Mr. Mat Defensor

May 25, 1981 Mr. Mat Defensor Legal Counsel The Group CLMC Building 269 E. de los Santos Avenue Greenhills, Metro Manila Dear Mr. Defensor : This refers to your letter of May 1st informing us of your desire to enter into a joint venture agreement with the Meridian Headquarters of Hongkong for the establishment of an advertising agency in the Philippines, to be called Meridian Philippines, with some future plans of making it a subsidiary of Ogilvy and Mather International (OMI). In this connection, you wish to get our opinion on the following: 1) Whether Meridian Headquarters would be entitled to 50% of the income of Meridian Philippines without necessarily putting in any equity. prcd 2) Whether it is allowable for Ogilvy and Mather International (OMI) to buy 30% of Meridian Philippines at par value regardless of when the option is exercised. Relative thereto, please be advised that our present laws allow Filipinos to enter into joint venture agreement with foreign partners. To give this agreement legal personality, the parties thereto must put up or establish either a corporation or a partnership and register the same with this Commission. Regarding your first query, we believe that Hongkong Meridian and your Group may mutually agree that the former would be entitled to 50% of the income of the proposed Meridian Philippines as "commission" for its services and expertise in advertising as well as other benefits that it will contribute to your Group. As to your second query, it is our view that OMI may exercise the option to buy 30% of the capital of Meridian Philippines regardless of when it wills or decides to exercise the option, provided the price shall not be lower than par. Please be guided accordingly. Very truly yours, For the Chairman: (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department