Chihuahua, Chih., May 15th, 2020.

Dear Clients and Friends.

We hereby inform you the following information, of utmost importance for your Company.

In May, employers are required to pay a percentage of the Company’s profits to their employees. Considering the health emergency declaration and the temporary suspension of specific activities issued by the federal authority, we hereby analyze if such payment is applicable and, if the case may be, the requirements for its fulfillment.

The National Commission for the Employees’ Participation in the Company Profits, foresees that 10% percent of the Company’s profits shall be distributed amongst the employees; this measure aims to promote the Country’s industrial development, as well as to ensure the employees’ right to obtain a reasonable interest of the Company, and the necessary reinvestment of capital, in favor of all employees, with the exception of the Company’s Directors, Administrators and General Managers, as well as domestic workers.

It should be noted, that temporary employees will be entitled to the Company’s profit shares, only if they have provided their services for at least sixty days during the fiscal year, whose profits are being distributed; likewise, employees that render their services to those persons whose income derives exclusively from their personal work, or security personnel of profit earning property, or the ones that collect debts without interest; if there is a profit, the paid percentage shall not exceed an amount equal to one month of their salary.

Pursuant the Federal Labor Law, the following cases, are exempt of the payment of the Company’s profits:

• Newly incorporated Companies, during their first year of operations.
• Newly incorporated Companies whose purpose is the creation of a new product, pursuant the laws for the promotion of new industries, and regarding the novelty of the product, during their first two years of operation.

• Newly incorporated Companies of the Extraction industry, during the exploration phase.
• Private assistance institutions, officially recognized, if they carry out humanitarian acts, have nonprofit purposes or no individuals are directly designated as their beneficiaries.

• The Mexican Social Security Institute and decentralized public Institutions for any cultural, assistance or charity purposes.
• Companies with a lower capital than the one fixed by the Labor and Social Security Ministry, for Industrial Companies.

The Companies have a sixty calendar-day term to pay the employees, once the tax is due (March 31st of each year).

It is important to note, that regarding uncollected profits, the employer make public all those that have been granted in favor of the employees, by means of notices in mass print media; if such profits are not claimed, once the employees’ right to collect it prescribes, one year since the day the tax was due, the uncollected amount must be included into the next year’s distributable profits.

Due to the current health contingency, it is physical and legal impossible to comply with the deadlines foreseen by the law; thus, the herein obligations will be enforceable once the ordinary activities restart, and the corresponding authorities issue the provisions for its timely fulfillment.

In case of any doubt or inquiry, or if you require any kind of assistance regarding the herein, please do not hesitate to contact us.

Mr. Daniel A. Jiménez Lara