ESOP

1. ADMINIDTRATION CLAUSE

1.1 The implementation of the ESOP schemes is done by creating a trust under the Indian
Registration Act. This ESOP scheme will use the trust to hold all the shares of the Rafael Pvt.
Ltd (herein referred to as the company) under the ESOP scheme.

1.2 The ESOP scheme needs approval from the board and such approval requires requisition
from the general meeting of the company.

1.3 The trust holds a right to issue a warrant to the employees of the company. One warrant
holds the right to be allotted or apply for one equity share at the exercise rate. The company
has to constitute a Compensation Committee to select employees who are eligible for the
grant of warrants and based on the committee’s advice the Trust will issue the warrant.

1.4 The company creates an employee’s welfare trust for the implementation of the ESOP
and allots 50,000 (Fifty Thousand) equity shares to the trust so as to constitute 2% of the post
issue paid-up equity share capital.

2. Eligible Employees

To be eligible under this ESOP there are various factors required, such factors are:

2.1 The employee must be a full-time employee of the company and a confirmed employee.
No contractual employee shall be eligible for the ESOP scheme.

2.2 The employee must be employed in the company for 10 years or more than 10 years (a
minimum period of service unanimously decided by the Compensation Committee
comprising a select group of directors)

2.3 The employee must hold a certain position or have a status in the company, the employee
is not eligible if he is below that status.

2.4 Any other factor which is relevant by the Compensation Committee.

2.5 The directors and promoters are eligible to participate in this ESOP.

3. Issue of warrant
3.1 Information
The eligible employees will be issued the warrant in lots of 100s in consideration of the
payment say Rupees 1 or the amount which is decided by the trust, and such payment
changes from time to time.

3.2 Transfer of warrants

The Compensation Committee shall make a specific recommendation about the transfer. The
warrant held by an employee is transferable only to the trust during the life of the warrant.
The employee cannot be mortgaged, hypothecated, pledged, assigned or in any other way
alienated or disposed of.

3.3 Transfer of warrant in case of resignation, dismissal or severance of employment

In case of resignation, dismissal or severance of employment the employee shall forthwith

transfer all the warrants held by the trust.

A special agreement must be there in between the employee and the trust for the transfer
purpose and consideration of the warrant that will be transferred in such cases.

4. For the recommending the grant

The trust is to hold the warrants for and on behalf of the employees and transfer the
same to them as and when advised. The company has constituted a Compensation
Committee to choose Rajaram grant of 1000 options. He has worked for 5 years in the
company. The trust would issue warrants to the employees on the basis of the advice of
the compensation committee.
 EXERCISE 2

1. Draft exercise of warrants, exercise price and exercise period clause keeping in
mind the following factors:

a. Employee to apply for warrants

The warrants shall be issued to the employees in lots of 1 equity share of nominal value
of each on the exercise price (shall be declared at the time of issue of the warrant) or such
other sum as the trust may, decide from time to time. Such transfer shall be made upon
the specific recommendation of the compensation committee.

b. Exercise price of the warrant.

The exercise price is declared at the time of issue of warrant, such price shall be made
upon the specific recommendation of the compensation committee.

c. The option to apply for the conversion of the warrant.

i. The warrant holder may at his discretion opt for conversion during the exercise period
and the option to apply for conversion of the warrant shall be exercisable as per a
vesting schedule as follows:
 On completion of first 3 months from the date of issue of warrant:- one-fourth
 On completion of second 3 months from the date of issue of warrant:- one-
fourth
 On completion of third 3 months from the date of issue of warrant:- one-fourth
 On completion of last 3 months from the date of issue of warrant:- one-fourth

ii. However the exercise shall be made in lots of 100 warrants each.

d. In case the warrants are not exercised by the employee within the exercise period they will
lapse & no rights will accrue after that date. The amount paid on the warrant shall in the event
be forfeited by the company.

e. Option for conversion

i. The warrant holder may at his discretion opt for conversion during the exercise period
on the exercise date of all the warrants that he has or some of the warrants.
ii. However the exercise shall be made in lots of 100 warrants each.

2. A LETTER OF GRANT

To,
Rajaran

Sub:- for the grant of 1000 options.

Dear Sir,

This letter has prepared by the Board of Rafael Pvt Ltd. to announce our intention to apply for
the grant of 1000 options to Mr. Rajaram, employee of the Rafael Pvt ltd. as per the
recommendation committee.

a. Employee to apply for warrants

The warrants shall be issued to the employees in lots of 1 equity share of nominal value
of each on the exercise price (shall be declared at the time of issue of the warrant) or such
other sum as the trust may, decide from time to time. Such transfer shall be made upon
the specific recommendation of the compensation committee.

b. Exercise price of the warrant.

The exercise price is declared at the time of issue of warrant, such price shall be made
upon the specific recommendation of the compensation committee.

The warrant holder may at his discretion opt for conversion during the exercise period
and the option to apply for conversion of the warrant shall be exercisable as per a
vesting schedule as follows:
 On completion of first 3 months from the date of issue of warrant:- one-fourth
 On completion of second 3 months from the date of issue of warrant:- one-
fourth
  On completion of third 3 months from the date of issue of warrant:- one-fourth
 On completion of last 3 months from the date of issue of warrant:- one-fourth

In case the warrants are not exercised by the employee within the exercise period
they will lapse & no rights will accrue after that date. The amount paid on the
warrant shall in the event be forfeited by the company.

The employee can opt for conversion of his warrants on the exercise date by
applying to the company’s employee welfare trust.

We’d be honored to submit a full proposal to the trust. We look forward to speak with you in
more detail about this letter to grant.

Sincerely,

Director of the Board

Rafael Pvt ltd.