer, the Person makingthe tender offer is not able to acquire at least half plus 1 (one) of the totalof the Shares representing the capital stock, said Person must obtain approvalfrom the Board of Directors upon the terms provided hereto.

 

The publictender offer referred to in this section six (6) must be madesimultaneously in Mexico’s and US stock markets, as long as the stock of theCompany continues to be traded in said countries.

 

Effective fromthe time the public tender offer is made and until the conclusion of the same,the Company, as well as its Directors and senior officers shall refrain frommaking or closing transactions which, in detriment to the minority investors,are aimed to hinder the development of said offer.

 

Notwithstandingthe foregoing, the Board of Directors shall, within 10 (ten)  business days following the commencement ofthe public tender offer, prepare, under the advise of the Corporate GovernanceCommittee and disclose to the investor public through SEDI (Electronic InformationCarriage and Disclosure System, as authorized to the applicable Stock Exchangeby the Mexican Banking and Securities Commission, or whichever systemsubstitutes SEDI for this purposes), its opinion in connection with the publictender offer.  If the Board of Directorsshould face a situation where it may create a conflict of interest or when morethan one offer is made at conditions not directly comparable to those containedin the opinion, then the opinion may be coupled with another opinion issued byan independent expert retained for such purposes by the Company at the requestof the Corporate Governance Committee.

 

 

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Directors whomay also be shareholders of the Company shall disclose to Bolsa de Valores,S.A. de C.V. (Mexican Stock Exchange), to be circulated through SEDI network(Electronic Information Carriage and Disclosure System, as authorized to theapplicable Stock Exchange by the Mexican Banking and Securities Commission, orwhichever system substitutes SEDI for this purposes), not later than thebeginning of the last business day of the public tender offer period, whichdecision they will take as to their Shares in connection with the public tenderoffer.

 

Theshareholders, in the event of any public tender offer, shall have the right tohear more competitive offers.

 

7 (seven).              AnyPerson performing a  Share acquisitionapproved by the Board of Directors, shall not be registered in the Stock Ledgerof the Company but until such time when the public tender offer referred to insections five (5) and six (6) above has been concluded. Consequently,such Person shall not be able to exercise the corporate nor the economic rightscorresponding to the Shares which acquisition has been approved, but until suchtime when the tender offer has been concluded.

 

In case ofPersons who are already shareholders of the Company and therefore, areregistered in the Stock Ledger of the Company, the Share acquisition approvedby the Board of Directors shall not be registered in the Stock Ledger of theCompany but until such time when the public tender offer had been concludedand, consequently, such Persons shall not be able to exercise the corporate northe economic rights corresponding to the Shares acquired by the authorizationgiven by the Board of Directors until they are entered in the Stock Ledger.

 

II.            GeneralProvisions:

 

If the termscontained in this Article are not met, then the Person or Persons inquestion may not, directly or indirectly exercise corporate or economic rightsvested into the Shares acquired without the appropriate approval, and suchShares shall not be taken into account for the purposes of computing quorum atShareholders’ Meetings and the Company shall refrain from recording the Sharesacquired in breach of the terms established by these Bylaws in the Company’sStock Ledger referred to in the Mexican Corporate Law, and any Registry kept byany securities depository institution shall have no effect whatsoever, andthus, the certificates or listings referred to in the first paragraph of Article 290of the Mexican Securities Law shall not be proof of ownership of Shares norwill they evidence the right to attend the Shareholders’ Meetings nor will theyentitle exercise of any action whatsoever, including those of procedural nature.

 

The Personsthat obtained the approval of the Board of Directors to acquire Shares asprovided under this Article, shall be bound to inform of such situation to saidcollegiate body, through a written notice addressed and delivered to the sameunder the terms set forth in the first paragraph of section one (1) ofthis Article within 5 (five) calendar days following the date theauthorized acts and operations are carried out.

 

The approvalsgranted by the Board of Directors pursuant to this Article shall cease tobe effective automatically and without the need of any statement if theapproved transactions are 

 

 

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not carriedout within a maximum term of sixty (60) calendar-days following the notice of thecorresponding approval to the interested party, unless the Board of Directors,prior petition of said person, extends the aforementioned term.

 

Holders ofShares reaching (or in its case, exceeding) the percentages referred hereunder,shall provide written notice of such circumstance to the Company, which noticeshall be addressed and delivered under the terms set forth in the firstparagraph of section one (1) of this Article, within a term of five (5) businessdays after obtaining, reaching or exceeding Ownership: (i) noncompetitors: each 2% (two percent) of common Shares; (ii) Competitors:each 1% (one percent) of common Shares.

 

III.           Exceptions:

 

The provisionsof this Article of the Corporate Bylaws shall not be applicable to:

 

(a)           acquisitionsor transfers of Shares made by succession, either with or without will, or

 

(b)           acquisitionsof Shares by: (i) the Person who directly or indirectly has the authorityor possibility of appointing the majority of the Directors of the Company’sBoard of Directors; (ii) any company, trust or similar form of venture,means, entity, corporation or economic or mercantile association, which may beunder the Control of the Person referred to in section (i) above; (iii) theheirs of the Person referred to in section (i) above; (iv) the Personreferred to in section (i) above when such Person should berepurchasing  the Shares of anycorporation, trust or similar form of venture, means, entity, corporation oreconomic or mercantile association referred to in section (ii) above, and;(v) the Company or trusts created by the Company.

 

(c) SuchPerson(s) that as of December 4th (fourth), 2003 (twothousand three) hold(s), directly or indirectly, 20% (twenty percent) or moreof the Shares representing the Company’s capital stock.

 

(d) Anyother exception contained in the Mexican Securities Law and other applicablelegal regulations.

 

IV.           Definitions:

 

For thepurposes of the foregoing Article, the terms indicated below shall have themeanings assigned thereto:

 

“Shares”and/or “common Shares” means the shares of stock representative of the capitalstock of the Company, of any class or series or any certificate, security orinstrument issued under such shares or which otherwise confer rights upon suchshares or which may be convertible into such shares, and specifically includingordinary participation certificates (CPO’s) representing shares of stock of theCompany.

 

“Affiliate”means any Person Controlling, under Control of or under common Control of anyPerson.

 

 

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“Competitor”means any Person devoted, directly or indirectly to (i) the business ofproduction and/or marketing of corn or wheat flour, and/or (ii) any otheractivity carried by the Company or by any of its Subsidiaries or Affiliates.

 

“Control”,“Controlling” or “Controlled” means the capacity of a person or group ofpersons to carry out any of the following activities: (a) to directly orindirectly impose decisions in General Shareholders’ Meetings, Partners’Meetings or any equivalent entities, or appoint destitute the majority of theDirectors, managers, or their equivalent, of a corporate entity; (b) tohold the rights that directly or indirectly allow voting regarding more than50% (fifty percent) of the capital stock of a corporate entity; (c) todirectly or indirectly direct the management strategies or main policies of acorporate entity, whether this be through the ownership of securities, bycontract or by any other means.

 

“SignificantParticipation” means the direct or indirect ownership or holding of 30% (thirtypercent) or more of the common voting Shares.

 

“Person” meansany natural person, corporate entity, trust or similar form of venture,vehicle, entity, corporation or economic or commercial association or anySubsidiaries or Affiliates of any of the former or, as determined by the Boardof Directors, any group of Persons who may be acting jointly, by an arrangementor in a coordinated manner under the terms of this Article.

 

“RelatedParty” means the ones that regarding the Company, fall in any one of thefollowing assumptions: (a) Controlling persons having a significantinfluence in a corporate entity belonging to the corporate group or consortiumto which the issuer belongs, as well as the Directors or managers and thesenior officers of the companies comprising said group or consortium; (b) personswith management authority in a corporate entity that is a part of a corporategroup or consortium to which the issuer belongs; (c) the spouse,concubine, concubinary and blood and non-blood related persons up to the fourthdegree or by affinity up to the third degree with individuals that fall in anyof the assumptions indicated in the aforementioned sections (a) and (b),as well as partners and co-owners keeping business relationship with theindividuals mentioned in said sections; (d) corporate entities that arepart of a corporate group or consortium to which the issuer belongs; (e) thecorporate entities over which any one of the persons referred to in theforegoing sections (a) to (c) have control or significant influence.

 

“Subsidiary”means any company in respect to which a Person should be the owner of themajority of the shares of stock representative of its capital stock or inrespect to which a Person should have the right to appoint the majority of theDirectors of its Board of Directors or otherwise the Sole Director.

 

The foregoingcovenant shall be filed with the Public Registry of Commerce of the corporatedomicile of the Company and shall be inserted accordingly in the certificatesof the shares of stock of the Company, so that third parties may be warned ofthe foregoing provisions.

 

**ARTICLE TWELFTH.PENALTIES.**As provided for in Article 2117  of the Código Civil Federal (“FederalCivil Code”), any Person acquiring Shares in violation to the terms of Article Eleventhof these Corporate Bylaws, shall be obligated to pay to the Company, aspenalty, an amount equal to the Market Value of the entirety of the Shares suchparty had purchased 

 

 

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withoutobtaining the approval referred to in said Article of these CorporateBylaws or the Market Value of the shares representing5% (five percent) of the capital stock, whichever is greater.  In the event of gratuitous transfers ofShares made in violation to the terms of Article Eleventh hereof, theamount payable as penalty shall be of an amount equal to the Market Value ofthe Shares subject matter of the transfer or the Market Value of sharesrepresenting 5% (five percent) of the capital stock, whichever is greater.

 

The term“Market Value” means and/or be understood as the quoted value on closing ofoperations of the Mexican Stock Exchange on the day of the transaction in whichthe percentage of shares requiring approval according to said Article hadbeen exceeded.

 

# **MANAGEMENTAND DIRECTION**

#  

**ARTICLE THIRTEENTH. THEMANAGEMENT OF THE COMPANY.** The Company’sManagement shall be entrusted to a Board of Directors and a Chief ExecutiveOfficer, whom shall have the authorities and attributions established in theseBylaws and the applicable legal regulations.

 

**ARTICLE FOURTEENTH.INTEGRATION OF THE BOARD OF DIRECTORS**. TheBoard of Directors shall be composed of at least 5 (five) and not more than 21(twenty one) Proprietary Directors, as determined by the Shareholders’ Meeting,of which at least 25% of the members shall be Independent Directors. EachProprietary Director will have an appointed corresponding Alternate, in theunderstanding that the Alternate Directors of such Proprietary IndependentDirectors must also meet the same requirements. In the same manner, the Boardof Directors or the General Shareholders’ Meeting shall appoint a Secretarythat will not be a part of said corporate entity who shall be subject to theobligations and responsibilities imposed to said officers by applicable legalregulations.

 

Directorsshall remain in office for a year with a possibility of reelection. Directorsshall remain in office even though their term for which they were designatedhad concluded or due to their resignation, for up to 30 (thirty) calendar days,if no designation of their substitute has been made, or when the substitute hasnot taken office, without being subject to the dispositions of Article 154of the Mexican Corporate Law. In the absence of any of the Directors, andprovided no Alternate Director has been designated, the Board of Directors maydesignate Provisional Directors without the intervention of the Shareholders’Meeting, whom shall ratify the referred appointment or designate otheralternate Directors in the Shareholders Meeting following such event.

 

Anyone who hasserved as external auditor of the Company or of any of the corporate entitiesintegrating the business group or consortium to which the Company belongs, maynot be Director of the Company during the 12 (twelve) months immediatelypresiding the date of their appointment. In the same manner, such persons whosepositions as Directors had been revoked may not serve as Directors of the Companyduring the 12 (twelve month) period following the date their positions wererevoked.

 

 

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IndependentDirectors shall be those Directors that comply with the independencerequirements established by the Mexican Securities Law and other applicablelegal regulations for the Company.

 

TheGeneral Shareholders’ Meeting designating or ratifying the Directors, or in itscase, the one informing or disclosing such designations or ratifications shallqualify the independence of Independent Directors whom shall be elected bytheir experience, capacity and professional prestige, considering also that accordingto their characteristics they are able to perform their duties without anyconflict of interest and without being subject to personal, patrimonial oreconomic interests.

 

IndependentDirectors that during their office term cease to have such character shouldinform the Board of Directors not later than the date following the BoardMeeting carried out after said requirements cease to exist.

 

**ARTICLEFIFTEENTH. COMPENSATION OF DIRECTORS.**Upon taking office,****the Members ofthe Board of Directors shall receive the compensation indicated by the GeneralShareholders’ Meeting. In the same manner, the Meeting may set forth additionalcompensation for the members of the Committees of the Board of Directors.

 

**ARTICLESIXTEENTH. CHAIRMAN OF THE BOARD OF DIRECTORS**. The General Shareholders’ Meeting, upondesignating the members of the Board of Directors or the Board itself in itsfirst meeting immediately following said Shareholders’ Meeting, shall designateone of its members to act as Chairman.

 

TheChairman of the Board of Directors shall be, due to such designation, therepresentative of said Board and shall have authority to execute theresolutions of the Board of Directors, without the need of a special resolutionof any sort. To exert his authority as Chairman of the Board of Directors, heshall have the powers of attorney enumerated in sections I to V of Article Eighteenthof these Corporate Bylaws.

 

Inthe same manner, the Chairman of the Board of Directors shall propose saidBoard or said Shareholders’ Meeting, the members that shall integrate theCorporate Governance and the Audit Committees, as it corresponds.

 

**ARTICLESEVENTEENTH. MEETINGS OF THE BOARD OF DIRECTORS**. The Board of Directors must meet at least 4(four) times during each fiscal year.

 

TheChairman of the Board of Directors or the Chairman of the Corporate Governanceand Audit Committees, as well as 25% (twenty five percent) of the Company’sDirectors may convene a Board Meeting and insert in the agenda the issues theydeem convenient.

 

The notices for the Meetings of the Board ofDirectors should be sent to Directors by email, regular mail, fax, or by anyother communication means, to the last address that said Directors had informedto the Company, at least 5 (five) working days prior to the date of theMeeting.

 

 

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TheCompany’s External Auditor may be convened to the Meetings of the Board ofDirectors, to be heard but without voting rights, refraining to attend suchissues relevant to the agenda where auditor has a conflict of interest or thatmay compromise his independence

 

Inthe same manner, the Chief Executive Officer and any other Company’s seniorofficers may be convened to the Meetings of the Board of Directors, but withoutvoting rights.

 

Thevalidity of the Meetings of the Board of Directors requires the attendance ofthe majority of its members.  Themeetings of the Board of Directors shall be presided by its Chairman. If theChairman is not present at the meeting, it shall be presided by itscorresponding alternate and in absence of both, by the Board member designatedby the majority of the remaining members of this Board.  In the same manner, the person that has beendesignated as such by the Board of Directors or by the Shareholders’ Meetingshall act as Secretary. If absent, he shall be substituted by the AlternateSecretary and in the absence of both, by the person designated therein by themajority of votes of the Directors.

 

TheBoard of Directors shall adopt its resolutions through the majority of thevotes of the attending members. The Chairman of the Board shall have the tiebreaking vote in case of a tie.  Theminutes of each meeting of the Board of Directors shall be registered in therelevant Book and shall be signed by the Chairman and by the Secretary.

 

Resolutionstaken outside the meeting of the Board of Directors by unanimous vote of itsmembers shall have, for all legal effects, the same validity as if they wereadopted in a Board meeting, provided that they are confirmed in writing.

 

Inthe same manner, any Director may postpone a Board meeting when said Directorhad not been convened for such meeting or if the notice was not made in timeor, in its case, if the Director did not receive the information delivered tothe other Directors.  Said postponementshall be for up to 3 (three) calendar days, being the Board of Directors beingable to meet without the need of a new notice, provided the deficiency has beenremedied.

 

**ARTICLEEIGHTEENTH.  AUTHORITIES OF THE BOARD OFDIRECTORS.** The Board of Directors shall have all theauthority to manage and administrate the Company, pursuant to the provisions ofthese Corporate Bylaws and of the applicable legal regulations, in the samemanner, the Board may establish the measures, procedures and other actionsdeemed necessary or convenient in order to comply with the legal dispositionsbinding the Company, being able to perform all actions that directly orindirectly are related to the corporate object, in which case the Board shallhave:

 

I. GENERAL POWER FOR COLLECTION ANDLITIGATION, with all the general and special powers requiring special poweror special clause, without any limitation whatsoever, with the ampleness of thefirst paragraph of Article 2554 and of Article 2587 of the FederalCivil Code and the corresponding Articles in the Civil Codes of all States ofthe Mexican Republic, including, but not limited to the authority to promoteand dismiss any legal action including the “amparo” proceeding, to settle orcompromise or subject to any arbitration proceedings the Company’s rights andlegal proceeding, accept reductions of amounts due and grant additional timefor compliance, intervene as a bidder in auctions, formulate and presentquestionnaires, to file complaints and accusations for any felony directly orindirectly committed in detriment of the Company, as well as granting pardons,to recuse judges, 

 

 

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magistratesor any other public servant, jurisdictional body or Labor Board in individualor collective matters, and in general, to represent the Company in any and alladministrative or judicial disputes before any and all authorities and beforeany individuals.

 

II.-GENERAL POWER OF ATTORNEY FOR ACTS OF ADMINISTRATION, being empowered toenter into any kind of agreements, contracts or any other legal acts, whethercivil, mercantile, administrative or of any other nature, pursuant to the termsof the second paragraph of Article 2554 and Article 2587 of theFederal Civil Code and the correlative Articles in the Civil Codes of theStates of the Mexican Republic.

 

III.-GUARANTEE AND SURETYSHIP POWER OF ATTORNEY, pursuant to the terms ofArticles 9 and 85 of the General Law of Negotiable Instruments and CreditOperations, being empowered to grant, accept, draw, subscribe, issue, endorse,guarantee and negotiate in any manner, all kinds of contracts and creditinstruments on behalf of the Company.

 

IV.-GENERAL POWER OF ATTORNEY FOR ACTS OF OWNERSHIP, being empowered to sell,mortgage, pledge, or put in a in trust, and in general dispose of and encumberin any manner and under any legal title, the assets of the Company, both thosethat constitute Fixed Assets as well as the Current Assets, with all legalauthorities of ownership pursuant to the terms of the third paragraph of Article 2554of the Federal Civil Code and the correlative Articles in the Civil Codes ofthe States of the Mexican Republic.

 

V.-Regarding the aforementioned Powers, the Board of Directors shall have theright to delegate them and grant General or Special Powers of Attorney and torevoke those previously granted.

 

**ARTICLENINETEENTH.  DUTIES OF THE BOARD OFDIRECTORS.** The Board ofDirectors shall have the following responsibilities:

 

I.To set general strategies for the conduction of the business of the Company andthe ones of the corporate entities controlled by said Company.

 

II.To oversee the performance and conduction of business of the Company and of thecorporate entities controlled by said Company, considering the relevance thatthese corporate entities have in the Company’s legal, administrative andfinancial situation, as the performance of the senior officers.

 

III.To approve, after obtaining the opinion of the corresponding Committee:

 

a)            the policies and guidelines for the use orenjoyment of the Company’s assets and of the corporate entities controlled bythe same, by any related party;

b)            every individual transaction entered into bythe Company with a related party, or corporate entities controlled by saidCompany.

Noapproval from the Board of Directors shall be required for any of thetransactions indicated bellow, provided that they conform to the policies andguidelines approved by the Board of Directors to that effect:

 

1.     Transactions which amount are not relevant for the Company or for thecorporate entities controlled by the same.

 

 

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2.     Transactions executed between the Company and the corporate entitiescontrolled by the same or those where the Company has a significant influenceor between any of these corporate entities, provided that:

 

(i)            they fall under their ordinary or habitualcourse of business

(ii)           they are deemed as done within price market orsupported by assessments made by specialized external agents.

 

3.     Transactions carried out with employees provided these are under thesame conditions as with any other client or as a result from labor benefits ofgeneral nature.

 

c)            Transactions executed either simultaneously orconsecutively, that due to their characteristics may be considered as one soletransaction intended to be performed by the Company or by the corporateentities controlled by the same within the term of a fiscal year, when they areunusual or non-habitual or that its amount represent, based upon figurescorresponding to the previous approved trimester, on any of the followingassumptions:

 

1.     The purchase or sale of property which value is greater than or equal to5% (five percent) of the Company’s consolidated assets.

2.     The granting of warranties or taking on debt for an amount greater thanor equal to 5% (five percent) of the Company’s consolidated assets.

 

Debtsecurity or banking instruments investments are excluded therefrom, providedthey are carried out pursuant to the policies approved by the Board ofDirectors for said effect.

 

d)            Appointment, election, and in its case,destitution of the Chief Executive Officer of the Company and his integralcompensation, as the designation of integral compensation policies for allother senior officers.

e)            Policies to grant muttums, loans or any otherkind of credits or guaranties to any related party.

f)             Dispensations granted to allow Directors,senior officers or persons with managing power to take business opportunitiesfavorable to them or to any third parties, that correspond to the Company or tothe corporate entities controlled by the same or over which the Company has asignificant influence.

g)            Internal control and internal audit guidelinesof the Company and of the corporate entities controlled by the same.

h)            Company’s accounting policies conforming to theaccounting principles accepted or issued by the Mexican Banking and SecuritiesCommission through general dispositions.

i)             Company’s financial statements.

j)             The hiring of the firm providing external auditservices and, in its case, any services additional or supplemental to theexternal audit.

 

When the determinations of theBoard of Directors are not according with the opinions furnished by thecorresponding Committee, said Committee should instruct the Chief ExecutiveOfficer to reveal such circumstance to the investor public through the stockmarket where the Company’s shares or where the credit instruments representingsaid shares are traded, conforming to the terms and conditions established bythe internal regulations of said stock market.

 

 

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IV. To submit before the GeneralShareholders’ Meeting held at the closing of the fiscal year:

 

a)            The reports referred to in Article 43 ofthe Mexican Securities Law.

b)            The report prepared by the Chief ExecutiveOfficer pursuant to the provisions of Section XI of Article 44 of theaforementioned Law, along with the opinion of the external auditor.

c)            The opinion issued by the Board of Directorsover the contents of the Chief Executive Officer’s report referred to in theprevious section.

d)            The report referred to in section b) of Article 172of the Mexican Corporate Law containing the main policies, accounting principlesand information criteria, considered to prepare the financial report.

e)            The report regarding any transaction andactivity where the Company had intervened, pursuant to the provisions of theMexican Securities Law.

 

V. To follow up the main risks encounteredby the Company and by the corporate entities controlled by the same, identifiedby the information submitted by the Committees, the Chief Executive Officer andthe firm providing the external auditing services, as well as the accountingsystems, internal control, and internal auditing, registration, files orinformation, both regarding the Company as the corporate entities controlled bythe same, which may be carried out through the Committee exercising suchauditing duties.

 

VI. To approve the information andcommunication policies with shareholders and the market, as well as with theDirectors and senior officers to comply with the provisions hereof.

 

VII. To determine the relevant actions toremedy any known irregularity and to implement the corresponding correctivemeasures.

 

VIII. To establish the terms and conditions tobe followed by the Chief Executive Officer while exerting any authority derivedfrom the power of attorney for acts of ownership.

 

IX. To instruct the Chief Executive Officer,to reveal to the investor public, any relevant information when known.

 

X.   Any other responsibilities set forth by theMexican Securities Law, by any other applicable legal regulations, or providedby these Bylaws.

 

**ARTICLETWENTIETH. DUTIES OF THE DIRECTORS**. The members of the Board of Directors, and in its case, the Secretaryof the Board of Directors, when exerting their duties and authorities, shallcomply with the duty of diligence and loyalty before the Company and thecorporate entities controlled by said Company or those where the Company has asignificant influence according to the terms of the Mexican Securities Law.

 

**ARTICLE TWENTY-FIRST. LIABILITIESOF THE DIRECTORS.**Members of the Board of Directors failing to comply with duty of diligence andloyalty, and/or those incurring in illegal acts, actions or omissions, pursuantto the terms of the Mexican Securities Law, shall be jointly liable for anydamages caused to the Company and to the corporate entities controlled by saidCompany or to those where the Company has a significant influence. Directorsfound guilty of incurring in illegal acts, actions or omissions, and/or thosewho fail to comply with loyalty duties pursuant to the terms of the MexicanSecurities Law shall be removed from their offices.

 

 

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Liabilityfor damages caused to the Company or to the corporate entities controlled bysaid Company or to those companies where the Company has a significantinfluence incurred by the members of the Board of Directors caused by breachesto their duty of diligence may be limited by the terms and conditionsdetermined by the General Shareholders’ Meeting unless arising from willfulmisconduct, bad faith or illegal acts according to applicable legalregulations.

 

Inthe same manner, the Company may settle payment for indemnifications and maypurchase, in favor of the members of the Board, insurance policies, suretybonds or bails covering the indemnification amount for damages caused by theirperformance to the Company or to the corporate entities controlled by saidCompany or to those where the Company has a significant influence, exceptionmade for those acts arising from willful misconduct or made in bad faith, orthat are illegal according to the corresponding applicable legal regulations,in which case, it shall be not legal to stipulate said indemnifications orcontracting insurance policies, surety bonds or bail bonds payable to them.

 

TheCompany, however, may never agree to any benefits or exemption clauses thatlimit, release from, substitute or compensate the obligations for the liabilityderived from the breach of their duty of loyalty or illegal acts, actions oromissions, nor shall contract in favor of any person whatsoever, insurancepolicies, surety bonds or bails covering the indemnification amount for anydamages caused thereof.

 

Toguarantee their performance, and only upon request of the General Shareholders’Meeting, proprietary and alternate Directors, members of the Audit Committeeand members of the Corporate Governance Committee shall deposit in the treasuryof the Company the amount in Mexican currency determined by said Meeting orthey shall contract a surety bond for said amount, payable to the Company whentaking office. The deposit or bond may not be withdrawn until the performanceof the relevant Director or Directors has been approved by the GeneralShareholders’ Meeting of the Company. In absence of the express indication fromthe General Shareholders’ Meeting, it shall be understood that the Meeting hasreleased the board members of the Company from guaranteeing their performancetherein.

 

**ARTICLETWENTY-SECOND. CIVIL LIABILITY SUIT.**  Liability derived from the actsreferred to in Articles Twenty-First and Twenty-Eighth hereof shall be,exclusively, in favor of the Company or in favor of the corporate entitiescontrolled by said Company or in favor of those companies where the Company hasa significant influence enduring the patrimonial damage.  The liability suit may be exerted: (i) bythe Company, or (ii) by the Company’s shareholders that jointly orindividually are holders of 5% (five percent) or more of the sharesrepresenting the capital stock of the Company.

 

Plaintiffmay settle by trial, the indemnity amount for damages, provided, however,plaintiff previously submits the terms and conditions of the correspondingsettlement to be approved by the Company’s Board of Directors.  Lack of said formality shall cause relativenullity.

 

The exertion of the suits, referred to in this Article shallnot be bound to the compliance of the requisites established in Articles 161and 163 of the Mexican Corporate Law. But said suit should comprise the total amount of liabilities in favorof the Company or in favor of the

 

 

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corporateentities controlled by said Company or in favor of those companies where theCompany has a significant influence and not only plaintiffs’ personalinterests.

 

**ARTICLETWENTY-THIRD. LIABILITY EXEMPTIONS.**Without affecting the provisions of the previous Article Twenty-Second,Directors shall not jointly or individually incur in any liability for damagescaused to the Company or to corporate entities controlled by the Company or tothose companies where the Company has significant influence, derived from thesuits exerted by the same, nor over the decisions adopted by them when, whileacting in good faith, any of the following liability exemptions occur:

 

I.  While complying with the provisions that theMexican Securities Law or these Bylaws establish to approve the issues to beresolved by the Board of Directors or in its case by the Committees to whichthey belong.

 

II.While adopting resolutions or voting in the Board meetings or, in its case, inthe meetings of the Committees to which they belong, based upon the informationfurnished by the senior officers, by the corporate entity rendering theexternal audit services or the independent experts, whose capacity andcredibility imply no reasonable doubt.

 

III.When, to the best of their ability, they have chosen the best alternative orwhen negative patrimonial effects have not been foreseeable, in both cases,considering the information available at the moment;

 

IV.While following the resolutions of the Shareholders’ Meeting as long as theyare not in violation of applicable legal regulations.

 

**ARTICLETWENTY-FOURTH. COMMITTEES OF THE BOARD OF DIRECTORS.**  For theperformance of their duties the Board of Directors, shall be assisted by anAudit Committee and by a Corporate Governance Committee.  Said Committees shall be exclusivelyintegrated by Independent Directors and by a minimum of 3 (three) members,designated by the Board of Directors proposed by the Chairman of the Board ofDirectors.

 

Notwithstandingthe foregoing, the Chairman of said Committees shall be exclusively designatedand/or removed from office by the General Shareholders’ Meeting and they maynot preside the Company’s Board of Directors. Independent Board Members designated to integrate any of theaforementioned Committees may be, in turn, designated to some other Company’sCommittee. In the same manner, the Board of Directors may create otherCommittees different from the aforementioned ones to care for and/or follow-upspecific issues for the establishment of policies or for other specifiedpurposes granting said Committees with the authorities that the Board ofDirectors deems convenient. The Company may provide the necessary funds for theperformance of the tasks of each Committee.

 

Incase the minimum number of members of the Audit Committee are not present, forany reason, and the Board of Directors has not appointed provisional Directors,any shareholder may request from the Chairman of the Board of Directors toconvene a General Shareholders’ Meeting to make the corresponding designationspursuant to the terms established by the Mexican Securities Law.

 

**ARTICLE TWENTY-FIFTH.  MEETINGS OF THE CORPORATE GOVERNANCE ANDAUDIT COMMITTEES. **The Audit and the Corporate GovernanceCommittees should meet as many times as it is necessary to comply with theobligations and authorities indicated in these Bylaws and in the applicablelegal regulations.

 

 

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TheChairman of the Board of Directors, any of the members of the CorporateGovernance and Audit Committees, the Secretary of the Board of Directors, theSecretary of any of these Committees the Chief Executive Officer, as well as25% (twenty five percent) of the Directors of the Company, may convene ameeting of any of the Corporate Governance and Audit Committees and insert inthe agenda any issues they deem pertinent.

 

Thenotices for the meetings of the Corporate Governance and Audit Committeesshould be sent to the Directors integrating the same, by e-mail, regular mail,fax, or by any other communication means, to the last address registered by thesame in the Company, at least 5 (five) working days prior to the date of themeeting. The Company’s External Auditor, Chief Executive Officer and othersenior officers and employees of the Company may be invited thereto.

 

Themeetings of the Committees shall only be valid with the attendance of themajority of its members. In the same manner, their resolutions shall be takenby the majority of the attending members.

 

Theresolutions unanimously adopted by the members of any Committee without ameeting shall have, for all legal effects, the same authority as if they hadbeen adopted in a meeting, provided they are confirmed in writing. The minutesof each meeting of the Committees shall be recorded in the relevant Book andthey shall be signed by the Chairman and the Secretary.

 

**ARTICLETWENTY-SIXTH. SURVEILLANCE OF THE COMPANY.**The Board of Directors, through the CorporateGovernance Committee and the Audit Committee as well as through the firmperforming the external audit of the Company, shall be in charge of thesurveillance of the Company and of the corporate entities controlled by thesame, considering the influence the latter have in the, legal, administrativeand financial situation of the first one.

 

Additionallyto the powers of attorney, duties and liabilities indicated in the applicablelegal regulations, the Corporate Governance Committee and the Audit Committeeshall be in charge of developing the following activities, as it maycorrespond:

 

I.The Corporate Governance Committee shall:

 

a)render an opinion to the Board of Directors over the issues corresponding tosaid Committee, pursuant to the Mexican Securities Law;

 

b)request the opinion of independent experts, when deemed convenient, for theadequate performance of their duties or as required by law;

 

c)convene shareholders meetings and include issues they deem pertinent in theagenda thereof;

 

d)support the Board of Directors when making the annual reports of thecorresponding fiscal year to be submitted to the General Shareholders’ Meeting.

 

e) any other activity established for theCompany by the Mexican Securities Law and other legal applicable regulations orprovided by these Bylaws.

 

 

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II.The Audit Committee shall:

 

a)render an opinion to the Board of Directors over the issues corresponding tosaid Committee, pursuant to the Mexican Securities Law;

 

b)assess the performance of the firm providing the external audit services aswell as analyze the opinions, reports or documents made and signed by theexternal auditor. For that effect, the Committee may require the attendance ofthe mentioned auditor when deemed convenient without affecting auditor’sobligation to meet with said Committee at least once a year;

 

c)discuss the financial statements of the Company with the persons responsiblefor making and revising the same, and based upon said financial statements,recommend its approval to the Board of Directors;

 

d)inform the Board of Directors of the condition and status of the internalcontrols and internal auditing systems of the Company or of the corporateentities controlled by the Company, including any irregularities detectedtherein;

 

e)prepare the opinion of the report rendered by the Chief Executive Officer andsubmit the same to the consideration of the Board of Directors to be presentedthereafter before the Shareholders’ Meeting supported by the opinion of theexternal auditor. Said opinion should indicate at least:

 

1.If the accounting and information policies and criteria followed by the Companyare adequate and sufficient considering the particularities of the same.

2.If said policies and criteria had been consistently applied in the informationpresented by the Chief Executive Officer.

3.If, as a consequence of the previous sections 1 and 2, the informationpresented by the Chief Executive Officer reflects, in a reasonable manner, thefinancial situation and the profit and losses of the Company.

 

f)support the Board of Directors in the preparation of the reports referred to inparagraphs d) and e) of Section IV of Article 28 of the MexicanSecurities Law;

 

g)oversee that the operations referred to in Section III of Article 28and Article 47 of the Mexican Securities Law be carried out conforming tothe relevant provisions contained therein;

 

h)request the opinion of independent experts when deemed convenient for theadequate performance of their duties or as required by law;

 

i) require from the senior officers and fromother employees of the Company or of the corporate entities controlled by theCompany, reports relevant to the preparation of the financial information andof any other kind deemed necessary for the performance of their duties;

 

 

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j)investigate possible breaches known to them, both committed by the Company orby the corporate entities controlled by said Company, examining the documents,register books and other probative evidence in the degree and scope necessaryto carry out such surveillance;

 

k)receive any observation made by shareholders, Directors, senior officers,employees, and in general, any third parties, regarding the issues referred to inthe previous paragraph, as well as to carry out the actions deemed appropriaterelevant to such observations;

 

l)request periodical meetings with senior officers as well as surrendering anykind of information in connection with the internal control and internal auditof the Company to corporate entities controlled by the same;

 

m)inform the Board of Directors about the material irregularities detected whileexerting their duties, and in its case, notify the corrective measures thereof;

 

n)convene Shareholders’ Meetings and request that the issues they deem convenientbe inserted in the agenda of said Meetings;

 

o)oversee that the Chief Executive Officer complies with the resolutions taken bythe Shareholders’ Meetings and by the Board of Directors;

 

p)oversee the establishment of internal controls and mechanisms in order toverify that the actions and transactions of the Company, and of the corporateentities controlled by said Company, conform to the legal applicableregulations.

 

q)any other activity established for the Company by the Mexican Securities Lawand other legal applicable regulations or provided by these Bylaws.

 

Inthe same manner, the Chairman of the Corporate Governance and Audit Committeesmust prepare an annual report about the activities corresponding to said bodiesand submit the same to the Board of Directors complying with the requirementsestablished by applicable legal regulations. To prepare said reports, as wellas the opinions referred to in this Article, the Corporate Governance and AuditCommittees shall consider the opinions of the senior officers of the Company.In case there is a difference of opinions with the latter, said differencesshall be incorporated into said reports and/or opinions.

 

TheCompany shall not be subject to the provisions of section V of Article 91of the Mexican Corporate Law, nor shall be applicable Articles 164 to 171, lastparagraph of Article 172, 173 and 176 and other Articles related to thestatutory auditor of the Company provided by the mentioned Law.

 

**ARTICLETWENTY-SEVENTH. CHIEF EXECUTIVE OFFICER.** The Chief Executive Officer shall be in chargeof running, conducting and executing the Company’s business and the ones of thecorporate entities controlled by the same, pursuant to this Article, complyingwith the strategies, policies and guidelines approved by the Board ofDirectors.

 

To comply with his duties, the Chief ExecutiveOfficer shall have the most ample power of attorney to represent the Companyfor acts of administration and for collection and litigation, including thespecial powers of attorney that according to law, require a special clause, inthe 

 

 

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sameterms indicated in Article Eighteenth hereof. The Chief Executive Officershall not have a power of attorney for acts of ownership except when this poweris expressly granted or delegated by the Board of Directors of the Company orby any person holding a power of attorney or authorized to do so.

 

Withoutlimiting the foregoing, the Chief Executive Officer shall:

 

I.Submit, for the approval of the Board of Directors, the business strategies ofthe Company and of the corporate entities controlled by the same, pursuant tothe information rendered by said corporate entities.

 

II.Carry out the resolutions of the Shareholders’ Meetings and of the Board ofDirectors according, in its case, to the instructions given by the same Board.

 

III.Propose to the Audit Committee, the internal control system and internal auditguidelines of the Company and of the corporate entities controlled by the same,as well as execute the guidelines approved thereof by the Board of Directors.

 

IV.Subscribe within his scope, any information relevant to the Company along withthe senior officers in charge of preparing the same.

 

V.Disclose the relevant information and events that should be disclosed to thepublic, conforming to the provisions of the Mexican Securities Law.

 

VI.Comply with the provisions relevant to the purchase and placement transactionsof Company’s own shares of stock.

 

VII.Exert, either personally or through an authorized delegate, within the scope ofthe Chief Executive Officer or as directed by the Board of Directors, thecorresponding corrective measures and liability suits.

 

VIII.Oversight, in its case, that the capital contributions made by the shareholdersare carried out.

 

IX.Comply with the legal and statutory requisites established regarding dividendspaid to shareholders.

 

X.Assure that adequate accounting, registry and information systems aremaintained by the Company.

 

XI.Prepare and submit to the Board of Directors the report referred to in Article 172of the Mexican Corporate Law, exception made for the provisions of section (b) ofsaid precept.

 

XII.Establish mechanisms and internal controls permitting to certify that theactions and transactions of the Company and of the corporate entitiescontrolled by the same conform to the applicable regulations, and take anynecessary measures thereof.

 

XIII. Exert the liability suits referred to inthe Mexican Securities Law and in Article Twenty-Second hereof, againstrelated parties or third parties that allegedly had caused a damage to 

 

 

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theCompany or to the corporate entities controlled by the same or to companieswhere said Company has a significant influence, exception made for the caseswhen the Board of Directors, after having obtained the approval from the AuditCommittee, determines that the damages caused are not relevant.

 

XIV.Provide anything necessary to comply with the provisions of Article 31 ofthe Mexican Securities Law in the corporate entities controlled by the Company.

 

TheChief Executive Officer shall carry out his duties and activities, as well ascomply with the obligations set forth by applicable legal regulations assistedby the senior officers designated thereof and by any other employee of theCompany or of the corporate entities controlled by the same.

 

**ARTICLETWENTY-EIGHTH. LIABILITY OF THE CHIEF EXECUTIVE OFFICER AND OTHER SENIOROFFICERS.**The ChiefExecutive Officer and other senior officers shall perform their dutiesintending to generate value in benefit of the Company and without favoring anydetermined shareholder or group of shareholders. To that effect, they shall actdiligently adopting educated decisions and complying with other duties that areto be imposed to them, and therefore, they shall be liable for the damagesderived from the performance of their corresponding duties. In the same manner,the liabilities for damages set forth in Article 46 of the MexicanSecurities Law, shall be applicable, as well as the liability exemptions andlimits referred to in Articles 33 and 40 of the same Mexican Securities Law.

 

**GENERAL SHAREHOLDERS MEETINGS**

 

**ARTICLETWENTY-NINTH. MEETINGS.**TheGeneral Shareholders’ Meeting convened pursuant to the provisions hereof, isthe outmost body of the Company.

 

TheGeneral Shareholders’ Meetings shall be Ordinary or Extraordinary.Extraordinary Meetings shall be the ones convened to deal with any of theissues included in Article 182 of the Mexican Corporate Law or, or thataccording to the applicable legal regulations, should have such character; allother meetings shall be Ordinary Meetings.

 

**ARTICLETHIRTIETH. GENERAL ORDINARY MEETINGS**. General Ordinary Shareholders’ Meetings shall be held at least once ayear within the 4 (four) month period following the closing of each fiscalyear. When said annual Meeting is held, besides other specific issues of theagenda, said Annual Meeting shall: (i) discuss, revise, and in its case,approve the reports and opinions indicated in Section IV of Article 28of the Mexican Securities Law; (ii) appoint the members of the Board ofDirectors, qualify the independence of the Directors proposed with suchcharacter and set their compensations, same which shall be included in theexpenses of the relevant fiscal year; (iii) appoint the chairmen of theCorporate Governance Committee and the Audit Committee; (iv) resolve theapplication of the fiscal year profits, and; (v) decide the maximumresource amount to be destined to repurchase Company’s own shares.

 

In the same manner it shall be a non delegableauthority of the General Ordinary Shareholders’ Meeting to approve thetransactions intended by the Company or by the 

 

 

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corporateentities controlled by the same when they represent 20% (twenty percent) ormore of the consolidated assets of the Company based upon the figurescorresponding to the previous closing quarter, notwithstanding their form ofexecution, whether this be simultaneously or successively, but that due totheir nature be considered as a sole operation.

 

**ARTICLETHIRTY-FIRST. SHAREHOLDERS’ RIGHTS.**

 

I.Shareholders that individually or jointly hold 5% (five percent) or more of thecapital stock may exert the liability suit provided by Article Twenty-Secondhereof.

 

II.Shareholders that individually or jointly hold 10% (ten percent) of the capitalstock of the Company shall be entitled to:

 

a)     designate and revoke in the General Shareholders’ Meeting, a member ofthe Board of Directors. Such designation may only be revoked by othershareholders when the appointment of all other Directors is revoked, in whichcase, the persons to be substituted may not be appointed with such characterduring the 12 (twelve) month period following the date of revocation;

b)    require from the Chairman of the Board or from the Corporate GovernanceCommittee and Audit Committee, at any time, that a General Shareholders’Meeting be convened, without the application of the percentage indicated in Article 184of the Mexican Corporate Law;

c)     request that the voting of any issue over which they consider they arenot sufficiently informed be postponed for a maximum of 3 (three) calendardays, and for one time only without the need of a new notice, without theapplication of the percentage indicated in Article 199 of the MexicanCorporate Law;

 

III.Shareholders that individually or jointly hold 20% (twenty percent) of thecapital stock may oppose in court the resolutions of the General Meetings wherethey have a right to vote, without the application of the percentage indicatedin Article 201 of the Mexican Corporate Law;

 

IV.In the same manner, the Company’s shareholders shall have the following rights:

 

a)     have access, at the Company’s offices, to the information and thedocumentation for every item Shareholders’ Meeting agenda, free from anycharge, and at least 15 (fifteen) calendar days prior to the date of theMeeting.

b)    Prevent that the matters be discussed in the General Shareholders’Meeting as “general matters” or its equivalent.

c)     Enter into agreements with the other shareholders pursuant to the termsprovided by the applicable legal regulations. Such agreements should benotified to the Company within 5 (five) working days following theirsubscription, to be revealed to the investor public through the stock marketwhere the shares or certificates representing said shares are traded, pursuantto the terms and conditions established by the same, being accessible to thepublic for consultation in the Company’s offices. These agreements shall not beopposable to the Company except in cases of judicial resolutions whichbreaching shall not affect the validity of the vote in Shareholders’ Meetings,but they may only effective between the parties when they have been revealed tothe investor public.

 

 

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**ARTICLETHIRTY-SECOND. NOTICES**.  Shareholders’ Meetings may be convened by theBoard of Directors, by the Corporate Governance Committee or by the AuditCommittee, as the case may be. In the same manner, shareholders representing atleast 10% (ten percent) of the capital stock may require from the Chairman ofthe Board of Directors or from the Committees, in writing, at any time, toconvene a General Shareholders’ Meeting to discuss the issues specified intheir request. Shareholders owning one share have the same right as any of thecases referred to in Article 185 of the Mexican Corporate Law. If thenotice is not made within 15 (fifteen) days following the date of the request,a civil or a district judge of the domicile of the Company shall make suchnotice upon request from anyone of the interested parties.

 

Inabsence of the minimum amount of members required for the Corporate GovernanceCommittee and Audit Committees to convene, and only when the Board of Directorshad not made the appointment of provisional Directors and/or members of theCommittees, any shareholder may request from the Chairman of the Board ofDirectors to convene, within a term of 3 (three) calendar days, a GeneralShareholders’ Meeting so that the latter makes the corresponding designations.

 

**ARTICLETHIRTY-THIRD. PUBLICATION OF NOTICES**. Meeting notices should be published in the Federal Official Gazette orin a newspaper of major circulation of the Company’s domicile at least 15(fifteen) calendar days prior to the date set for said Meeting. Notices shallcontain the agenda and shall be signed by the person or persons making suchnotice. The General Shareholders’ Meeting may be held without a previous noticeif all the capital stock is represented therein at voting time.

 

**ARTICLETHIRTY-FOURTH. SHAREHOLDER’S PROXIES**. The Shareholders of the Company may be represented in theShareholders’ Meetings by the person or persons designated by said shareholdersby a simple proxy or by a power of attorney given in the forms prepared by theCompany, which forms shall be at the disposal of shareholders through marketbrokers or through the Company, at least 15 (fifteen) days prior to the date ofeach Meeting complying with the following requisites: (i) notice shallindicate in a noticeable manner the name of the Company as well as thecorresponding agenda; (ii) it shall contain a space to be filled with theinstructions given by grantor to exert said power of attorney. The Secretary ofthe Board of Directors should verify that the provisions contained in this Article areobserved and shall inform the General Shareholders’ Meeting of said compliance,evidencing the same in the relevant minute.

 

**ARTICLETHIRTY-FIFTH. DEVELOPMENT OF THE MEETINGS.** The Meetings shall be presided by the Chairmanof the Board of Directors and in his absence, by his Alternate, and in theabsence of the latter, by the person designated by the majority of votes of theShareholders. In the same manner, it shall serve as Secretary, the onedesignated as such by the Board of Directors and/or by the Shareholders’Meeting, and in his absence, he shall be substituted by the AlternateSecretary, and in absence of both, by the person designated by the Shareholdersby a majority of votes therein.

 

The Minutes of the Meetings shall be recordedin the relevant Book and shall be signed by the Chairman and by the Secretaryof the meeting.

 

 

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**ARTICLETHIRTY-SIXTH. QUORUM FOR THE GENERAL MEETINGS.**General Ordinary Shareholders’ Meetings held byfirst notice shall be valid if at least 50% (fifty percent) of the capitalstock is represented therein and their resolutions shall be valid when they areadopted by the assenting vote of the majority of the shares representedtherein. In the Meetings, each common share shall be entitled to one vote.

 

TheExtraordinary Shareholders’ Meetings held by first notice shall be valid if atleast 75% (seventy five percent) of the capital stock is represented thereinand their resolutions shall be valid when they are adopted by the assentingvote of shares representing at least 50% (fifty percent) of the capital stock.

 

RegardingOrdinary Meetings, if the number of shares established in the previous Articlesin the date set forth for the first notice were not represented therein, thisshall reconvene and said Meeting shall decide the issues contained in theagenda, notwithstanding the number of shares represented in the same. If itshould be a Extraordinary Meeting it shall require, in all cases, the assentingvote of the shares representing at least 50% (fifty percent) of the capitalstock.

 

**ARTICLETHIRTY-SEVENTH. RIGHT TO ATTEND MEETINGS.** In order to be entitled to attend to and votein a Shareholders’ Meeting, all shareholders shall previously deposit theirshare certificates with the Company’s Secretary, in any Mexican or Foreign Bankor any Securities Depository Institution, not later than the day immediately precedingthe date set forth for the Meeting. The deposit slip of the share will accreditthe right to attend the Meetings. The Stock Ledger of the Company shall beclosed, and therefore no recordings shall be permitted the day prior to thedate of the Meeting.

 

**FISCAL YEARS, FINANCIAL INFORMATION, PROFITS AND LOSSES**

 

**ARTICLETHIRTY-EIGHTH. FISCAL YEARS.** Fiscal years shall coincide with calendar years pursuant to the termsof Article 8-A of the Mexican Corporate Law.

 

**ARTICLETHIRTY-NINTH. ANNUAL REPORT.**The Company through its Board of Directors shall annually submit to theShareholders’ Meeting held for the closing of the fiscal year the following: (i) thereport prepared by the Chief Executive Officer pursuant to the provisions of Section XIof Article 44 of the Mexican Securities Law; (ii) the opinion of theBoard of Directors over the contents of the report prepared by the ChiefExecutive Officer; (iii) the report provided in Article 172 of theGeneral Law of Commercial Companies, containing the main policies, accountingprinciples and information criteria followed to prepare the financialinformation of the Company; (iv) the reports of the Chairman of theCorporate Governance Committee and the Chairman of the Audit Committee, and (v) thereport containing the transactions and activities where the Company hadintervened pursuant to the provisions of the Mexican Securities Law.

 

Notwithstandingthe foregoing, the Board of Directors shall be free to submit any financialstatements referring to any date during the fiscal year and the Meeting mayapprove them for all legal effects thereof.

 

**ARTICLE FORTIETH. APPLICATION OFPROFITS AND LOSSES.**Netprofits shown in the Financial Statements approved in the Shareholders’Meetings shall be distributed as follows: 

 

 

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(i) 5%(five percent) to reconstitute the legal reserve fund until said fund reachesat least 20% (twenty percent) of the capital stock; (ii) if it is sodetermined by the Meeting it may designate the amounts deemed convenient toconstitute a contingency fund, as well as special reserve funds, and; (iii) theremaining profits, if any, shall be applied in the manner resolved by theGeneral Ordinary Shareholders’ Meeting.

 

Losses,if any, shall be supported primarily by the reserves, and in lack of these, bythe capital stock.

 

**ARTICLEFORTY-FIRST. DISTRIBUTION OF DIVIDENDS.** The Ordinary Shareholders’ Meeting may declarea dividend payment throughout the fiscal year, in the form, term, andconditions agreed by said Meeting, complying with the legal requirements andafter making the corresponding legal reserves.

 

**DISSOLUTION AND LIQUIDATION**

 

**ARTICLEFORTY-SECOND. DISSOLUTION.**The Company shall be dissolved in any of the events specified in Article 229of the Mexican Commercial Law.

 

**ARTICLEFORTY-THIRD. LIQUIDATION.**Once the Company has been dissolved it shall be liquidated. One or moreliquidators appointed by the General Extraordinary Shareholders’ Meeting shallbe in charge of the Liquidation. If the Meeting fails to appoint saidliquidator, a Civil or District Judge, of the domicile of the Company shall doso, upon petition of any of the shareholders.

 

**ARTICLEFORTY-FOURTH. BASIS FOR LIQUIDATION.** In absence of specific instructions given by the Meeting to theLiquidators, Liquidation shall be performed according to the following generalbasis:

 

I.              Conclusionof all pending businesses with the minimum damage to creditors andshareholders.

II.            Preparationof the General Balance Sheet and Inventory.

III.           Collection of all Credits and payment of all debts.

IV.           Saleof all Company’s Assets and application of profits for the purpose of theLiquidation.

V.            Distributionof the remnant, if any, among the shareholders, in proportion to their shares.

 

**ARTICLE FORTY-FIFTH. APPLICATIONOF LIQUIDATION REMNANT.**Once the Liquidation transactions are concluded, the Liquidator or Liquidatorsshall convene a General Meeting to examine, during the same, the LiquidationAccount Statements, to render an opinion on said Statements, and resolve theapplication of the remnant, if any.

 

 

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**CANCELLATION OF REGISTRATION AND CONFLICT RESOLUTION**

 

**ARTICLEFORTY-SIXTH. CANCELLATION OF REGISTRATION AT THE MEXICAN SECURITIES REGISTRY.**Cancellation of the registration of theCompany’s shares in the Mexican Securities Registry, should be carried outwithin the prices, dates, terms, conditions and exceptions established by theMexican Securities Law and other legal regulations applicable to the Company.

 

**ARTICLEFORTY-SEVENTH. DISPUTE RESOLUTION.** It is the will of the shareholders of the Company to expressly waivethe judicial venue and submit to arbitration all controversies, issues, orincidence that should arise against the Company regarding these Bylaws. Saidarbitration shall be of law and shall be resolved by an arbitration courtcomposed by 3 (three) arbiters. Each one of the parties shall be entitled toappoint an arbiter and both parties shall appoint a third arbiter. Thearbitration shall be governed and controlled, regarding arbitrationproceedings, by the relevant Articles of Commercial Arbitration contained inthe Código de Comercio (“Mexican Commerce Code”).

 

**ARTICLE FORTY-EIGHTH. HEADINGS.**All headings and titles contained in each oneof the Articles herein, are for convenience and reference only and they willnot affect, in any manner whatsoever, the interpretation of these Bylaws.

 

 

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