SECURITIES AND EXCHANGE BOARD OF INDIA (EMPLOYEE STOCK OPTION SCHEME AND EMPLOYEE STOCK PURCHASE SCHEME) GUIDELINES,

1999 NOTES
The Guidelines have been issued by SEBI under Section 11 of the SEBI Act, 1992. These Guidelines shall apply to any co pany !hose shares are listed on any reco"ni#ed stoc$ e%chan"e in India. Accordin" this "uidelines e ployee stoc$ option has been defined as follo!s& employee stock option means the option given to the whole-time Directors, Officers or employees of a company which gives such Directors, Officers or employees, the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a predetermined price. As per the guidelines, no ESOS can be offered to employees of a company unless the shareholders of the company approve ESOS by passing a special resolution in the general meeting. 'nce the resolution has been passed by the shareholders only then the co pany can provide this sche e. But in private company this is not applicable as they can issue stoc$ option !ithout the per ission of shareholders but by the consent of board of directors. Eligi ili!" !# $%&!i'i$%!( i) ESOS& An e ployee shall be eli"ible to participate in ES'S of the co pany. A no inated Board of (irector, only if his contract says so. A director !ho either by hi self or throu"h his relative or throu"h any body corporate, directly or indirectly holds ore than 1)* of the outstandin" e+uity shares of the co pany shall not be eli"ible to participate in the ES'S An e ployee !ho is a pro oter or belon"s to the pro oter "roup shall not be eli"ible to participate in the ES'S. P&i'i)g The co panies "rantin" option to its e ployees pursuant to ES'S !ill have the freedo to deter ine the e%ercise price sub,ect to confor in" to the accountin" policies entioned in Schedule I of the "uideline.

L#'*+i) $(&i#, %), &ig-!. #/ !-( #$!i#)+-#l,(&0 There shall be a option. 1 ini u period of one year bet!een the "rant of options and vestin" of to specify the loc$-in period for the shares issued

The co pany shall have the freedo pursuant to e%ercise of option.

The e ployee shall not have ri"ht to receive any dividend or to vote or in any anner en,oy the benefits of a shareholder in respect of option "ranted to hi , till shares are issued on e%ercise of option N#) !&%)./(&% ili!" #/ #$!i#)0 'ption "ranted to an e ployee shall not be transferable to any person. .o person other than the e ployee to !ho the option is "ranted shall be entitled to e%ercise the option. /nder the cashless syste of e%ercise, the co pany ay itself fund or per it the e panelled stoc$ bro$ers to fund the pay ent of e%ercise price !hich shall be ad,usted a"ainst the sale proceeds of so e or all the shares, sub,ect to the provision of the 0o panies Act. ort"a"ed or

The option "ranted to the e ployee shall not be pled"ed, hypothecated, other!ise alienated in any other anner.

In the event of the death of e ployee !hile in e ploy ent, all the option "ranted to hi till such date shall vest in the le"al heirs or no inees of the deceased e ployee. In case the e ployee suffers a per anent incapacity !hile in e ploy ent, all the option "ranted to hi as on the date of per anent incapacitation, shall vest in hi on that day.

1rovided that in a case !here options are "ranted by a co pany under an ES'S in lieu of options held by the sa e person under an ES'S in another co pany !hich has er"ed or a al"a ated !ith the first entioned co pany, the period durin" !hich the options "ranted by the transferor co pany !ere held by hi shall be ad,usted a"ainst the ini u vestin" period re+uired under this clause.