Para 6 - Shareholder approval - SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999

6. Shareholder approval: 6.1 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. 6.2 The explanatory statement to the notice and the resolution proposed to be passed in general meeting for ESOS shall, inter alia, contain the following information: (a) the total number of options to be granted; (b) identification of classes of employees entitled to participate in the ESOS; (c) requirements of vesting and period of vesting; (d) maximum period (subject to clause 9.1) within which the options shall be vested; (e) exercise price or pricing formula; (f) exercise period and process of exercise; (g) the appraisal process for determining the eligibility of employees to the ESOS; (h) maximum number of options to be issued per employee and in aggregate; (i) a statement to the effect that the company shall conform to the accounting policies specified in clause 13.1; [ 1 ][(j) the method which the company shall use to value its options whether fair value or intrinsic value; (k) the following statement: In case the company calculates the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed in the Directors report and also the impact of this difference on profits and on EPS of the company shall also be disclosed in the Directors report. ] 6.3 Approval of shareholders by way of separate resolution in the general meeting shall be obtained by the company in case of; (a) grant of option to employees of subsidiary or holding company and, (b) grant of option to identified employees, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant of option. ******* [1] Inserted vide circular no. SEBI/PMD/MBD/ESOP/2/2003/30/06 dated June 30, 2003, for all notices of general meetings sent on or after June 30, 2003.