**Exhibit 10.3**

 

**FORM OF STOCK OPTION AWARDAGREEMENT**

 

***Certificate of Stock Option Grant***

1275 Harbor Bay Parkway

Alameda, CA 94502 USA

Main: 1-510-864-8800

Fax:  1-510-864-8802

 

Employee ID:

 

Youhave been granted an option to purchase UTStarcom, Inc. Common Stock asfollows:

 

**Type of Option:**

**Grant No.:**

**Stock Option Plan:**

**Date of Grant:**

**Vesting Start Date:**

**Total Number of Option Shares:**

**Option Exercise Price per Share:**

**Total Exercise Price of Option Shares:**

**Grant Expiration Date:**

 
| ** **                        | ** ** | **Vesting Frequency** | ** ** | **Total Shares Vesting** |
|-----------------------------------|------------|----------------------------|------------|------------------------------------|
| **Vesting Period Ends** | ** ** | **During Period**     | ** ** | **Over Period**               |
|                              |       |                       |       |                               |
|                              |       |                       |       |                               |
|                              |       |                       |       |                               |

 

You agree by acceptance of this grant that this grantis subject to the terms and conditions of the 2006 Equity Incentive Plan (asamended from time to time), the Stock Option Award Agreement for the Plan year(the “Award Agreement”), and any country-specific terms and conditionscontained in an Appendix to the Award Agreement if you are resident in ortransfer to one of the countries identified therein.

 

 
| [Signature] |   |
|-------------|--------|
|        |   |
| [Name]      |   |
|        |   |
| [Title]     |   |

 

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**UTSTARCOM, INC.**

** **

**2006 EQUITY INCENTIVE PLAN**

** **

**STOCK OPTION AWARD AGREEMENT**

** **

Unlessotherwise defined herein, the terms defined in the 2006 Equity Incentive Plan (the“**Plan**”) will have the same definedmeanings in this Stock Option Award Agreement (the “**AwardAgreement**”).

 

# **I.**                                         NOTICEOF STOCK OPTION GRANT

# ** **

## A.    The Plan Administrator of UTStarcom, Inc.,a Delaware corporation (the “**Company**”),hereby grants to the individual named in the Certificate of Stock Option Grant(the “**Participant**”) an option (the “**Option**”) to purchase the number of shares, as set forth inthe Certificate of Stock Option Grant, at the exercise price per share setforth in the Certificate of Stock Option Grant (the “**ExercisePrice**”), subject to the terms and conditions of the Plan, which isincorporated herein by reference. Subject to Section 19(c) of the Plan, in the event of aconflict between the terms and conditions of the Plan and the terms andconditions of this Award Agreement, the terms and conditions of the Plan willprevail.

##  

Subject to any acceleration provisions contained inthe Plan or set forth below, this Option may be exercised, in whole or in part,in accordance with the following schedule:

 

Twenty-five percent (25%) of the shares subject to the Option shallvest twelve (12) months after the Vesting Commencement Date, and 1/48 of the sharessubject to the Option shall vest each month thereafter on the same day of themonth as the Vesting Commencement Date (and if there is no corresponding day,on the last day of the month), subject to Participant continuing to be anactive Service Provider through such dates.

 

B.            TerminationPeriod:

 

This Option shall be exercisable for three (3) monthsafter Participant ceases to be an active Service Provider, unless suchtermination is due to Participant’s death or Disability, in which case thisOption shall be exercisable for****twelve (12)months after Participant ceases to be a Service Provider.  Notwithstanding the foregoing, in no eventmay this Option be exercised after the Term/Expiration Date as provided aboveand may be subject to earlier termination as provided in Section 14(c) ofthe Plan.

 

# **II.**                                     AGREEMENT

# ** **

## A.            Exercise of Option.

##  

#### 1.             Right to Exercise.  This Option is exercisable during its term inaccordance with the Vesting Schedule set out in the Certificate of Stock OptionGrant and the applicable provisions of the Plan and this Award Agreement.

####  

#### 2.             Method of Exercise.  This Option is exercisable by delivery of anexercise notice, in the form attached as Exhibit A (the “**Exercise Notice**”) or in such other form and manner asdetermined by the Administrator, which will state the election to exercise theOption, the number of shares in respect of which the Option is being exercised(the “**Exercised Shares**”), and such otherrepresentations and agreements as may be required by the Company pursuant tothe provisions of the Plan.  The ExerciseNotice will be completed by Participant and delivered to the Company.  The Exercise Notice will be accompanied bypayment of the aggregate Exercise Price as to all Exercised Shares, togetherwith any applicable withholding taxes. This Option will be deemed to be exercised upon receipt by the 

 

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#### Companyof such fully executed Exercise Notice accompanied by such aggregate ExercisePrice and any applicable tax withholding (as discussed in greater detail in Section II.Hbelow).

####  

No shares will beissued pursuant to the exercise of this Option unless such issuance andexercise comply with Applicable Laws. Assuming such compliance, for income tax purposes the Exercised Shareswill be considered transferred to Participant on the date the Option isexercised with respect to such Exercised Shares.

 

## B.            Method of Payment.

##  

Payment of the aggregate Exercise Price will be by anyof the following, or a combination thereof, at the election of Participant:

 

### 1.             cash;

###  

### 2.             check; or

###  

### 3.             consideration received by theCompany under a formal cashless exercise program adopted by the Company inconnection with the Plan.

###  

## C.            Non-Transferability of Option.  Unless determined otherwise by theAdministrator, this Option may not be transferred in any manner otherwise thanby will or by the laws of descent or distribution and may be exercised duringthe lifetime of Participant only by Participant.

##  

## D.            Rights as Stockholder.  Until the issuance (as evidenced by theappropriate entry on the books of the Company or of a duly authorized transferagent of the Company) of the shares, no right to vote or receive dividends orany other rights as a stockholder will exist with respect to the OptionedStock, notwithstanding the exercise of the Option.  The shares so acquired will be issued toParticipant as soon as practicable after exercise of the Option.  No adjustment will be made for a dividend orother right for which the record date is prior to the date of issuance, exceptas provided in Section 14 of the Plan.

##  

## E.             Restrictions on Exercise.  This Option may not be exercised until suchtime as the Plan has been approved by the shareholders of the Company, or ifthe issuance of such shares upon such exercise or the method of payment ofconsideration for such shares would constitute a violation of any ApplicableLaw or other law or regulation.  Further,Participant agrees that, if so requested by the Company, Participant shall notexercise this Option, or sell or otherwise transfer any shares or othersecurities of the Company.  Participantalso agrees that the Company may issue stop-transfer instructions with respectto Participant’s shares.

##  

## F.             Participant’s Representations.  In the event the shares have not beenregistered under the Securities Act of 1933, as amended, at the time thisOption is exercised, Participant shall, if required by Company, concurrentlywith the exercise of all or portions of the Option, deliver to Company his orher Investment Representations Statement in a form acceptable to the Company.

##  

## G.            Term of Option.

##  

This Option may beexercised only within the term set out in the Certificate of Stock Option Grant,and may be exercised during such term only in accordance with the Plan and theterms of this Award Agreement.

 

## H.            Tax Obligations.

##  

### 1.             Regardless of anyaction the Company or Participant’s employer (the “**Employer**”)takes with respect to any or all income tax, social insurance, payroll tax,payment on account or other Tax Obligations related to Participant’sparticipation in the Plan and legally applicable to Participant (“**Tax Obligations**”), Participant acknowledges that theultimate liability for all Tax Obligations is and remains Participant’sresponsibility and may exceed the amount actually withheld by the Company orthe Employer.  Participant furtheracknowledges that the 

 

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### Company and/or the Employer (a) make norepresentations or undertaking regarding the treatment of any Tax Obligationsin connection with any aspect of the Option, including, without limitation, thegrant, vesting or exercise of the Option, the issuance of shares at exercise ofthe Option, the subsequent sale of shares acquired pursuant to such issuanceand the receipt of any dividends; and (b) do not commit to and are underno obligation to structure the terms of the grant or any aspect of the Optionto reduce or eliminate Participant’s liability for Tax Obligations or achieveany particular tax result.  Furthermore,if Participant has become subject to tax in more than one jurisdiction betweenthe Grant Date and the date of any relevant taxable event, Participantacknowledges that the Company and/or the Employer (or former employer, asapplicable) may be required to withhold or account for Tax Obligations in morethan one jurisdiction.

###  

### 2.             Prior to anyrelevant taxable or tax withholding event, as applicable, Participant will payor make adequate arrangements satisfactory to the Company and/or the Employerto satisfy all Tax Obligations.  In thisregard, Participant authorizes the Company and/or the Employer, or theirrespective agents, at their discretion, to satisfy the obligations with regardto all Tax Obligations by one or a combination of the following: (a) withholdingfrom Participant’s wages or other cash compensation paid to Participant by theCompany, the Employer and/or any other Subsidiary or Affiliate; or (b) withholdingfrom proceeds of the sale of shares acquired at exercise of the Option eitherthrough a voluntary sale or through a mandatory sale arranged by the Company(on Participant’s behalf pursuant to this authorization); or (c) withholdingin shares to be issued at exercise of the Option.

###  

### 3.             To avoid anynegative accounting treatment, the Company may withhold or account for TaxObligations by considering applicable minimum statutory withholding amounts orother applicable withholding rates.  Ifthe obligation for Tax Obligations is satisfied by withholding in shares, fortax purposes, Participant is deemed to have been issued the full number of sharessubject to the exercised Option Shares, notwithstanding that a number of the sharesare held back solely for the purpose of paying the Tax Obligations due as aresult of any aspect of Participant’s participation in the Plan.

###  

### 4.             Finally, Participantshall pay to the Company or the Employer any amount of Tax Obligations that theCompany or the Employer may be required to withhold or account for as a resultof Participant’s participation in the Plan that cannot be satisfied by themeans previously described in this Section. The Company may refuse to issue or deliver the shares or the proceeds ofthe sale of shares, if Participant fails to comply with Participant’sobligations in connection with the Tax Obligations.

###  

## I.             Nature of Grant.  In accepting the grant of the Option,Participant acknowledges that:

##  

### 1.             the Plan is established voluntarilyby the Company, is discretionary in nature and may be modified, amended,suspended or terminated by the Company at any time;

###  

### 2.             the grant of the Option isvoluntary and occasional and does not create any contractual or other right toreceive future grants of Options, or benefits in lieu of Options, even ifOptions have been granted repeatedly in the past;

###  

### 3.             all decisions with respect tofuture grants of Options, if any, will be at the sole discretion of theCompany;

###  

### 4.             Participant is voluntarilyparticipating in the Plan;

###  

### 5.             the Option and the Option sharesare an extraordinary item that does not constitute compensation of any kind forservices of any kind rendered to the Company or the Employer and which isoutside the scope of Participant’s employment contract, if any;

###  

### 6.             the Option and the Option sharesare not intended to replace any pension rights or compensation;

 

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### 7.             the Option and the Option sharesare not part of normal or expected compensation or salary for any purposes,including, without limitation, calculating any severance, resignation,termination, redundancy, dismissal, end-of-service payments, bonuses,long-service awards, pension or retirement or welfare benefits or similarpayments and in no event should be considered as compensation for, or relatingin any way to, past services for the Company, the Employer or any Subsidiary orAffiliate;

###  

### 8.             the grant of the Option andParticipant’s participation in the Plan shall not be interpreted to form anemployment contract or relationship with the Company or any Subsidiary orAffiliate;

###  

### 9.             the future value of the Option andthe Option shares is unknown and cannot be predicted with certainty;

###  

### 10.           if the Option shares do not increasein value, the Option will have no value;

###  

### 11.           if Participant exercises the Optionand obtains shares, the value of those shares may increase or decrease invalue, even below the Exercise Price per share;

###  

### 12.           in consideration of the grant of theOption, no claim or entitlement to compensation or damages shall arise fromforfeiture of the Option resulting from termination of Participant’s status asa Service Provider for the Company or the Employer (for any reason whatsoeverand whether or not in breach of local labor laws), and Participant irrevocablyreleases the Company and the Employer from any such claim that may arise; if,notwithstanding the foregoing, any such claim is found by a court of competentjurisdiction to have arisen, Participant shall be deemed irrevocably to havewaived his or her entitlement to pursue such claim;

###  

### 13.           in the event of termination ofParticipant’s status as a Service Provider (whether or not in breach of locallabor laws), Participant’s right to vest in the Option under the Plan, if any,will terminate effective as of the date that Participant’s status as an activeService Provider terminates and will not be extended by any notice periodmandated under local law (*e.g.*, status asan active Service Provider would not include a period of “garden leave” orsimilar period pursuant to local law); the Administrator shall have theexclusive discretion to determine when Participant’s status as an activeService Provider has terminated for purposes of the Option grant; and

###  

### 14.           the Option and benefits under thePlan, if any, will not automatically transfer to another company in the case ofa merger, takeover or transfer of liability.

###  

## J.             No Advice Regarding Grant.  PARTICIPANT UNDERSTANDS THAT HE/SHE MAY SUFFERADVERSE TAX CONSEQUENCES AS A RESULT OF PARTICIPANT’S PARTICIPATION IN THE PLANINCLUDING, WITHOUT LIMITATION, EXERCISE OF THE OPTION, OR PURCHASE ORDISPOSITON OF THE SHARES.  PARTICIPANTREPRESENTS THAT PARTICIPANT HAS CONSULTED WITH ANY TAX, LEGAL OR FINANCIALCONSULTANTS PARTICIPANT DEEMS ADVISABLE IN CONNECTION WITH THE EXERCISE OF THEOPTION, OR PURCHASE OR DISPOSITON OF THE SHARES, AND THAT PARTICIPANT IS NOTRELYING ON THE COMPANY FOR ANY TAX ADVICE.

##  

## K.            *Data Privacy.*

##  

### *1.             Participant hereby explicitly andunambiguously consents to the collection, use and transfer, in electronic orother form, of Participant’s personal data as described in this  Award Agreement and any other Option grantmaterials by and among, as applicable, the Employer, the Company and any otherSubsidiary or Affiliate for the exclusive purpose of implementing,administering and managing my participation in the Plan.*

###  

### *2.             Participant understands that theCompany and the Employer may hold certain personal information aboutParticipant, including, but not limited to, Participant’s name, home address andtelephone number, date of birth, social insurance number or otheridentification number, salary, nationality, job title, any shares ordirectorships held in the Company, details of all Options or any otherentitlement to shares granted, canceled, exercised,*

 

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### *vested, unvested or outstanding in Participant’sfavor, for the exclusive purpose of implementing, administering and managingthe Plan (“Data”).*

###  

### *3.             Participant understands that Datawill be transferred to any broker designated by the Company and any other thirdparties as may be selected by the Company in the future, which are assistingthe Company with the implementation, administration and management of thePlan.  Participant understands that therecipients of the Data may be located in the United States or elsewhere, andthat the recipients’ country (e.g., the United States) may have different dataprivacy laws and protections than Participant’s country.  Participant understands that he or she mayrequest a list with the names and addresses of any potential recipients of theData by contacting Participant’s local human resources representative.  Participant authorizes the Company, anybroker designated by the Company and any other possible recipients which mayassist the Company (presently or in the future) with implementing,administering and managing the Plan to receive, possess, use, retain andtransfer the Data, in electronic or other form, for the sole purpose ofimplementing, administering and managing Participant’s participation in thePlan.  Participant understands that Datawill be held only as long as is necessary to implement, administer and manageParticipant’s participation in the Plan. Participant understands that he or she may, at any time, view Data,request additional information about the storage and processing of Data,require any necessary amendments to Data or refuse or withdraw the consentsherein, in any case without cost, by contacting in writing Participant’s localhuman resources representative. Participant understands, however, that refusing or withdrawing his orher consent may affect his or her ability to participate in the Plan.  For more information on the consequences ofParticipant’s refusal to consent or withdrawal of consent, Participantunderstands that he or she may contact Participant’s local human resourcesrepresentative.*

###  

## L.             Electronic Delivery.  The Company may, in its sole discretion,decide to deliver any documents related to current or future participation inthe Plan by electronic means. Participant hereby consents to receive such documents by electronicdelivery and agrees to participate in the Plan through an online or electronicsystem established and maintained by the Company or a third party designated bythe Company.

##  

## M.           Entire Agreement; Governing Law;Venue.

##  

### 1.             The Plan is incorporated herein byreference.  The Plan and this AwardAgreement (with any country-specific appendix thereto) constitute the entireagreement of the parties with respect to the subject matter hereof andsupersede in their entirety all prior undertakings and agreements of theCompany and Participant with respect to the subject matter hereof, and may notbe modified adversely to Participant’s interest except by means of a writingsigned by the Company and Participant.

###  

### 2.             This Award Agreement is governed bythe internal substantive laws, but not the choice of law rules, of California.  For purposes of litigating any dispute thatarises directly or indirectly from the relationship of the parties evidenced bythe Option or this Award Agreement, the parties hereby submit to and consent tothe exclusive jurisdiction of the State of California and agree that suchlitigation shall be conducted only in the courts of the County of Alameda, Stateof California, or the federal courts for the United States for the NorthernDistrict of California, and no other courts, where this grant is made and/or tobe performed.

###  

## N.            Language.  If Participant received this Award Agreementor any other document related to the Plan translated into a language other thanEnglish and if the meaning of the translated version differs from the Englishversion, the English version shall control.

##  

## O.            Severability.  The provisions of this Award Agreement areseverable and if any one or more provisions are determined to be illegal orotherwise unenforceable, in whole or in part, the remaining provisions shallnevertheless be binding and enforceable.

##  

## P.             Appendix.  Notwithstanding any provisions in this AwardAgreement, the Option granted to Participant shall be subject to any specialterms and conditions set forth in any Appendix to this Award Agreement forParticipant’s country.  Moreover, ifParticipant relocates to one of the countries included in the Appendix, the specialterms and conditions for such country shall apply to Participant, to the extentthe Company determines that the 

 

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## application of such terms and conditions is necessaryor advisable in order to comply with local law or to facilitate theadministration of the Plan.  The Appendixconstitutes part of this Award Agreement.

##  

## Q.            Imposition of Other Requirements.  The Company reserves the right to imposeother requirements on Participant’s participation in the Plan, on the Optionand on any shares acquired under the Plan, to the extent the Company determinesit is necessary or advisable in order to comply with local law or facilitatethe administration of the Plan, and to require Participant to execute any additionalagreements or undertaking that may necessary to accomplish the foregoing.

##  

## R.            No Guarantee of Continued Service.  PARTICIPANT ACKNOWLEDGES AND AGREES THAT THEVESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BYCONTINUING AS AN ACTIVE SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THEPARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THEACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARESHEREUNDER.  PARTICIPANT FURTHERACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONSCONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOTCONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICEPROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOTINTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (ORTHE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATEPARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUTCAUSE.

##  

By Participant’s receiptof this Award Agreement, Participant and the Company agree that this Option isgranted under and governed by the terms and conditions of the Plan and thisAward Agreement (including any country-specific appendix thereto).  Participant has reviewed the Plan and thisAward Agreement in their entirety, has had an opportunity to obtain the adviceof counsel prior to executing this Award Agreement and fully understands allprovisions of the Plan and this Award Agreement.  Participant hereby agrees to accept asbinding, conclusive and final all decisions or interpretations of theAdministrator upon any questions relating to the Plan and this AwardAgreement.  Participant further agrees tonotify the Company upon any change in the residence address indicated below.

 

***[Appendix with Country-SpecificTerms and Conditions Immediately Follows]***

 

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**APPENDIX**

 

**ADDITIONAL TERMS AND CONDITIONS**

**UTSTARCOM, INC.**

**2006 EQUITY INCENTIVE PLAN**

**STOCK OPTION AWARD AGREEMENT**

**FOR NON-U.S. PARTICIPANTS**

 

***TERMSAND CONDITIONS***

 

This Appendix includesadditional terms and conditions that govern the Option granted under the Planif Participant resides in one of the countries listed below during the exerciseperiod.  Certain capitalized terms usedbut not defined in this Appendix shall have the meanings set forth in the Plan,the Certificate of Stock Option Grant and/or the Award Agreement to which thisAppendix is attached.

 

***NOTIFICATIONS***

 

This Appendix alsoincludes notifications relating to exchange control and other issues of whichParticipant should be aware with respect to his or her participation in thePlan.  The information is based on theexchange control, securities and other laws in effect in the countries listed inthis Appendix, as of August 2008. Such laws are often complex and change frequently.  As a result, the Company strongly recommendsthat Participant not rely on the notifications herein as the only source ofinformation relating to the consequences of his or her participation in thePlan because the information may be outdated when Participant exercises theOption and purchases Shares, or when Participant subsequently sell sharesacquired under the Plan.

 

In addition, thenotifications are general in nature and may not apply to Participant’sparticular situation, and the Company is not in a position to assureParticipant of any particular result. Accordingly, Participant is advised to seek appropriate professionaladvice as to how the relevant laws in Participant’s country may apply toParticipant’s situation.  Finally, ifParticipant is a citizen or resident of a country other than the one in whichParticipant is currently working, the information contained herein may not beapplicable to Participant.

 

**CHINA**

 

***TERMSAND CONDITIONS***

 

**Cashless,Sell-All Exercise Restriction.**  Due to regulatoryissues in China, Participant will be required to exercise the Option and paythe Exercise Price and any Tax Obligation related thereto by a cashless, sell-allexercise, such that Participant will deliver a properly executed noticetogether with irrevocable instructions to a broker in a form acceptable to theCompany providing for the immediate sale of all of the shares acquired upon theexercise of the Option pursuant to a program adopted by the Company.  The cash proceeds of sale, less the aggregateExercise Price, any Tax Obligations and broker’s fees or commissions, will beremitted to Participant.  In the event ofchanges in regulatory requirements, the Company reserves the right to eliminatethe cashless sell-all method of exercise requirement and, in its solediscretion, to permit cash exercise or cashless sell-to-cover exercises.

 

**ExchangeControl Requirements.**  Participant understands andagrees that, pursuant to local exchange control requirements, Participant willbe required to repatriate the cash proceeds from the immediate sale of the sharesissued upon exercise of the Option to China. Participant understands that, under local law, such repatriation of hisor her cash proceeds may need to be effectuated through a special exchangecontrol account established by the Company or the Employer or one of theCompany’s other Subsidiaries, and Participant hereby consents and agrees thatany proceeds from the sale of any Shares he or she acquires may be transferredto such special account prior to being delivered to Participant.  In accordance with Section II.Q of the AwardAgreement, Participant further agrees to comply with any other requirementsthat may be imposed by the Company in the future in order to facilitatecompliance with exchange control requirements in China.

 

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**HONG KONG**

 

***TERMSAND CONDITIONS***

 

In the event that sharesare issued to Participant or his or her heirs earlier than six (6) monthsfrom the Date of Grant, due to legal requirements in Hong Kong, the shares maynot be sold prior to six (6) months after the Date of Grant.

 

***NOTIFICATIONS***

 

*Warning:  The offer of a grant of an Option and the sharesto be issued upon exercise do not constitute a public offering of securitiesunder Honk Kong law, and are available only to Service Providers of the Companyand its Subsidiaries.*

 

*Please notethat the contents of the Award Agreement, including the Certificate of StockOption Grant and this Appendix, and the Plan have not been reviewed by anyregulatory authority in Hong Kong.  TheParticipant is cautioned to review the Grant documentation carefully as it maynot include the same information as an offer made by a Hong Kong issuer.  If the Participant is in any doubt about anyof the contents of the Option Agreement, including this Appendix, the Certificateof Stock Option Grant or the Plan, the Participant should obtain independent legaladvice.*

 

**INDIA**

 

***TERMSAND CONDITIONS***

 

**Restrictionof Exercise Methods.  **Due to legal restrictions inIndia, Participant acknowledges and agrees that a cashless, “sell to cover”method of exercise, whereby a certain number of Option shares are soldimmediately upon exercise and the proceeds of the sale are remitted to theCompany to cover the aggregate Exercise Price and any Tax or FBT (see below) Obligations,with Participant receiving the remaining Shares, shall not be permitted.  In the event of changes in regulatoryrequirements, the Company reserves the right, in its sole discretion, to permita cashless “sell to cover” method of exercise.

 

**FringeBenefit Tax.**  By accepting the Option andparticipating in the Plan, Participant consents and agrees to assume any andall liability for fringe benefit tax (“FBT”) that may be payable by the Companyor the Employer in connection with the exercise of the Option.  Participant further understands that theCompany may refuse to deliver shares to Participant if the Company or theEmployer cannot recover from Participant the amount of FBT due in connectionwith the exercise of the Option.

 

***NOTIFICATIONS***

 

**ExchangeControl Information.**  Participant acknowledges andagree that any proceeds from the sale of shares acquired under the Plan and anydividends received in respect of the shares must be repatriated to India andconverted into local currency within 90 days of receipt.  Participant must obtain a foreign inwardremittance certificate (“FIRC”) from the bank where the foreign currency isdeposited and maintain the FIRC as evidence of repatriation of funds to beproduced if requested by the Reserve Bank of India or the Employer.

 

**JAPAN**

 

***NOTIFICATIONS***

 

**ExchangeControl Notification.**  If Participant acquires sharesvalued at more than ¥100,000,000 in a single transaction, the Participant mustfile a “Securities Acquisition Report” with the Ministry of Finance (“MOF”)through the Bank of Japan within 20 days of the purchase of such shares.

 

In addition, ifParticipant pays more than ¥30,000,000 in a single transaction for the purchaseof shares upon the exercise of the Option, the Participant must file a “PaymentReport” with the MOF through the Bank of Japan by the 20th day of the monthfollowing the month in which the payment was made.  The precise reporting requirements varydepending on whether the relevant payment is made through a bank in Japan.

 

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A Payment Reportis required independently from a Securities Acquisition Report.  Therefore, if the total amount thatParticipant pays upon a one-time transaction for exercising the Option andpurchasing shares exceeds ¥100,000,000, then Participant must file both aPayment Report and a Securities Acquisition Report.

 

**KOREA**

 

***NOTIFICATIONS***

 

**ExchangeControl Information.**  If Participant realizesUS$500,000 or more from the sale of shares, Participant must repatriate theproceeds to Korea within eighteen months of sale.

 

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