Rights and Obligations of Shareholders

Stockholder Rights Over Corporate Action Reference

1. Regular and Special Meetings Sections 50
and 52 of the
Right to notice Corporation
Code
Stockholders of record have the right to be notified, unless a different
period is fixed in the by-laws. at least two (2) weeks prior to the
conduct of regular meetings, which are held annually.

For special meetings, which are held at any time deemed necessary or as
may be provided in the by-laws, notice to stockholders of record must
be given at least one (1) week prior to the meeting, unless otherwise
provided in the by-laws.

The right to notice of any meeting may be waived, expressly or

impliedly, by any stockholder.

Quorum in meetings

Unless otherwise provided in the by-laws, a number of stockholders

representing a majority of the outstanding capital stock of the
corporation is necessary to constitute a quorum.

2. Corporate By-Laws and Articles of Incorporation Sections 16, 46

and 48 of the
Adoption of by-laws Corporation
Code
The affirmative vote of the stockholders representing at least a majority
of the outstanding capital stock (includes voting and non-voting shares)
is necessary for a corporation to adopt its by-laws. Once adopted, the
by-laws will be signed by the stockholders voting for them and will be
made available for inspection at the principal office of the corporation.

Amendment, repeal, or adoption of new by-laws

The by-laws adopted by a corporation may be amended, repealed, or

replaced by a new one, by a majority vote of the board of directors and
the affirmative vote of stockholders representing at least a majority of
the outstanding capital stock (includes voting and non-voting shares).

Stockholders representing at least 2/3 of the outstanding capital stock

may also delegate the power to amend or repeal the by-laws or to adopt
a new Comone to the board of directors.
However, this delegated power may be revoked by a majority vote of
 stockholders representing a majority of the outstanding capital stock.

Amendment of articles of incorporation

The corporation may amend the provisions of its articles of

incorporation with the approval of the board of directors and the
affirmative vote of shareholders representing 2/3 of the outstanding
capital stock (includes voting and non-voting shares).

3. Election of the Board of Directors Sections 24

and 29 of the
Quorum Corporation
Code
During any election of the board of directors, it is necessary that the
owners of a majority of the outstanding capital stock are present, either
in person or by proxy.

Right to vote

Except for delinquent stocks, every stockholder of record, is entitled to

participate in the election of the members of the board of directors. In
casting his votes, a stockholder has the option to: (1) vote such number
of shares as he may own for as many persons as there are directors; (2)
concentrate his votes on one candidate and give that candidate as many
votes as the number of directors to be elected multiplied by the number
of shares he owns; or (3) cumulate his votes and distribute them among
as many candidates as he deems fit.

Vacancy in the office

A majority vote of the remaining directors, is needed to fill vacancies in

the office of the board of directors, other than by removal or expiration
of term. If the remaining board of directors cannot anymore constitute a
quorum as a result of the vacancy, the said vacancy must be filled by the
stockholders in a regular or special meeting called for the purpose.

Creation of new position

If there is a vacancy resulting from the increase in the number of

directors, said vacancy must be filled only by an election at a regular or
at a special meeting of stockholders or members duly called for the
purpose, or in the same meeting authorizing the increase of directors or
trustees if so stated in the notice of the meeting.

4. Removal of Directors Section 28 of

the
Any director of a corporation may be removed from office by a vote of Corporation

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 the stockholders holding or representing at least two-thirds (2/3) of the Code
outstanding capital stock.

5. Compensation of Directors Section 30 of

the
Except for reasonable per diems, directors are not entitled to Corporation
compensation, unless otherwise provided in the by-laws. Any such Code
compensation other than reasonable per diems may be granted to
directors by the vote of the stockholders representing at least a majority
of the outstanding capital stock at a regular or special meeting. The total
yearly compensation of directors, as such directors, cannot exceed ten
(10%) percent of the net income before income tax of the corporation
during the preceding year.

6. Power to Enter Into a Management Contract Section 44 of

the
Management contracts with another corporation cannot be concluded Corporation
without the approval of the board of directors and by the stockholders Code
representing at least the majority of the outstanding capital stock, of
both the managing and the managed corporation, at a meeting duly
called for the purpose. However, this required number increases to at
least two-thirds (2/3) of the total outstanding capital stock entitled to
vote, in the event a stockholder or stockholders representing the same
interest of both the managing and the managed corporations own or
control more than one-third (1/3) of the total outstanding capital stock
entitled to vote of the managing corporation.

7. Ratification of Contracts Entered Into By Directors or Officers with the Section 32 of

Corporation the
Corporation
Contracts entered into by directors or officers with the corporation are Code
voidable at the option of the corporation, unless all of the following are
present:

a) The presence of such director or trustee in the board meeting in

which the contract was approved was not necessary to constitute
a quorum for such meeting;

b) The vote of such director or trustee was not necessary for the
approval of the contract;

c) The contract is fair and reasonable under the circumstances; and

d) In case of an officer, the contract has been previously authorized

by the board of directors.

If either (a) or (b) above, or both, are absent, the contract may be ratified

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 by the vote of the stockholders representing at least two-thirds (2/3) of
the outstanding capital stock, as long as full disclosure of the adverse
interest of the directors involved is made at the meeting called for the
purpose.

8. Ratification of Contracts Entered Into By and Between Corporations Section 33 of

with Interlocking Directors the
Corporation
As long as there is no fraud, and provided the contract is fair and Code
reasonable under the circumstances, a contract entered into between two
or more corporations having interlocking directors are deemed valid.

However, if the interest of the interlocking director in one corporation is

substantial and his interest in the other corporation or corporations is
merely nominal, the contract may be ratified by the vote of the
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock, as long as full disclosure of the adverse interest of the
directors involved is made at the meeting called for the purpose.

For purposes of interlocking directors, stockholdings exceeding twenty

(20%) percent of the outstanding capital stock is considered substantial.

9. Ratification of Contract Entered Into by a Disloyal Director Section 34 of

the
A director who obtains profit in a business opportunity that rightfully Corporation
belongs to the corporation is required to refund such profits, unless his Code
acts are ratified by a vote of the stockholders owning or representing at
least two-thirds (2/3) of the outstanding capital stock.

10. Power to Declare Dividends Section 43 of

the
The board of directors may declare dividends out of the unrestricted Corporation
retained earnings of the corporation, which may be payable in cash, in Code
property, or in stock to all stockholders on the basis of their
stockholdings.

However, stock dividends may not be issued without the approval of

stockholders representing not less than two-thirds (2/3) of the
outstanding capital stock at a regular or special meeting duly called for
the purpose.

11. Grant of Stock Options Rules

12.1.3.2.4.3
The board of directors may grant stock options to non-stockholders if it and
has been authorized to grant that benefit by the corporation's articles of 12.1.3.2.4.4 of
incorporation, by-laws or by a resolution of the stockholders the SRC IRR

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 representing at least two-thirds (2/3) of the outstanding voting and non-
voting capital stock.

Directors and officers may also be granted stock options with the
approval of stockholders representing at least two-thirds (2/3) of the
outstanding voting and non-voting capital stock.

12. Power to Increase or Decrease Capital Stock or Incur or Create Bonded Section 38 of
Indebtedness the
Corporation
The increase or decrease in capital stock or the incurring, creation or Code
increase of bonded indebtedness of the corporation must be approved by
a majority vote of the board of directors and two-thirds (2/3) of the
outstanding capital stock (includes voting and non-voting shares).

13. Power to Deny Pre-emptive Right Section 39 of

the
Corporation
All stockholders of a stock corporation are entitled to exercise pre- Code
emptive right to subscribe to all issues or disposition of shares of any
class, in proportion to their respective shareholdings, unless such right is
denied by the articles of incorporation.

However, such pre-emptive right cannot be exercised over shares that

must be issued in compliance with laws requiring stock offerings or
minimum stock ownership by the public; or to shares to be issued in
good faith with the approval of the stockholders representing two-thirds
(2/3) of the outstanding capital stock, in exchange for property needed
for corporate purposes or in payment of a previously contracted debt.

14. Sale or Disposition of Corporate Assets Section 40 of

the
The board of directors may sell, lease, exchange, mortgage, pledge or Corporation
otherwise dispose of all or substantially all of property and assets, Code
including the goodwill of the corporation when authorized by the vote
of the stockholders representing at least two-thirds (2/3) of the
outstanding capital stock (includes voting and non-voting shares).

A sale or other disposition shall be deemed to cover substantially all the

corporate property and assets if the corporation would be rendered
incapable of continuing the business or accomplishing the purpose for
which it was incorporated as a result of such sale or disposition.

15. Ratification of Investment of Corporate Funds in Another Corporation Section 42 of

or Business or For Any Other Purpose the
Corporation
The corporation may invest its funds in any other corporation or Code

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 business or for any purpose other than the primary purpose for which it
was incorporated when approved by a majority of the board of directors
and ratified by the stockholders representing at least two-thirds (2/3) of
the outstanding capital stock (includes voting and non-voting shares).

However, the approval of the stockholders will not be necessary in case

the investment by the corporation is reasonably necessary to accomplish
its primary purpose as stated in the articles of incorporation.

16. Approval of Merger or Consolidation Section 77 of

the
The affirmative vote of stockholders representing at least two-thirds Corporation
(2/3) of the outstanding capital stock of each corporation is necessary Code
for the approval or amendment of any plan of merger or consolidation.

17. Extending or Shortening of Corporate Term Section 37 of

the
The corporation may extend or shorten its corporate term as stated in the Corporation
articles of incorporation when approved by a majority vote of the board Code
of directors or trustees and ratified at a meeting by the stockholders
representing at least two-thirds (2/3) of the outstanding capital stock.

18. Corporate Dissolution Sections 118-

120 and 122 of
Voluntary dissolution the
Corporation
If dissolution will not prejudice any of its creditors, the corporation may Code
decide to undergo voluntary dissolution. This may be effected by s
majority vote of the board of directors and by a resolution duly adopted
by the affirmative vote of the stockholders owning at least two-thirds
(2/3) of the outstanding capital stock (includes voting and non-voting
shares).

Dissolution by shortening corporate term

A voluntary dissolution may also be effected by amending the articles of

incorporation to shorten the corporate term. This would require the
majority vote of the board of directors and the affirmative vote of
shareholders representing 2/3 of the outstanding capital stock (includes
voting and non-voting shares).

Reportorial Obligations Reference

19. Report of 5% Beneficial Ownership Section 18 of the SRC and
Rule 18 of the SRC IRR
The legal owner and beneficial owner either individually

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 or jointly, must submit within five (5) business days after
the acquisition of at least 5% beneficial ownership of any
class of shares, to the issuer corporation, the Philippine
Stock Exchange (PSE), and to the Securities and
Exchange Commission (SEC) a sworn statement
containing the information required by SEC Form 18-A,
such as personal background, identity, residence, purpose
of the purchase of shares, and including information on
any contracts or arrangements in relation to the shares of
the issuer.

20. Report of Material Transactions Rule 17.1.1.3 of the SRC IRR

An owner of more than five percent (5%) of the voting

rights of the corporation is required to disclose any
material information affecting the corporation to the SEC
and the PSE.

21. Tender Offer Section 19 of the SRC and

Rule 19 of the SRC IRR
It is mandatory for the following to publicly announce
their intention to acquire shares of a public corporation:

a) Any person or group of persons acting in concert,

who intends to acquire at least fifteen percent (15 %)
of equity securities in a public company in one or
more transactions within a period of twelve (12)
months;

b) Any person or group of persons acting in concert,

who intends to acquire thirty five percent (35%) of
the outstanding voting shares or such outstanding
voting shares that are sufficient to gain control of the
board in a public company in one or more
transactions within a period of twelve (12) months;
and

c) Any person or group of persons acting in concert,

who intends to acquire over fifty percent (50%) of the
total outstanding equity securities of a public
company.
22. Transactions of Directors, Officers, and Principal Section 23 of the SRC and
Stockholders Rule 23 of the SRC IRR

Any beneficial owner, whether directly or indirectly, of

more than ten per centum (10%) of any class of any
equity security, or who is a director or an officer of the

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corporation, must within ten days after the close of each
calendar month, give a report to the PSE and the SEC of
any change in his beneficial ownership of shares of the
corporation that occurred during any calendar month.