Dynetics, Inc.

May 17, 1985 Dynetics, Inc. Avodaco Street FTI Complex Taguig, Metro Manila Attention : Mr . Antonio M . Garcia President Gentlemen: This refers to your letter dated May 2, 1985 requesting an opinion whether or not an exclusive assembly agreement executed on behalf of your company by a representative of the other contracting party without approval of your company's board of directors, is binding on your company. In your letter, you disclosed the following: Your company assembles integrated circuits for customers around the world, including Interlek, Inc.,a California corporation. The Chairman of the Board of your corporation is at the same time the President and Chairman of the Board of Interlek, Inc. Sometime in February of 1985, the Chairman of your company, in his capacity as such, sent a memo to the representative of Interlek at your company, directing him to sign on behalf of your company, an Assembly Agreement under the terms of which your company would agree to perform assembly work exclusively for Interlek, Inc. Notwithstanding opposition from the President of your company, Interlek's representative executed the exclusive Assembly Agreement on behalf of your company, to forestall further pressure being exerted on him by the Chairman of your company and because by that time, he had received advice from counsel that such an agreement signed by him, would not be binding on your company, in the absence of board approval. After the agreement was signed on behalf of your company by the representative of Interlek, your Chairman signed the same agreement on behalf of Interlek, in his capacity as President of that company. You now wish to know if the exclusive Assembly Agreement is binding on your company. LexLib Section 23 of the Corporation Code provides that "unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporation controlled and held by a board of directors." Generally, contracts or acts not executed by the board of directors or by a corporate agent duly authorized by the board, are not binding on the corporation, particularly if the act is not usual and in the ordinary course of business (Ramirez v. Orientalist Co., GR No. 11897, September 24, 1918, 38 Phil. 634). The Assembly Agreement executed on behalf of your company obligating it to assembly exclusively for Interlek, Inc. contrary to its present practice of assembling for various customers, is not usual and in the ordinary course of business and requires board approval in order for it to be binding on the corporation. That it was executed on behalf of your company by a representative of the other contracting party on the basis of a directive of the Chairman of your company who happens to be President of the other contracting party, deprives the Agreement of even any semblance of legality. We, however, suggest that the Assembly Agreement be formally repudiated by the board of directors of your company at the earliest opportunity. LibLex Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner