Satyam Computer Services Limited Secunderabad 500 003 Associate Stock Option Plan B


Exhibit 4.2
  i.   In its continuing efforts to create participative environmentcontributing to the growth of associates as part of the corporate growth plans,SATYAM COMPUTER SERVICES LIMITED (SATYAM) formulated new Associate Stock OptionPlan “B”, (ASOP ‘B’), pursuant to the enabling authority given by the members ofSATYAM in its General Meeting held on 28th May, 1999.
  ii.   The plan is aimed at the following:
  §   Rewarding the associates for their performance and contribution to thesuccess and growth of SATYAM.
  §   Providing them with a good and attractive motivational tool to improvetheir performance.
  §   Providing an opportunity for the professional partners to becomefinancial partners in the Equity of SATYAM.
  §   Retaining the talent and services of the associates who havecontributed to the success of SATYAM.
  §   Attracting the right talent for right roles
  iii.   This plan will be effective from such a date as decided by the Board of Directors.
      In this plan, unless the context otherwise requires
  i.   “Associate” means Employee of SATYAM on full time, in the regularservice and includes full time employees of subsidiary companies or Parent Companyof SATYAM including a director of the Company, whether a wholetime director ornot.
  ii.   “Board of Directors” means the “Board of Directors of SATYAM”
  iii.   “Compensation Committee” means a committee of directors constitutedand authorised by the “Board of Directors” of SATYAM consisting of a majority ofindependent directors
  iv.   “Eligible Associate” means an Employee who fulfills the criteriafixed for eligibility to the benefits of the Plan as per the Appraisal process ofSATYAM
      However, that Sri B Ramalinga Raju and Sri B Rama Raju who are the promoterdirectors of SATYAM will not be eligible for the benefits of the Plan.
  v.   “Exercise” means the act of making of an application by the Associateto SATYAM for issue of shares against option vested in him in pursuance of theASOP’B”.
  vi.   “Exercise Period” means the period after vesting within which theemployee should exercise his right to apply for shares against the option vestedin him in pursuance of ASOP ‘B’. Such period shall be after 12 months from thedate of Grant of Options to the Associate but within 60 months from the date ofVesting of Options in the Associate provided the Contract of Service between theAssociate and the Company has not ceased. Options not exercised by Associatesbefore the expiry of the Exercise period will lapse and become void for allpurposes.



  vii.   “Exercise Price” means the Exercise Price determined by theCompensation Committee from time to time in accordance with the notifications,guidelines andclarifications issued by SEBI or any other statutory authority from time to time asapplicable, which shall be paid by the Associate at the time of Exercise.
  viii.   “Grant” means the act of issue of option to Associates under“ASOP’B’”.
  ix.   “Fair Market Value” / “Market Price” of a share on a date means theclosing price of the shares on that date on the stock exchange on which the sharesof SATYAM are listed. Where the shares are quoted on more than one stock exchange,then the stock exchange where there is highest trading volume on that date shallbe considered. In case the share price is not quoted on any given date, the shareprice on the next trading day on the same parameters would be the Market price.
  x.   “Option” means a right but not an obligation granted to an Associatein pursuance of ASOP’B’ to apply for shares of the Company at a pre-determinedprice on fulfillment of certain conditions.
  xi.   “Option Agreement” means a written or typed or printed or electronicagreement between SATYAM and the Optionee giving the terms and conditions ofASOP’B’
  xii.   “Optionee” means the holder of an outstanding Option granted pursuantto ASOP’B’.
  xiii.   “Plan” means “Associate Stock Option Plan ‘B’” for Associates.
  xiv.   “SATYAM” means “Satyam Computer Services Limited”.
  xv.   “Share” means equity share of SATYAM
  xvi.   “Vesting” means the process by which the Associate is given the rightto apply for shares of SATYAM against the option granted to him in pursuance ofASOP’B’.
  xvii.   “Vesting period” means the period during which the vesting of theoption granted to the Associate in pursuance of ASOP’B’ takes place.
  i.   A Compensation Committee shall be constituted by the Board ofDirectors of SATYAM consisting of not more than 3 directors for administration andsuperintendent of the ASOP’B’.
  ii.   The majority of the members of the Compensation Committee formed bythe Board shall consist of independent directors of the Company.
  i.   The Compensation Committee shall formulate the detailed terms andconditions of the ASOP’B’ including:
  §   the Exercise Price from time to time
  §   The date of grant for each or a group of cases
  §   Selection of the Associates for the benefits of the ASOP’B’ among theeligible Associates from time to time
  §   Finalising the quantum of options to be granted to each Associate foreach such option
  §   Determining the vesting and Exercise periods
  §   Procedure for Exercise after vesting within Exercise Period
  §   Approval of forms for use under the ASOP’B’
  §   Prescribe, amend and rescind rules and regulations of the ASOP’B’
  §   Clarify, interpret and advise on the terms of the ASOP’B’
  §   Conditions under which Option vested in Associate may lapse in case ofcessation of service for misconduct, termination,



      resignation orotherwise, non-exercise of option within the exercise period etc.
  §   The procedure for making a fair and reasonable adjustment to the numberof options and to the Exercise Price in case of Rights Issue, Bonus Issuesand other corporate actions such as Consolidation or Split.
  §   The grant, vest and exercise of option in case of employees who are onlong leave
  §   The procedure for cashless exercise of options
Notwithstanding anything contained above, the Compensation Committee shall havepower to alter, waive, modify, extend or change the vesting and/or Exercise periodat its sole discretion subject to 9.1 clause dealing with minimum vesting period.
  ii.   The Compensation Committee can delegate its function(s) to ASOPAdvisory Board which shall discharge those function(s) guided by the principles offairness, impartiality and natural justice and make its recommendations toCompensation Committee.
  iii.   The decisions, determinations, interpretations of the CompensationCommittee shall be final and binding on all Associates and are not subject toreview or appeal at the request/demand of Associates.
  i.   The maximum number of shares which will be subject to Options andgranted under ASOP’B” are 26,00,000 shares of face value of Rs.10 each. The sharesmay be authorised but unissued or reacquired.
  ii.   The Board will make allotment of shares at its meetings dulyconvened, at periodic intervals, after the optionee exercises the conversionoption before the end of exercise period.
  iii.   The quantum and the exercise price of the ASOP’B’ can be suitablyadjusted based on fair and reasonable grounds in case of rights, bonus or anyother corporate actions including consolidation or split.
  iv.   In case of an Option expiring or becoming unexercisable for reasonsof non-fulfillment of conditions of ASOP’B’ without the right of purchase beingexercised, such options shall be available for future grant or sale under ASOP’B’unless the plan has been terminated. The shares that are already issued onexercise of right can not be returned to the ASOP’B’ and shall not be availablefor future grant or sale.
  i.   The Advisory Board will study and assess the eligible Associates,based on the guidelines for assessment formulated as part of the plan from time totime by the Compensation Committee and make recommendations of identifiedAssociates to the Compensation Committee.
  ii.   The Advisory Board shall have the right to exclude any one from thelist of eligible Associates, from being identified for the benefits of ASOP ‘B’.
  iii.   The recommendations of the ASOP Advisory Board shall be forwarded tothe Compensation Committee for its consideration and final decision.
  iv.   The ASOP Advisory Board can exercise any other functions as and whenthey are delegated to it by the Compensation Committee.
  i.   Basis of selection out of eligible Associates shall be as per theguidelines framed and approved by the Compensation Committee from time to time.
  ii.   The factors to be considered for assessment of Associates for selection shall be:



  §   Performance
  §   Organisational Development
  §   Customer Satisfaction
  iii.   The Compensation Committee shall have power to add or delete thefactors from time to time at its sole discretion.
  iv.   The weightage to the factors mentioned in 7.2 and any addition ordeletion to the list of factors shall be decided by the Compensation Committeeinitially and shall be reviewed periodically for implementation by the AdvisoryBoard.
  v.   The Compensation committee shall also determine the minimum scoringthat an Associate in each category has to score to be considered for the benefitsof the scheme.
  vi.   The Compensation Committee reserves the right to factor differentparameters and different weightages for different categories of the Associates.
  vii.   The Advisory Board shall recommend the quantum of eligibility to            shares for different categories of Associates on the basis of identifiedparameters and in terms of the scoring of the Associates in the assessment.
  viii.   The Advisory Board can also recommend Associates for awards forexceptional performance and/or contribution for the organisational growth forconsideration by the Compensation committee.
  ix.   The Advisory Board can also recommend new Associates joining Satyamto the benefits of the scheme.
  x.   The ASOP Advisory Board shall seek the guidance and clarifications ifany required, from the Compensation Committee in implementing the assessmentprocedure.
  i.   The Compensation Committee may, on such dates it shall determine,grant to such Eligible Associates as it may, at its absolute discretion select,such Options of SATYAM on such terms and conditions and for the consideration asit may decide. The compensation Committee may consider the recommendations of theAdvisory Board, while it reserves its right to reject the recommendations of theAdvisory Board in part or in full.
  ii.   The date of Grant of an Option, shall, for all purposes, be the dateon which the Compensation Committee makes the determinations of granting suchOption, or such other date as is determined by the Compensation Committee.Intimation of determination shall be given to each Associate to whom an Option isso granted within a reasonable time after the date of such grant.
  iii.   The Intimation of Stock Options Grant shall indicate the Optionsgranted, name of the Associate who was granted the Options, Exercise price pershare, Vesting Schedule and the Exercise Period, along with main terms andconditions of the Grant.
  iv.   The intimation of Stock Options Grant shall also include the term ofeach Option, subject to the condition that the term shall be no more than five (5)years from the date of vesting thereof.
  v.   No Associate shall be granted Options to purchase more than orequaling 1% of the issued capital of the company (excluding outstanding warrantsand conversions), at the time of grant of option, during any one year.
  vi.   The Plan shall become effective from the date of its adoption by theBoard of Directors of SATYAM. It shall continue in effect till all the



      Optionsgranted under the Plan are exercised or have been extinguished or unless the Planis terminated.
  i.   There shall be a minimum period of one year between the grant ofoptions and vesting of option.
  ii.   The vesting period and Exercise Period for different Options forDifferent Associates shall be determined by the Compensation Committee
  iii.   The Compensation Committee shall have the freedom to specify thelock-in period for the shares issued pursuant to exercise of option.
  iv.   The Associate shall not have right to receive any dividend or to voteor in any manner enjoy the benefits of a shareholder in respect of option grantedto him, till shares are issued on exercise of option.
  i.   The Exercise Price per share to be issued upon Exercise of an Optionshall be such prices as is determined by the Compensation Committee.
  ii.   Such Exercise price can be different for each associate or each groupof associates at the sole discretion of the Compensation Committee.
  iii.   The method and mode of payment of the Exercise Price for shares to beissued on exercise of options will be decided by the Compensation Committee at thetime of grant. The mode of payment can be in (I) cash (ii) cheque (iii) DemandDraft (iv) Electronic transfer of funds or (v) consideration received by theCompany under a cash less Exercise program implemented / to be implemented by theCompany in connection with the Plan or (vi) any combination of them.
  iv.   The Exercise Price shall be subject to fair and reasonable adjustmentin case of rights issues, bonus issues and other corporate actions. TheCompensation Committee shall be the authority to take such decisions.
  i.   Associates opting for Exercise can apply for conversion of Optionsinto shares in the form prescribed for the purpose, along with full payment forthe shares with respect to which the Option is being exercised.
  ii.   Exercise of Options can not be for a fraction of a share.
  iii.   Associates may at their discretion, opt for Exercise after the expiryof vesting period, but within the Exercise Period of all or part of the Optionsgranted to him/her.
  iv.   Associates who do not want to avail ASOP’B’, may opt out of thescheme any time before Exercise Period and surrender the Options to SATYAM forcancellation. Such options will be available for re-issuance under the ASOP’B’.
  i.   After completion of the Exercise Process, shares will be issued inthe name of the Associate, after completion of the required formalities asrequired by law
  ii.   The shares transferred to the Associate after conversion fromwarrants, shall be the absolute property of the Associate and will be held by theAssociate, subject to the lock-in period and subject to lien favouring SATYAM forany statutory liability that may arise out of the ASOP.
  iii.   As a registered shareholder, the Associate will be entitled to allthe benefits, which may accrue to him such as dividends, bonus, rights, etc.
  iv.   Shares issued as bonus shares or rights shares after conversion intoshares, after lock in period, will not be subjected to any lock in period.
  v.   The shares arising on conversion shall rank pari passu with all otherequity shares of SATYAM for the time being in force; from the date of allotment.



  i.   The amount paid by the Associate, if any, at the time of grant ofoption, may be refunded to the employee if the options are not vested due to non-fulfillment of condition(s) relating to vesting of option as per the ASOP’B’ atthe sole discretion of the Compensation Committee.
  i.   Option granted to an Associate shall not be transferable to anyperson.
  ii.   No person other than the Associate to whom the option is grantedshall be entitled to exercise the option.
  iii.   Under the cashless system of exercise, SATYAM may itself fund orpermit the empanelled stock brokers to fund the payment of exercise price whichshall be adjusted against the sale proceeds of some or all the shares, subject tothe provisions of the Companies Act, 1956 as amended from time to time.
  iv.   The option granted to the Associate shall not be pledgedhypothecated, mortgaged or otherwise alienated in any other manner.
  v.   In the event of the Associate dying in harness while in employment,all the options granted to him till such date shall vest in the legal heirs ornominees of the deceased Associate on the date of death. Such vested Options shallbe exercisable within twelve (12) months from the date of death of the Associate,but not earlier to ONE YEAR from the date of grant. Options not exercised withinsuch period will become invalid in the hands of the legal heirs or nominees andshall be available for re-issuance under the Plan.
  vi.   In case the Associate suffers a permanent incapacity while inemployment, all the option granted to him as on the date of permanentincapacitation, shall vest in him on that day. Such vested Options shall beexercisable within twelve (12) months from the date of Disability of theAssociate, but not earlier to ONE YEARfrom the date of grant.. Options not exercised within such period will becomeinvalid and shall be available for re-issuance under the Plan.
  vii.   In the event of resignation or termination of the Associate, alloptions not vested as on that day shall expire. However, the Associate shall beentitled to retain all the vested options as on the date of such resignation,termination. Such vested options shall be exercisable within three (3) months fromthe last working day Options not exercised within such period will become invalidand shall be available for re-issuance under the Plan.
  viii.   In the event of superannuation/retirement, the vesting schedule forthe options granted during the period of employment shall continue. In case ofdeath of a superannuated or retired Associate, all the outstanding options as onthat date shall vest immediately in the legal heirs or nominee(s) of the deceasedand such vested options shall be exercisable within twelve (12) months from thedate of death of the superannuated or retired Associate, but not earlier to oneyear from the date of grant. Options not exercised within such period becomeinvalid in the hands of legal heirs or nominees and shall be available forreissuance under the plan.
  i.   The shares allotted to Associates on conversion shall be listed onthe stock exchanges subject to the terms and conditions of this scheme



      and terms and conditions of the listing agreement.
  i.   Any tax liability on account of Grant of Options / Vesting / Exerciseof Options/ allotment of shares/ transfer of shares shall be that of the Associatealone.
  i.   The Compensation Committee reserves the right to change the terms andconditions of the scheme, at any time, at its discretion.
  ii.   Such changes in terms and conditions as per clause 18.1 can also bedue to any change in the law applicable to the scheme or any mutual agreementbetween SATYAM and its Associates.
  i.   This scheme shall not form part of any contract of employment betweenSATYAM and the Associate. The rights and obligations of any individual under thecontract of employment shall not be affected by his participation in this schemeor any right, which he may have to participate in it.
  ii.   Nothing in this scheme shall afford any Associate any additionalright(s) as to compensation or damages in consequence of the termination of suchoffice or employment for any reason.
  iii.   This scheme shall not confer any Associate any legal or equitableright against SATYAM either directly or indirectly or give rise to any cause ofaction in law or equity against SATYAM.
  i.   This scheme is subject to all applicable laws, rules, regulations,guidelines and to such approvals from any governmental agencies as may berequired. In case of any contradiction between the provisions of this Scheme andany provisions, rules, regulations, guidelines issued by any governmentalagencies, the provisions of law shall override the provisions of this scheme.
  ii.   The Associates who are granted warrants/ shares under the schemeshall comply with such requirements of law as may be necessary.
  i.   SATYAM does not guarantee any return on the equity investment made byAssociates as part of the scheme. Any loss due to fluctuations in the market priceof the equity including the shortfall in the expectations or projections and therisks associated with the investment are that of the Associate alone.