Document:

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                                                                     EXHIBIT 4.2

                                                                  Execution Copy

                      SECOND AMENDMENT TO CREDIT AGREEMENT

         THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of November 4, 2005
(this "Amendment"), is among Tecumseh Products Company, a Michigan corporation
(the "Borrower"), the Lenders party hereto and JPMorgan Chase Bank, N.A., as
agent for the Lenders (in such capacity, the "Agent").

                                     RECITAL

         The Borrower, the Lenders party thereto and the Agent are parties to a
Credit Agreement dated as of December 21, 2004, as modified by a waiver letter
dated June 30, 2005 and a First Amendment dated August 5, 2005 (the "Credit
Agreement"). The Borrower and the Guarantors desire to amend the Credit
Agreement and the Agent and the Lenders are willing to do so in accordance with
the terms hereof.

                                      TERMS

         In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:

                                   ARTICLE 1.
                                   AMENDMENTS

         The Credit Agreement shall be amended as follows:

         1.1      The following definitions are added to the Credit Agreement in
appropriate alphabetical order:

         "Second Amendment" means the Second Amendment to this Agreement dated
as of the Second Amendment Effective Date.

         "Second Amendment Effective Date" shall mean November 4, 2005.

         1.2      The following definition in the Credit Agreement is restated
as follows:

         "Second Amendment Financial Certificate" means a separate certificate
delivered by the Borrower to the Lenders dated the Second Amendment Effective
Date and identified as the "Second Amendment Financial Certificate", together
with any Supplemental Projections delivered under this Agreement.

         1.3      All references in the Credit Agreement to "First Amendment
Financial Certificate" shall be deleted and "Second Amendment Financial
Certificate" shall be substituted in each place thereof.

         1.4      Section 2.2(ii) is amended by deleting reference therein to
"$15,000,000" and substituting "$7,500,000" in place thereof.

                                       -1-
<PAGE>

         1.5      Section 5.5 is restated as follows:

         5.5.     Material Adverse Change. Since the date of the financial
statements of the Borrower filed with the Securities and Exchange Commission
with the Borrower's Quarterly Report on Form 10-Q for the period ended June 30,
2005 (the "Second Quarter 2005 Financial Statements"), there has been no change
in the business, Property, prospects, condition (financial or otherwise) or
results of operations of the Borrower and its Subsidiaries which, except for an
approximate $25,000,000 reduction in profits and assets resulting from the
establishment by the Company, during the fiscal quarter ended September 30,
2005, of a valuation allowance against deferred tax assets, as contemplated in
footnote 11 to the Second Quarter 2005 Financial Statements, could reasonably be
expected to have a Material Adverse Effect, except as disclosed in the SEC
Reports.

         1.6      Section 6.1(ii) is restated as follows:

                  (ii)     For each of the first three quarterly periods of each
                           of its fiscal years, upon the earlier of the date 40
                           days after the close of each such quarterly period
                           and the date the Company files its quarterly report
                           on Form 10-Q with the Securities and Exchange
                           Commission for such quarterly period, for itself and
                           its Subsidiaries, consolidated unaudited balance
                           sheets as at the close of each such period and
                           consolidated profit and loss and reconciliation of
                           surplus statements and a statement of cash flows for
                           the period from the beginning of such fiscal year to
                           the end of such quarter, all certified by its chief
                           financial officer.

         1.7      Section 6.1(x) is hereby amended by adding the following
proviso to the end of such Section:

                  "; provided, however that such reporting package shall also
                  contain a calculation in reasonable detail of Consolidated
                  EBITDA for the period of 12 fiscal months of the Borrower
                  ending on the last day of such fiscal month and for the period
                  beginning on the first day of the then current fiscal year of
                  the Borrower and ending on the last day of such fiscal month"

         1.8      Section 6.13(vi) is restated as follows:

         (vi)     Other leases, sales or other dispositions of its Property
                  that, together with all other Property of the Borrower and its
                  Subsidiaries previously leased, sold or disposed of (other
                  than inventory in the ordinary course of business) as
                  permitted by this clause (vi) shall be less than: (a) in the
                  2005 or 2006 fiscal year of the Borrower, $7,500,000 in the
                  aggregate for each such fiscal year, based on the Net Cash
                  Proceeds received by the Borrower or any of its Subsidiaries
                  from the lease, sale or other disposition of such Property,
                  (b) in any fiscal year of the Borrower thereafter, 15% of the
                  consolidated assets of the Borrower and its Subsidiaries or
                  Property which is responsible for more than 15% of the
                  consolidated net sales or of the consolidated net income of
                  the Borrower and its Subsidiaries, in each case, as would be
                  shown in the consolidated financial statements of the Borrower
                  and its Subsidiaries as of the end of the immediately
                  preceding fiscal year, and (c) cumulatively after the date
                  hereof, 30% of the consolidated assets of the Borrower and its
                  Subsidiaries or Property which is responsible for more than
                  30% of the consolidated net sales or of the consolidated net
                  income of the Borrower and its Subsidiaries, in each case, as
                  would be shown in the consolidated financial statements of the
                  Borrower and its Subsidiaries as of the end

                                       -2-
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                  of the most recent fiscal quarter ending prior to the date
                  hereof, provided that, immediately before and after any such
                  transaction, no Default or Unmatured Default shall exist or
                  shall have occurred and be continuing. Notwithstanding the
                  foregoing, and in addition to any other restrictions contained
                  herein, the Borrower will not, nor will permit its Subsidiary
                  to lease, sell or otherwise dispose of its Property to any
                  other person if such lease, sale or other disposition is not
                  permitted by the 2003 Senior Note Documents.

         1.9      Section 6.19.2 is restated as follows:

                           6.19.2.  Leverage Ratio. The Borrower will not permit
         the Leverage Ratio to be greater than 3.0:1.0 at any time on or after
         March 31, 2007.

         1.10     Section 6.19.6 is amended by deleting reference therein to
"December 31, 2006" and substituting "March 30, 2007" in place thereof.

         1.11     Sections 6.21 and 6.22 added pursuant to the First Amendment
and inadvertently designated as Sections 6.20 and 6.21 are re-designated as
Sections 6.21 and 6.22, respectively, and such Section 6.22 is restated as
follows:

                  6.22     Optional Payments and Modification of Debt. The
Borrower will not, nor will it permit any Subsidiary to, (i) make any optional
payment, defeasance (whether a covenant defeasance, legal defeasance or other
defeasance), prepayment, repurchase (including without limitation any offer to
repurchase) or other optional redemption of any 2003 Senior Note Debt or IRB
Debt, unless, concurrently therewith, all other Secured Obligations are paid in
full, (ii) enter into any agreement restricting the ability of the Borrower and
its Subsidiaries to amend or modify any Loan Document, (iii) enter into any
agreement or arrangement requiring any defeasance of any kind of any 2003 Senior
Note Debt or IRB Debt or (iv) pay or agree to pay any fee, interest or other
compensation or consideration (other than as required under the 2003 Senior Note
Documents and IRB Documents delivered to the Lenders prior to the First
Amendment Effective Date and under Amendment No. 3 to the 2003 Note Purchase
Agreement delivered to the Lenders pursuant to Section 3.3 of the Second
Amendment (which means that any fees in the documents delivered to the Agent and
the Lenders under Section 3.3 of the Second Amendment are permitted to be paid,
which the Agent and the Lenders understand to be the fees payable to Bingham
McCutchen LLP and Conway, Del Genio, Gries & Co., LLC agreed to by the Borrower
and the fee payable on March 31, 2006 under Section 7(b) of such Amendment No.
3) to any purchaser or other holder of the 2003 Senior Note Debt or IRB Debt.

                                   ARTICLE 2.
                                 REPRESENTATIONS

         The Borrower represents and warrants to the Agent and the Lenders that:

         2.1      The execution, delivery and performance of this Amendment are
within its powers, have been duly authorized by the Borrower and are not in
contravention of any Requirement of Law. This Amendment is the legal, valid and
binding obligations of the Borrower, enforceable against it in accordance with
the terms thereof, except to the extent the enforcement thereof may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.

                                       -3-
<PAGE>

         2.2      After giving effect to the amendments and waiver herein
contained and the amendment to the 2003 Note Purchase Agreement delivered under
Section 3.3 below and previously received waiver to the IRB Documents dated
August 5, 2005, the representations and warranties contained in the Credit
Agreement and the representations and warranties contained in the other Loan
Documents are true on and as of the date hereof with the same force and effect
as if made on and as of the date hereof, except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct on
and as of such earlier date, and no Default or Unmatured Default exists or has
occurred and is continuing on the date hereof.

         2.3      Complete and correct copies of Amendment No. 3 to 2003 Note
Purchase Agreement and all agreements and documents executed in connection
therewith have been delivered to the Lenders and such amendment and other
agreements and documents are being executed simultaneously herewith, and neither
the Borrower nor any Subsidiary thereof has paid (or promised to pay) any
amendment fee or any other direct or indirect compensation to any party to the
2003 Note Purchase Documents or the IRB Documents or any of their respective
Affiliates, attorneys, agents, consultants or other representatives (other than
as set forth in such amendment and other agreements and documents, which means
that any fees in the documents delivered to the Agent and the Lenders under
Section 3.3 below are permitted to be paid, which the Agent and the Lenders
understand to be the fees payable to Bingham McCutchen LLP and Conway, Del
Genio, Gries & Co., LLC agreed to by the Borrower and the fee payable on March
31, 2006 under Section 7(b) of such Amendment No. 3) or to any other creditor of
the Borrower or any Subsidiary in connection with the transactions contemplated
thereby. No amendment, waiver or other modification is being made to the IRB
Documents as of the date hereof and there is no default under the IRB Documents,
provided that the Borrower represents that the IRB Documents will be amended to
conform certain terms thereof to the Credit Agreement but no other material
amendments to the IRB Documents will be made.

         2.4      All Subsidiaries that are Guarantors (per the definition of
Guarantor) have duly executed and delivered a Guaranty and are parties to the
Consent and Agreement attached hereto.

                                   ARTICLE 3.
                              CONDITIONS PRECEDENT.

                  This Amendment shall become effective as of the date hereof,
provided that each of the following has been satisfied:

         3.1      This Amendment shall be signed by the Borrower, the Agent and
the Required Lenders.

         3.2      Each Guarantor shall have executed the Consent and Agreement
attached hereto.

         3.3      The Lenders shall have received an amendment to the 2003 Note
Purchase Agreement and all agreements and documents executed in connection
therewith, and all such amendments and waivers and other agreements and
documents shall be executed simultaneously herewith and shall be satisfactory to
the Required Lenders.

         3.4      The Lenders shall have received the Second Amendment Financial
Certificate, and such Second Amendment Financial Certificate shall be
satisfactory to the Required Lenders.

                                       -4-
<PAGE>

         3.5      The Borrower and the Guarantors shall have executed and
delivered such other agreements and instruments, and satisfied such other
conditions in connection with this Amendment as required by the Agent, including
but not limited to certificates, financial statements and projections and
opinions of counsel acceptable to the Agent.

                                   ARTICLE 4.
                                     WAIVER.

         The Lenders hereby waive (a) any Default as a result of the
non-compliance with Section 6.19.5 of the Credit Agreement for the fiscal
quarter ending September 30, 2005, (but do not waive compliance with such
Section 6.19.5 for any other fiscal quarter) and (b) any Default as a result of
the non-compliance with Section 6.19.2 of the Credit Agreement at any time on or
prior to the date hereof. The Lenders do not waive any other Default or
Unmatured Default.

                                   ARTICLE 5.
                                 MISCELLANEOUS.

         5.1      References in any Loan Document to the Credit Agreement shall
be deemed to be references to the Credit Agreement as amended hereby and as
further amended from time to time.

         5.2      The Borrower agrees to pay and to save the Agent harmless for
the payment of all costs and expenses arising in connection with this Amendment,
including the reasonable fees of counsel to the Agent in connection with
preparing this Amendment and the related documents.

         5.3      The Borrower acknowledges and agrees that the Agent and the
Lenders have fully performed all of their obligations under all documents
executed in connection with the Loan Documents and all actions taken by the
Agent and the Lenders are reasonable and appropriate under the circumstances and
within their rights under the Loan Documents. The Borrower represents and
warrants that it is not aware of, and hereby waives, any claims or causes of
action against the Agent or any Lender, any participant lender or any of their
successors or assigns.

         5.4      Except as expressly amended hereby, the Borrower agrees that
the Loan Documents are ratified and confirmed and shall remain in full force and
effect and that it has no set off, counterclaim, defense or other claim or
dispute with respect to any Loan Document or any transactions in connection
therewith. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement.

         5.5      This Amendment may be signed upon any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the same
instrument, and telecopied signatures shall be enforceable as originals.

                                       -5-
<PAGE>

         IN WITNESS WHEREOF, the parties signing this Amendment have caused this
Amendment to be executed, delivered and effective as of the day and year first
above written.

                                   TECUMSEH PRODUCTS COMPANY

                                   By: /s/ James S. Nicholson
                                   Title: Vice President, Treasurer & CFO

                                   JPMORGAN CHASE BANK, N.A., as a Lender and
                                   as Agent and LC Issuer

                                   By: /s/ Mike Kelly
                                   Title: Vice President

                                   COMERICA BANK, as a Lender and as Syndication
                                   Agent

                                   By: /s/ (not readable)
                                   Title: Account Officer

                                   FIFTH THIRD BANK

                                   By: /s/ (not readable)
                                   Title: Executive Vice President

                                   THE NORTHERN TRUST COMPANY

                                   By: /s/ (not readable)
                                   Title: Vice President

                                       -6-
<PAGE>

                              CONSENT AND AGREEMENT

         As of the date and year first above written, each of the undersigned
hereby:

         (a)      fully consents to the terms and provisions of the above
Amendment and the consummation of the transactions contemplated hereby, and
agrees to all terms and provisions of the above letter applicable to it;

         (b)      agrees that its Guaranty and all other Loan Documents executed
by the undersigned in connection with the Credit Agreement or otherwise in favor
of the Agent and/or the Lenders (collectively, the "Documents") are hereby
ratified and confirmed and shall remain in full force and effect, and the
undersigned acknowledges that it has no setoff, counterclaim, defense or other
claim or dispute with respect to any Document or any transactions in connection
therewith; and

         (c)      acknowledges that it is in its interest and to its financial
benefit to execute this consent and agreement.

                                   M.P. PUMPS, INC.
                                   TECUMSEH INVESTMENTS INC.
                                   TECUMSEH COMPRESSOR COMPANY
                                   LITTLE GIANT PUMP COMPANY
                                   DOUGLAS HOLDINGS, INC.
                                   TECUMSEH POWER COMPANY
                                   FASCO INDUSTRIES, INC.
                                   CONVERGENT TECHNOLOGIES
                                      INTERNATIONAL, INC.
                                   EVERGY, INC.
                                   TECUMSEH DO BRASIL USA, LLC
                                   TECUMSEH PUMP COMPANY
                                   TECUMSEH CANADA HOLDING COMPANY
                                   VON WEISE GEAR COMPANY
                                   MANUFACTURING DATA SYSTEMS, INC.

                                   By:
                                      ------------------------------------------
                                          James. Nicholson
                                   Their: Vice President and Treasurer

                                   EUROMOTOR, INC.

                                   By:
                                      ------------------------------------------
                                          James. Nicholson
                                   Its: Vice President and Treasurer

                                       -7-<PAGE>
                                                                    EXHIBIT 10.1

                                  SYNTEL, INC.
                      1997 STOCK OPTION AND INCENTIVE PLAN
                             (AMENDED AND RESTATED)

                              I. GENERAL PROVISIONS

     1.1 ESTABLISHMENT. On April 1, 1997, the Board of Directors ("Board") of
Syntel, Inc. ("Corporation") adopted the 1997 Stock Option and Incentive Plan
("Plan"), which was approved by the shareholders of the Corporation on April 1,
1997. This Plan is further amended and restated as of August 11, 1997, May 23,
2000, and May 2, 2005.

     1.2 PURPOSE. The purpose of the Plan is (i) to promote the best interests
of the Corporation and its shareholders by encouraging Employees and
non-employee directors of the Corporation and its Subsidiaries to acquire an
ownership interest in the Corporation through Options, Stock Appreciation
Rights, Restricted Stock, Performance Share Awards and Annual Incentive Awards,
thus identifying their interests with those of shareholders, and (ii) to enhance
the ability of the Corporation to attract and retain qualified Employees and
non-employee directors. It is the further purpose of the Plan to permit the
granting of Nonqualified Stock Options, Stock Appreciation Rights and Annual
Incentive Awards that will constitute performance based compensation, as
described in Section 162(m) of the Code, and regulations promulgated thereunder.

     1.3 DEFINITIONS. As used in this Plan, the following terms have the meaning
described below:

          (A) "AGREEMENT" means the written agreement that sets forth the terms
of a Participant's Option, Stock Appreciation Right, Restricted Stock Grant,
Performance Share Award or Annual Incentive Award.

          (B) "ANNUAL INCENTIVE AWARD" means an award that is granted in
accordance with Article VI of the Plan.

          (C) "BOARD" means the Board of Directors of the Corporation.

          (D) "CHANGE IN CONTROL" means the occurrence of any of the following
events: (i) the acquisition of ownership by a person, firm or corporation, or a
group acting in concert, of fifty-one percent, or more, of the outstanding
Common Stock of the Corporation in a single transaction or a series of related
transactions within a one-year period; (ii) a sale of all or substantially all
of the assets of the Corporation to any person, firm or corporation; or (iii) a
merger or similar transaction between the Corporation and another entity if
shareholders of the Corporation do not own a majority of the voting stock of the
corporation surviving the transaction and a majority in value of the total
outstanding stock of such surviving corporation after the transaction; provided,
however, that any such event involving any of the current shareholders of the
Corporation as of the date of adoption of this Plan by the Board (or any entity
at any time controlled by any such shareholder or shareholders) shall not be
included within the meaning of "Change in Control."

          (E) "CHANGE IN POSITION" means, with respect to any Participant: (i)
such Participant's involuntary termination of employment; or (ii) a significant
reduction in such Participant's duties, responsibilities, compensation and/or
fringe benefits, or the assignment to such Participant of duties inconsistent
with his position (all as in effect immediately prior to a Change in Control),
whether or not such Participant voluntarily terminates employment as a result
thereof.

          (F) "CODE" means the Internal Revenue Code of 1986, as amended.

          (G) "COMMITTEE" means the Compensation Committee of the Corporation,
which shall be comprised of two or more members of the Board.

          (H) "COMMON STOCK" means shares of the Corporation's authorized common
stock.

                                       26

<PAGE>

          (I) "CORPORATION" means Syntel, Inc., a Michigan corporation.

          (J) "DISABILITY" means total and permanent disability, as defined in
Code Section 22(e).

          (K) "EMPLOYEE" means an individual who has an "employment
relationship" with the Corporation or a Subsidiary, as defined in Treasury
Regulation 1.421-7(h), and the term "employment" means employment with the
Corporation, or a Subsidiary of the Corporation.

          (L) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time and any successor thereto.

          (M) "FAIR MARKET VALUE" means for purposes of determining the value of
Common Stock on the Grant Date, the Stock Exchange closing price of the
Corporation's Common Stock as reported in The Wall Street Journal (or as
otherwise reported by such Stock Exchange) for the Grant Date. In the event that
there were no Common Stock transactions on such date, the Fair Market Value
shall be determined as of the immediately preceding date on which there were
Common Stock transactions.

Unless otherwise specified in the Plan, "Fair Market Value" for purposes of
determining the value of Common Stock on the date of exercise means, the Stock
Exchange closing price of the Corporation's Common Stock on the last date
preceding the exercise on which there were Common Stock transactions.

          (N) "GRANT DATE" means the date on which the Committee authorizes an
individual Option, Stock Appreciation Right, Restricted Stock grant, Performance
Share Award or Annual Incentive Award, or such later date as shall be designated
by the Committee.

          (O) "INCENTIVE STOCK OPTION" means an Option that is intended to meet
the requirements of Section 422 of the Code.

          (P) "NONQUALIFIED STOCK OPTION" means an Option that is not intended
to constitute an Incentive Stock Option.

          (Q) "OPTION" means either an Incentive Stock Option or a Nonqualified
Stock Option.

          (R) "PARTICIPANT" means an Employee or non-employee director
designated by the Committee to participate in the Plan.

          (S) "PERFORMANCE SHARE AWARD" means a performance share award that is
granted in accordance with Article V of the plan.

          (T) "PLAN" means the Syntel, Inc. 1997 Stock Option and Incentive
Plan, the terms of which are set forth herein, and amendments thereto.

          (U) "RESTRICTION PERIOD" means the period of time during which a
Participant's Restricted Stock grant is subject to restrictions and is
nontransferable.

          (V) "RESTRICTED STOCK" means Common Stock that is subject to
restrictions.

          (W) "RETIREMENT" means termination of employment on or after the
attainment of age 65.

          (X) "STOCK APPRECIATION RIGHT" means the right to receive a cash or
Common Stock payment from the Corporation upon the surrender of a tandem Option,
in accordance with Article III of the Plan.

          (Y) "STOCK EXCHANGE" means the principal national securities exchange
on which the Common Stock is listed for trading or, if the Common Stock is not
listed for trading on a national securities exchange, such other recognized
trading market or quotation system upon which the largest number of shares of
Common Stock has been traded in the aggregate during the last 20 days before a
Grant Date or date on which an Option is exercised, whichever is applicable.

                                       27

<PAGE>

          (Z) "SUBSIDIARY" means a corporation defined in Code Section 424(f).

          (AA) "VESTED" means the extent to which an Option or Stock
Appreciation Right granted hereunder has become exercisable in accordance with
this Plan and the terms of the respective Agreement pursuant to which such
Option or Stock Appreciation Right was granted.

     1.4 ADMINISTRATION.

          (A) The Plan shall be administered by the Committee. At all times it
is intended that the directors appointed to serve on the Committee shall be
"disinterested persons" (within the meaning of Rule 16b-3 promulgated under the
Exchange Act) and "outside directors" (within the meaning of Code Section
162(m)); however, the mere fact that a Committee member shall fail to qualify
under either of these requirements shall not invalidate any award made by the
Committee if the award is otherwise validly made under the Plan. The members of
the Committee shall be appointed by, and may be changed at any time and from
time to time, at the discretion of the Board.

          (B) The Committee shall interpret the Plan, prescribe, amend, and
rescind rules and regulations relating to the Plan, and make all other
determinations necessary or advisable for its administration. The decision of
the Committee on any question concerning the interpretation of the Plan or its
administration with respect to any Option, Stock Appreciation Right, Restricted
Stock grant, Performance Share Award or Annual Incentive Award granted under the
Plan shall be final and binding upon all Participants. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any grant or award hereunder.

     1.5 PARTICIPANTS. Participants in the Plan shall be such Employees
(including Employees who are directors) and non-employee directors of the
Corporation and its Subsidiaries as the Committee in its sole discretion may
select from time to time. The Committee may grant Options, Stock Appreciation
Rights, Restricted Stock, Performance Share Awards and Annual Incentive Awards
to an individual upon the condition that the individual become an Employee of
the Corporation or of a Subsidiary, provided that the Option, Stock Appreciation
Right, Restricted Stock, Performance Share Award or Annual Incentive Award shall
be deemed to be granted only on the date that the individual becomes an
Employee.

     1.6 STOCK. The Corporation has reserved 8,000,000 shares of the
Corporation's Common Stock for issuance under the Plan. Shares subject to any
unexercised portion of a terminated, cancelled or expired Option, Stock
Appreciation Right, Restricted Stock grant or Performance Share Award granted
hereunder, and pursuant to which a Participant never acquired benefits of
ownership, including payment of a stock dividend (but excluding voting rights),
may again be subjected to grants and awards under the Plan, but shares
surrendered pursuant to the exercise of a Stock Appreciation Right are not
available for future grants and awards. All provisions in this Section 1.6 shall
be adjusted, as applicable, in accordance with Article VIII.

                                II. STOCK OPTIONS

     2.1 GRANT OF OPTIONS. The Committee, at any time and from time to time,
subject to Section 9.8, may grant Options to such Employees and for such number
of shares of Common Stock (whole or fractional) as it shall designate. Provided,
however, that no Employee may be granted Options and Stock Appreciation Rights
during any one fiscal year to purchase more than 100,000 shares of Common Stock.
Any Participant may hold more than one Option under the Plan and any other Plan
of the Corporation or Subsidiary. The Committee shall determine the general
terms and conditions of exercise, including any applicable vesting requirements,
which shall be set forth in a Participant's Option Agreement. No Option granted
hereunder may be exercised after the tenth anniversary of the Grant Date. The
Committee may designate any Option granted as either an Incentive Stock Option
or a Nonqualified Stock Option, or the Committee may designate a portion of an
Option as an Incentive Stock Option or a Nonqualified Stock Option. At the
discretion of the Committee, an Option may be granted in tandem with a Stock
Appreciation Right. Nonqualified Stock Options are intended to satisfy the
requirements of Code Section 162(m) and the regulations promulgated hereunder.

     2.2 INCENTIVE STOCK OPTIONS. Any Option intended to constitute an Incentive
Stock Option shall comply with the requirements of this Section 2.2 No Incentive
Stock Option shall be granted with an exercise price below the Fair Market Value
of Common Stock on the Grant Date or with an exercise term that extends beyond
10 years from the Grant Date. An Incentive Stock Option shall not be granted to
any Participant who owns (within the meaning of Code Section 424(d)) stock of
the Corporation or any Subsidiary possessing more than 10% of the total combined
voting power of all classes of stock of

                                       28

<PAGE>

the Corporation or a Subsidiary unless, at the Grant Date, the exercise price
for the Option is at least 110% of the Fair Market Value of the shares subject
to the Option and the Option, by its terms, is not exercisable more than 5 years
after the Grant Date. The aggregate Fair Market Value of the underlying Common
Stock (determined at the Grant Date) as to which Incentive Stock Options granted
under the Plan (including a plan of a Subsidiary) may first be exercised by a
Participant in any one calendar year shall not exceed $100,000. To the extent
that an Option intended to constitute an Incentive Stock Option shall violate
the foregoing $100,000 limitation (or any other limitation set forth in Code
Section 422), the portion of the Option that exceeds the $100,000 limitation (or
violates any other Code Section 422 limitation) shall be deemed to constitute a
Nonqualified Stock Option.

     2.3 OPTION PRICE. The Committee shall determine the per share exercise
price for each Option granted under the Plan. The Committee, at its discretion,
may grant Nonqualified Stock Options with an exercise price below 100% of the
Fair Market Value of Common Stock on the Grant Date. The foregoing
notwithstanding, no Incentive Stock Option shall be granted with an exercise
price below the Fair Market Value of Common Stock on the Grant Date. Neither the
Committee nor the Board shall amend any outstanding Options to reduce the
exercise price thereof.

     2.4 PAYMENT FOR OPTION SHARES.

          (A) The purchase price for shares of Common Stock to be acquired upon
exercise of an Option granted hereunder shall be paid in full in cash or by
personal check, bank draft or money order at the time of exercise; provided,
however, that in lieu of such form of payment a Participant may pay such
purchase price in whole or in part by tendering shares of Common Stock, which
are freely owned and held by the Participant independent of any restrictions,
hypothecations or other encumbrances, duly endorsed for transfer (or with duly
executed stock powers attached), or in any combination of the above. Shares of
Common Stock surrendered upon exercise shall be valued at the Stock Exchange
closing price for the Corporation's Common Stock on the day prior to exercise,
as reported in The Wall Street Journal (or as otherwise reported by such Stock
Exchange), and the certificate(s) for such shares, duly endorsed for transfer or
accompanied by appropriate stock powers, shall be surrendered to the
Corporation. Participants who are subject to short swing profit restrictions
under the Exchange Act and who exercise an Option by tendering
previously-acquired shares shall do so only in accordance with the provisions of
Rule 16b-3 of the Exchange Act.

          (B) At the discretion of the Committee, as set forth in a
Participant's Option Agreement, any Option granted hereunder may be deemed
exercised by delivery to the Corporation of a properly executed exercise notice,
acceptable to the Corporation, together with irrevocable instructions to the
Participant's broker to deliver to the Corporation sufficient cash to pay the
exercise price and any applicable income and employment withholding taxes, in
accordance with a written agreement between the Corporation and the brokerage
firm ("cashless exercise procedure").

                         III. STOCK APPRECIATION RIGHTS

     3.1 GRANT OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted, held and exercised in such form as set by the Committee on an
individual basis. A Stock Appreciation Right may be granted to a Participant
with respect to such number of shares of Common Stock of the Corporation as the
Committee may determine. The number of shares covered by the Stock Appreciation
Right shall not exceed the number of shares of stock which the Participant could
purchase upon the exercise of the related Option. Stock Appreciation Rights are
intended to satisfy the requirements of Code Section 162(m) and the regulations
promulgated thereunder.

     3.2 EXERCISE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right shall
be deemed exercised upon receipt by the Corporation of written notice of
exercise from the Participant. Except as permitted under Rule 16b-3, notice of
exercise of a Stock Appreciation Right by a participant subject to the insider
trading restrictions of Section 16(b) of the Securities Exchange Act of 1934,
shall be limited to the period beginning on the third day following the release
of the Corporation's quarterly or annual summary of earnings and ending on the
12th business day after such release. The exercise term of each Stock
Appreciation Right shall be limited to 10 years from its Grant Date or such
earlier period as set by the related Option. A Stock Appreciation Right shall be
exercisable only at such times and in such amounts as the related Option may be
exercised. A Stock Appreciation Right granted to a Participant subject to the
insider trading restrictions shall not be exercisable in whole or part during
the first six months of its term, unless the Participant dies or becomes
disabled during such six-month period.

     3.3 STOCK APPRECIATION RIGHT ENTITLEMENT.

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          (A) Upon exercise of a Stock Appreciation Right, a Participant shall
be entitled to payment from the Corporation, in cash, shares, or partly in each
(as determined by the Committee in accordance with any applicable terms of the
Agreement), of an amount equal to the difference between--

          (1) the Fair Market Value of the number of shares subject to the Stock
          Appreciation Right on the exercise date, and

          (2) the Option price of the associated Option multiplied by the number
          of shares available under the Option.

          (B) Notwithstanding paragraph (a) of this Section, upon exercise of a
Stock Appreciation Right the Participant shall be required to surrender the
associated Option.

     3.4 MAXIMUM STOCK APPRECIATION RIGHT AMOUNT PER SHARE. The Committee may,
at its sole discretion, establish (at the time of grant) a maximum amount per
share which shall be payable upon the exercise of a Stock Appreciation Right,
expressed as a dollar amount or as a percentage or multiple of the Option price
of a related Option.

                              IV. RESTRICTED STOCK

     4.1 GRANT OF RESTRICTED STOCK. Subject to the terms and conditions of the
Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under this Plan to such Employees and in such amounts as it
shall determine.

     4.2 RESTRICTED STOCK AGREEMENT. Each grant of Restricted Stock shall be
evidenced by a Restricted Stock Agreement that shall specify the terms of the
restrictions, including the restriction period, or periods, the number of
Restricted Stock shares subject to the grant, and such other provisions,
including performance goals, as the Committee shall determine.

     4.3 TRANSFERABILITY. Except as provided in this Article IV of the Plan, the
shares of Restricted Stock granted hereunder may not be transferred, pledged,
assigned, or otherwise alienated or hypothecated until the termination of the
applicable Restriction Period or for such period of time as shall be established
by the Committee and as shall be specified in the Restricted Stock Agreement, or
upon the earlier satisfaction of other conditions as specified by the Committee
in its sole discretion and as set forth in the Restricted Stock Agreement. All
rights with respect to the Restricted Stock granted to an Employee shall be
exercisable during a Participant's lifetime only by the Participant or the
Participant's legal representative.

     4.4 OTHER RESTRICTIONS. The Committee shall impose such other restrictions
on any shares of Restricted Stock granted under the Plan as it may deem
advisable including, without limitation, restrictions under applicable Federal
or State securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.

     4.5 CERTIFICATE LEGEND. In addition to any legends placed on certificates
pursuant to Sections 4.3 and 4.4, each certificate representing shares of
Restricted Stock shall bear the following legend:

     The sale or other transfer of the shares of stock represented by this
     certificate, whether voluntary, involuntary or by operation of law, is
     subject to certain restrictions on transfer set forth in the Syntel, Inc.
     1997 Stock Option and Incentive Plan ("Plan"), rules and administrative
     guidelines adopted pursuant to such Plan and a Restricted Stock Agreement
     dated ____________________. A copy of the Plan, such rules and such
     Restricted Stock Agreement may be obtained from the General Counsel of
     Syntel, Inc.

     4.6 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this Article
IV of the Plan, and subject to applicable federal and state securities laws,
shares covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the Restriction
Period. Once the shares are released from the restrictions, the Participant
shall be entitled to have the legend required by Section 4.5 of the Plan removed
from the applicable Common Stock certificate. Provided further, the Committee
shall have the discretion to waive the applicable Restriction Period with
respect to all or any part of a Restricted Stock grant.

     4.7 VOTING RIGHTS. During the Restriction Period, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to the Restricted Stock.

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<PAGE>

     4.8 DIVIDENDS AND OTHER DISTRIBUTIONS. Any dividend or other distribution
shares declared with respect to the Restricted Stock shall be accrued and paid
only after the restrictions on the shares of Restricted Stock lapse.

     4.9 RESTRICTED STOCK AWARDS GRANTED UNDER CODE SECTION 162(M). The
Committee, at its discretion, may designate certain Restricted Stock Awards as
granted pursuant to Code Section 162(m). Such Restricted Stock Awards must
comply with the following additional requirements, which override any other
provision set forth in this Article IV:

          (A) Each Code Section 162(m) Restricted Stock Award shall be based
upon pre-established, objective performance goals that are intended to satisfy
the performance-based compensation requirements of Code Section 162(m) and the
regulations promulgated thereunder. Further, at the discretion of the Committee,
a Restricted Stock Award also may be subject to goals and restrictions in
addition to the performance requirements.

          (B) Each Code Section 162(m) Restricted Stock Award shall be based
upon the attainment of specified levels of Corporation or Subsidiary performance
during a specified performance period, as measured by any or all of the
following: earnings (as measured by net income, net income per share, operating
income or operating income per share), sales growth and market capitalization.

          (C) For each designated performance period, the Committee shall (i)
select those Employees who shall be eligible to receive a Restricted Stock
Award, (ii) determine the performance period, which may be a one to three fiscal
year period, (iii) determine the target levels of Corporation or Subsidiary
performance, and (iv) determine the number of shares subject to a Restricted
Stock Award to be paid to each selected Employee. The Committee shall make the
foregoing determinations prior to the commencement of services to which a
Restricted Stock Award relates (or within the permissible time-period
established under Code Section 162(m)) and while the outcome of the performance
goals and targets is uncertain.

          (D) For each performance period, the Committee shall certify, in
writing: (i) if the Corporation has attained the performance targets, and (ii)
the number of shares pursuant to the Restricted Stock Award that are to become
freely transferable. The Committee shall have no discretion to waive all or part
of the conditions, goals and restrictions applicable to the receipt of full or
partial payment of a Restricted Stock Award.

          (E) Any dividends paid during the Restriction Period automatically
shall be reinvested on behalf of the Employee in additional shares of Restricted
Stock under the Plan, and such additional shares shall be subject to the same
performance goals and restrictions as the other shares under the Restricted
Stock Award. No shares under a Code Section 162(m) Restricted Stock Award shall
become transferable until the Committee certifies in writing that the
performance goals and restrictions have been satisfied.

          (F) No Employee, in any one fiscal year of the Company, shall be
granted a Code Section 162(m) Restricted Stock Award for more THAN 25,000 shares
of Common Stock.

          (G) Except as provided in this Article IV of the Plan, the shares
pursuant to a Restricted Stock Award granted hereunder may not be transferred,
pledged, assigned, or otherwise alienated or hypothecated until the applicable
performance targets and other restrictions are satisfied, as shall be certified
in writing by the Committee. All rights with respect to a Performance Share
Award granted hereunder shall apply only to such Employee or the Employee's
legal representative.

          (H) Except as otherwise provided in this Article IV of the Plan, and
subject to applicable federal and state securities laws, shares covered by each
Restricted Stock Award made under the Plan shall become freely transferable by
the Employee after the Committee has certified that the applicable performance
targets and restrictions have been satisfied. Once the shares are released from
the restrictions, the Employee shall be entitled to have the legend required by
Section 4.5 of the Plan removed from the applicable Common Stock certificate.

                           V. PERFORMANCE SHARE AWARDS

     5.1 GRANT OF PERFORMANCE SHARE AWARDS. The Committee, at its discretion,
may grant Performance Share Awards to Employees of the Corporation and its
Subsidiaries and may determine, on an individual or group basis, the performance
goals to be attained pursuant to each Performance Share Award.

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<PAGE>

     5.2 TERMS OF PERFORMANCE SHARE AWARDS. In general, Performance Share Awards
shall consist of rights to receive cash, Common Stock or a combination of each,
if designated performance goals are achieved. The terms of a Participant's
Performance Share Award shall be set forth in his individual Performance Share
Agreement. Each Agreement shall specify the performance goals applicable to a
particular Employee or group of Employees, the period over which the targeted
goals are to be attained, the payment schedule if the goals are attained, and
any other terms, conditions and restrictions applicable to an individual
Performance Share Award and not inconsistent with the provisions of the Plan.
The Committee, at its discretion, may waive all or part of the conditions, goals
and restrictions applicable to the receipt of full or partial payment of a
Performance Share Award.

     5.3 PERFORMANCE SHARE AWARDS GRANTED UNDER CODE SECTION 162(M). The
Committee, at its discretion, may designate certain Performance Share Awards as
granted pursuant to Code Section 162(m). Such Performance Share Awards must
comply with the following additional requirements, which override any other
provision set forth in this Article V:

          (A) The Committee, at its discretion, may grant Code Section 162(m)
Performance Share Awards based upon pre-established, objective performance goals
that are intended to satisfy the performance-based compensation requirements of
Code Section 162(m) and the regulations promulgated thereunder. Further, at the
discretion of the Committee, a Performance Share Award also may be subject to
goals and restrictions in addition to the performance requirements.

          (B) Each Code Section 162(m) Performance Share Award shall be based
upon the attainment of specified levels of Corporation or Subsidiary performance
during a specified performance period, as measured by any or all of the
following: earnings (as measured by net income, net income per share, operating
income or operating income per share), sales growth and market capitalization.

          (C) For each designated performance period, the Committee shall (i)
select those Employees who shall be eligible to receive a Code Section 162(m)
Performance Share Award, (ii) determine the performance period, which may be a
one to three fiscal year period, (iii) determine the target levels of
Corporation or Subsidiary performance, and (iv) determine the Performance Share
Award to be paid to each selected Employee. The Committee shall make the
foregoing determinations prior to the commencement of services to which a
Performance Share Award relates (or within the permissible time-period
established under Code Section 162(m)) and while the outcome of the performance
goals and targets is uncertain.

          (D) For each performance period, the Committee shall certify, in
writing: (i) if the Corporation has attained the performance targets, and (ii)
the cash or number of shares (or combination thereof) pursuant to the
Performance Share Award that shall be paid to each selected Employee (or the
number of shares that are to become freely transferable, if a Performance Share
Award is granted subject to attainment of the designated performance goals). The
Committee, may not waive all or part of the conditions, goals and restrictions
applicable to the receipt of full or partial payment of a Performance Share
Award.

          (E) Code Section 162(m) Performance Share Awards may be granted in two
different forms, at the discretion of the Committee. Under one form, the
Employee shall receive a Performance Share Award that consists of a legended
certificate of Common Stock, restricted from transfer prior to the satisfaction
of the designated performance goals and restrictions, as determined by the
Committee and specified in the Employee's Performance Share Agreement. Prior to
satisfaction of the performance goals and restrictions, the Employee shall be
entitled to vote the Performance Shares. Further, any dividends paid on such
shares during the performance/restriction period automatically shall be
reinvested on behalf of the Employee in additional Performance Shares under the
Plan, and such additional shares shall be subject to the same performance goals
and restrictions as the other shares under the Performance Share Award. No
shares under a Performance Share Award shall become transferable until the
Committee certifies in writing that the performance goals and restrictions have
been satisfied.

          (F) Under the second form, the Employee shall receive a Performance
Share Agreement from the Committee that specifies the performance goals and
restrictions that must be satisfied before the Company shall issue the payment,
which may be cash, a designated number of shares of Common Stock or a
combination of the two. Any certificate for shares under such form of
Performance Share Award shall be issued only after the Committee certifies in
writing that the performance goals and restrictions have been satisfied.

                                       32

<PAGE>

          (G) No Employee, in any one fiscal year of the Company, shall be
granted a Performance Share Award to receive more than 25,000 shares of Common
Stock.

          (H) Except as provided in this Article V of the Plan, the shares
pursuant to a Performance Share Award granted hereunder may not be transferred,
pledged, assigned, or otherwise alienated or hypothecated until the applicable
performance targets and other restrictions are satisfied, as shall be certified
in writing by the Committee. All rights with respect to a Performance Share
Award granted hereunder shall apply only to such Employee or the Employee's
legal representative.

          (I) In addition to any legends placed on certificates pursuant to
paragraph (h), each certificate representing shares under a Performance Share
Award shall bear the following legend:

          The sale or other transfer of the shares of stock represented by this
          certificate, whether voluntary, involuntary or by operation of law, is
          subject to certain restrictions on transfer set forth in the Syntel,
          Inc. 1997 Stock Option and Incentive Plan ("Plan"), rules and
          administrative guidelines adopted pursuant to such Plan and a
          Performance Share Agreement dated ______________. A copy of the Plan,
          such rules and such Performance Share Agreement may be obtained from
          the General Counsel of Syntel, Inc.

          (J) Except as otherwise provided in this Article V of the Plan, and
subject to applicable federal and state securities laws, shares covered by each
Performance Share Award made under the Plan shall become freely transferable by
the Employee after the Committee has certified that the applicable performance
targets and restrictions have been satisfied. Once the shares are released from
the restrictions, the Employee shall be entitled to have the legend required by
paragraph (i) removed from the applicable Common Stock certificate.

                           VI. ANNUAL INCENTIVE AWARDS

     6.1 GRANT OF ANNUAL INCENTIVE AWARDS.

          (A) The Committee, at its discretion, may grant Annual Incentive
Awards to such Employees as it may designate from time to time. Annual Incentive
Awards shall be based upon pre-established, objective performance goals that are
intended to satisfy the performance-based compensation requirements of Code
Section 162(m) and the regulations promulgated thereunder.

          (B) The determination of Annual Incentive Awards for a given year
shall be based upon the attainment of specified levels of Corporation or
Subsidiary performance as measured by any or all of the following: earnings (as
measured by net income, net income per share, operating income or operating
income per share), sales growth and market capitalization.

          (C) For each fiscal year of the Corporation, the Committee shall (i)
select those Employees who shall be eligible to receive an Annual Incentive
Award, (ii) determine the performance period, which may be a one to three fiscal
year period, (iii) determine target levels of Corporation performance, and (iv)
determine the level of Annual Incentive Award to be paid to each selected
Employee upon the achievement of each performance level as provided below. The
Committee shall make the foregoing determinations prior to the commencement of
services to which an Annual Incentive Award relates (or within the permissible
time-period established under Code Section 162(m)) and while the outcome of the
performance goals and targets is uncertain.

     6.2 ATTAINMENT OF PERFORMANCE TARGETS.

          (A) For each fiscal year, the Committee shall certify, in writing: (i)
the degree to which the Corporation has attained the performance targets, and
(ii) the amount of the Annual Incentive Award to be paid to each selected
Employee.

          (B) Notwithstanding anything to the contrary herein, the Committee
may, in its discretion, reduce any Annual Incentive Award based on such factors
as may be determined by the Committee, including, without limitation, a
determination by the Committee that such a reduction is appropriate: (i) in
light of pay practices of competitors; or (ii) in light of the Corporation's, a
subsidiary's, or an selected Employee's performance relative to competitors
and/or performance with respect to the Corporation's strategic business goals.

                                       33

<PAGE>

     6.3 PAYMENT OF ANNUAL INCENTIVE AWARDS. An Annual Incentive Award shall be
paid only if (i) the Corporation achieves at least the threshold performance
level; and (ii) the Committee makes the certification described in Section 6.2.

     6.4 ANNUAL INCENTIVE AWARD PAYMENT FORMS.

          (A) Annual Incentive Awards shall be paid in cash and/or shares of
Common Stock of the Corporation, at the discretion of the Committee. Payments
shall be made within 30 days following (i) a certification by the Committee that
the performance targets were attained, and (ii) a determination by the Committee
that the amount of an Annual Incentive Award shall not be decreased in
accordance with Section 6.2. The aggregate maximum Annual Incentive Award that
may be earned by any Participant on behalf of any one fiscal year (calculated as
of the last day of the fiscal year for which the Annual Incentive Award is
earned) may not exceed the lesser of two (2) times the Participant's base salary
for the fiscal year or $1,000,000.

          (B) The amount of an Annual Incentive Award to be paid upon the
attainment of each targeted level of performance shall equal a percentage of
each Participant's base salary for the fiscal year, as determined by the
Committee.

                         VIII. TERMINATION OF EMPLOYMENT

     7.1. OPTIONS AND STOCK APPRECIATION RIGHTS.

          (A) If, prior to the date that an Option or Stock Appreciation Right
first becomes Vested, a Participant's employment is terminated for any reason
(other than as provided in Section 8.2, after a Change in Control), the
Participant's right to exercise the Option or Stock Appreciation Right shall
terminate and all rights thereunder shall cease.

          (B) If, on or after the date that an Option or Stock Appreciation
Right first becomes Vested, a Participant's employment is terminated for any
reason other than death or Disability, the Participant shall have the right,
within the earlier of (i) the expiration of the Option or Stock Appreciation
Right, and (ii) three months after termination of employment, to exercise the
Option or Stock Appreciation Right to the extent that it was exercisable and
unexercised on the date of the Participant's termination of employment, subject
to any other limitation on the exercise of the Option or Stock Appreciation
Right in effect on the date of exercise. The Committee may designate in a
Participant's Agreement that an Option or Stock Appreciation Right shall
terminate at an earlier time than set forth above.

          (C) If, on or after the date that an Option or Stock Appreciation
Right first becomes Vested, a Participant dies while an Option or Stock
Appreciation Right is still exercisable, the person or persons to whom the
Option or Stock Appreciation Right shall have been transferred by will or by the
laws of descent and distribution, shall have the right within the exercise
period specified in the Participant's Agreement to exercise the Option or Stock
Appreciation Right to the extent that it was exercisable and unexercised on the
Participant's date of death, subject to any other limitation on exercise in
effect on the date of exercise. Provided, however, that the beneficial tax
treatment of an Incentive Stock Option may be forfeited if the Option is
exercised more than one year after a Participant's date of death.

          (D) If, on or after the date that an Option or Stock Appreciation
Right first becomes Vested, a Participant terminates employment due to
Disability, the Participant shall have the right, within the exercise period
specified in the Participant's Agreement to exercise the Option or Stock
Appreciation Right to the extent that it was exercisable and unexercised on the
date of the Participant's termination of employment, subject to any other
limitation on the exercise of the Option or Stock Appreciation Right in effect
on the date of exercise. If the Participant dies after termination of employment
while the Option or Stock Appreciation Right is still exercisable, the Option or
Stock Appreciation Right shall be exercisable in accordance with the terms of
paragraph (c) above.

          (E) The Committee, at the time of a Participant's termination of
employment, may accelerate a Participant's right to exercise an Option or extend
the exercise period of an Option or Stock Appreciation Right; provided, however
that the extension of the exercise period for an Incentive Stock Option may
cause such Option to forfeit its preferential tax treatment.

          (F) Shares subject to Options and Stock Appreciation Rights that are
not exercised in accordance with the provisions of (a) through (e) above shall
expire and be forfeited by the Participant as of their expiration date and shall
become available for new grants and awards under the Plan as of such date.

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<PAGE>

     7.2 RESTRICTED STOCK. If a Participant terminates employment for any reason
(other than as provided in Section 8.2, after a Change in Control), the
Participant's shares of Restricted Stock still subject to the Restriction Period
automatically shall expire and be forfeited by the Participant and, subject to
Section 1.6, shall be available for new grants and awards under the Plan as of
such termination date; provided, however, that the Committee, in its sole
discretion, may waive the restrictions remaining on any or all shares of
Restricted Stock and add such new restrictions to such shares of Restricted
Stock as it deems appropriate. Notwithstanding the foregoing, the Committee
shall not waive any restrictions on a Code Section 162(m) Restricted Stock
Award, but the Committee may include a provision in an Employee's Code Section
162(m) Restricted Stock Agreement stating that upon the Employee's termination
of employment due to (i) death, (ii) Disability, or (iii) involuntary
termination by the Company without cause prior to the attainment of the
associated performance goals and the termination of the Restriction Period, that
the performance goals and restrictions shall be deemed to have been satisfied on
a pro rata basis, so that the number of shares that become freely transferable
shall be based on the Employee's full number of months of employment during the
Restriction Period, and the Employee shall forfeit the remaining shares and his
rights to such forfeited shares shall terminate in full.

     7.3 PERFORMANCE SHARES. Performance Share Awards shall expire and be
forfeited by a Participant upon the Participant's termination of employment for
any reason (other than as provided in Section 8.2, after a Change in Control),
and such shares shall be available for new grants and awards under the Plan as
of such termination date; provided, however, that the Committee, in its
discretion, may waive all or part of the conditions, goals and restrictions
applicable to the receipt of full or partial payment of a Performance Share
Award. Notwithstanding the foregoing, the Committee shall not waive any
restrictions on a Code Section 162(m) Performance Share Award, but the Committee
may include a provision in an Employee's Code Section 162(m) Performance Share
Agreement stating that upon the Employee's termination of employment due to (i)
death, (ii) Disability, or (iii) involuntary termination by the Company without
cause prior to the attainment of the associated performance goals and
restrictions, that the performance goals and restrictions shall be deemed to
have been satisfied on a pro rata basis, so that the number of shares that
become freely transferable shall be based on the Employee's full number of
months of employment during the employment period, and the Employee shall
forfeit the remaining shares and his rights to such forfeited shares shall
terminate in full.

     7.4 ANNUAL INCENTIVE AWARDS.

          (A) A Participant who has been granted an Annual Incentive Award and
terminates employment due to Retirement, Disability or death prior to the end of
the Corporation's fiscal year shall be entitled to a prorated payment of the
Annual Incentive Award, based on the number of full months of employment during
the fiscal year. Any such prorated Annual Incentive Award shall be paid at the
same time as regular Annual Incentive Awards or, in the event of the
Participant's death, to the beneficiary designated by the Participant.

          (B) A Participant who has been granted an Annual Incentive Award and
resigns or is terminated for any reason (other than Retirement, Disability or
death), before the end of the Corporation's fiscal year for which the Annual
Incentive Award is to be paid, shall forfeit the right to an Annual Incentive
Award payment for that fiscal year.

     7.5 OTHER PROVISIONS. The transfer of an Employee from one corporation to
another among the Corporation and any of its Subsidiaries, or a leave of absence
under the leave policy of the Corporation or any of its Subsidiaries shall not
be a termination of employment for purposes of the Plan, unless a provision to
the contrary is expressly stated by the Committee in a Participant's Agreement
issued under the Plan.

                     VIII. ADJUSTMENTS AND CHANGE IN CONTROL

     8.1 ADJUSTMENTS.

          (A) The total amount of Common Stock for which Options, Stock
Appreciation Rights, Restricted Stock, Performance Share Awards and Annual
Incentive Awards may be issued under the Plan, and the number of shares subject
to any such grants or awards (both as to the number of shares of Common Stock
and the Option price), shall be adjusted pro rata for any increase or decrease
in the number of outstanding shares of Common Stock resulting from payment of a
stock dividend on Common Stock, a subdivision or combination of shares of Common
Stock, or a reclassification of Common Stock.

                                       35

<PAGE>

          (B) The foregoing adjustments shall be made by the Committee. Any such
adjustment may provide for the elimination of any fractional share which might
otherwise become subject to an Option, Stock Appreciation Right, Restricted
Stock grant, Performance Share Award or Annual Incentive Award.

     8.2 CHANGE IN CONTROL. Notwithstanding anything contained herein to the
contrary, in the event of a Participant's Change in Position subsequent to a
Change in Control, (i) any outstanding Option or Stock Appreciation Right
granted to such Participant hereunder immediately shall become fully Vested and
exercisable in full, regardless of any installment provision applicable to such
Option or Stock Appreciation Right; (ii) the remaining Restriction Period on any
Restricted Stock granted to such Participant hereunder immediately shall lapse
and the shares shall become fully transferable, subject to any applicable
federal or state securities laws; (iii) all performance goals and conditions
shall be deemed to have been satisfied and all restrictions shall lapse on any
outstanding Performance Share Awards granted to such Participant hereunder, and
such Awards shall become payable in full; and (iv) for purposes of any Annual
Incentive Awards granted to such Participant hereunder, the determination of
whether the performance targets have been achieved shall be made as of the date
of the Change in Control and payments due should become immediately payable.

                                IX. MISCELLANEOUS

     9.1 PARTIAL EXERCISE/FRACTIONAL SHARES. The Committee may permit, and shall
establish procedures for, the partial exercise of Options and Stock Appreciation
Rights granted under the Plan. No fractional shares shall be issued in
connection with the exercise of a Stock Appreciation Right or payment of a
Performance Share Award or Annual Incentive Award; instead, the Fair Market
Value of the fractional shares shall be paid in cash, or at the discretion of
the Committee, the number of shares shall be rounded down to the nearest whole
number of shares and any fractional shares shall be disregarded.

     9.2 RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on the exercise of an Option or
Stock Appreciation Right (including, without limitation, the right of the
Committee to limit the time of exercise to specified periods), or the grant of
Restricted Stock or the payment of a Performance Share Award or Annual Incentive
Award, as may be required to satisfy the requirements of Rule 16b-3 of the
Exchange Act.

     9.3 RIGHTS PRIOR TO ISSUANCE OF SHARES. No Participant shall have any
rights as a shareholder with respect to shares covered by an Option, Stock
Appreciation Right, Restricted Stock grant, Performance Share Award or Annual
Incentive Award until the issuance of a stock certificate for such shares. No
adjustment shall be made for dividends or other rights with respect to such
shares for which the record date is prior to the date the certificate is issued.

     9.4 NON-ASSIGNABILITY. No Option, Stock Appreciation Right, Restricted
Stock grant, Performance Share Award or Annual Incentive Award shall be
transferable by a Participant except by will or the laws of descent and
distribution. During the lifetime of a Participant, an Option or Stock
Appreciation Right shall be exercised only by the Participant, except in the
event of the Participant's Disability, in which case the Participant's legal
guardian or the individual designated in the Participant's durable power of
attorney may exercise the Option or Stock Appreciation Right. Any transferee of
the Option or Stock Appreciation Right shall take the same subject to the terms
and conditions of this Plan. No transfer of an Option, Stock Appreciation Right,
Restricted Stock grant, Performance Share Award or Annual Incentive Award by
will or the laws of descent and distribution shall be effective to bind the
Corporation unless the Corporation shall have been furnished with written notice
thereof and a copy of the will and/or such evidence as the Corporation may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of the Option, Stock
Appreciation Right, Restricted Stock grant, Performance Share Award or Annual
Incentive Award.

     9.5. SECURITIES LAWS.

          (A) Anything to the contrary herein notwithstanding, the Corporation's
obligation to sell and deliver Common Stock pursuant to the exercise of an
Option or Stock Appreciation Right or deliver Common Stock pursuant to a
Restricted Stock grant, Performance Share Award or Annual Incentive Award is
subject to such compliance with federal and state laws, rules and regulations
applying to the authorization, issuance or sale of securities as the Corporation
deems necessary or advisable. The Corporation shall not be required to sell and
deliver or issue Common Stock unless and until it receives satisfactory
assurance that the issuance or transfer of such shares shall not violate any of
the provisions of the Securities Act of 1933 or the Securities Exchange Act of
1934, or the rules and regulations of the Securities Exchange Commission
promulgated thereunder or those of the Stock Exchange or any stock exchange on
which the Common Stock

                                       36

<PAGE>

may be listed, the provisions of any state laws governing the sale of
securities, or that there has been compliance with the provisions of such acts,
rules, regulations and laws.

          (B) The Committee may impose such restrictions on any shares of Common
Stock acquired pursuant to the exercise of an Option or Stock Appreciation Right
or the grant of Restricted Stock or the payment of a Performance Share Award or
Annual Incentive Award under the Plan as it may deem advisable, including,
without limitation, restrictions (i) under applicable federal securities laws,
(ii) under the requirements of the Stock Exchange or any other securities
exchange, recognized trading market or quotation system upon which such shares
of Common Stock are then listed or traded, and (iii) under any blue sky or state
securities laws applicable to such shares. No shares shall be issued until
counsel for the Corporation has determined that the Corporation has complied
with all requirements under appropriate securities laws.

     9.6 FOREIGN LAW RESTRICTIONS. Anything to the contrary herein
notwithstanding, the Corporation's obligation to sell and deliver Common Stock
pursuant to the exercise of an Option or Stock Appreciation Right or deliver
Common Stock pursuant to a Restricted Stock grant, Performance Share Award or
Annual Incentive Award is subject to compliance with the laws, rules and
regulations of any foreign nation applying to the authorization, issuance or
sale of securities, providing of compensation, transfer of currencies and other
matters, as may apply to any Participant hereunder who is a resident of such
foreign nation. To the extent that it shall be impermissible under such foreign
laws for such a Participant to pay the exercise price for any Option granted
under the Plan (to the extent Vested), the Committee may treat such Participant
as being entitled instead to exercise additional Stock Appreciation Rights (to
the extent not previously granted in tandem with such Option) which are of
equivalent value to the Participant, as determined by comparing the Fair Market
Value upon exercise of the number of shares subject to the Option (to the extent
Vested), less the Option price of such shares. Further, to the extent that it
shall be impermissible under such foreign laws for the Corporation to deliver
Common Stock to any such Participant pursuant to any Option, Stock Appreciation
Right, Restricted Stock grant, Performance Share Award or Annual Incentive Award
granted under the Plan (to the extent Vested), the Committee may arrange for
payment to the Participant of an equivalent amount of cash in lieu of such
shares (less any amount otherwise payable by the Participant), in accordance
with all applicable United States and foreign currency restrictions and
regulations. To the extent that the Corporation is restricted in accordance with
such foreign laws from delivering shares of Common Stock to Participants as
would otherwise be provided for in this Plan, the Corporation shall be released
from such obligation and shall not be subject to the claims of any Participant
hereunder with respect thereto.

     9.7 WITHHOLDING TAXES.

          (A) The Corporation shall have the right to withhold from a
Participant's compensation or require a Participant to remit sufficient funds to
satisfy applicable withholding for income and employment taxes upon the exercise
of an Option or Stock Appreciation Right or the lapse of the Restriction Period
on a Restricted Stock grant or the payment of a Performance Share Award or
Annual Incentive Award. A Participant may make a written election to tender
previously-acquired shares of Common Stock or have shares of stock withheld from
the exercise, provided that the shares have an aggregate Fair Market Value
sufficient to satisfy in whole or in part the applicable withholding taxes. The
cashless exercise procedure of Section 2.4 may be utilized to satisfy the
withholding requirements related to the exercise of an Option. At no point shall
the Corporation withhold from the exercise of an Option more shares than are
necessary to meet the established tax withholding requirements of federal, state
and local obligations.

          (B) A Participant subject to the insider trading restrictions of
Section 16(b) of the Exchange Act may use Common Stock to satisfy the applicable
withholding requirements only if such disposition is approved in accordance with
Rule 16b-3 of the Exchange Act. Any election by a Participant to utilize Common
Stock for withholding purposes is further subject to the discretion of the
Committee.

     9.8 TERMINATION AND AMENDMENT.

          (A) The Board may terminate the Plan, or the granting of Options,
Stock Appreciation Rights, Restricted Stock, Performance Share Awards or Annual
Incentive Awards under the Plan, at any time. No new grants or awards shall be
made under the Plan after the tenth anniversary of the adoption of this Plan by
the Board, or approval by the shareholders, whichever is earlier, as noted in
Section 1.1.

          (B) The Board may amend or modify the Plan at any time and from time
to time, but no amendment or modification, without the approval of the
shareholders of the Corporation, shall (i) materially increase the benefits

                                       37

<PAGE>

accruing to Participants under the Plan; (ii) increase the amount of Common
Stock for which grants and awards may be made under the Plan, except as
permitted under Sections 1.6 and 8.1; or (iii) change the provisions relating to
the eligibility of individuals to whom grants and awards may be made under the
Plan.

          (C) No amendment, modification, or termination of the Plan shall in
any manner affect any Option, Stock Appreciation Right, Restricted Stock grant,
Performance Share Award or Annual Incentive Award granted under the Plan without
the consent of the Participant holding the Option, Stock Appreciation Right,
Restricted Stock grant, Performance Share Award or Annual Incentive Award.

     9.9 EFFECT ON EMPLOYMENT. Neither the adoption of the Plan nor the granting
of any Option, Stock Appreciation Right, Restricted Stock, Performance Share
Award or Annual Incentive Award pursuant to the Plan shall be deemed to create
any right in any individual to be retained or continued in the employment of the
Corporation or a Subsidiary.

     9.10 USE OF PROCEEDS. The proceeds received from the sale of Common Stock
pursuant to the Plan will be used for general corporate purposes of the
Corporation.

     9.11 APPROVAL OF PLAN. As noted in Section 1.1, the Plan has been approved
by the shareholders of the Corporation within 12 months of adoption of the Plan
by the Board, as required by Section 422 of the Code.

     IN WITNESS WHEREOF, this Amended and Restated 1997 Stock Option and
Incentive Plan has been executed on behalf of the Corporation on the 3rd day of
June, 2005.

                                        SYNTEL, INC.

                                        By: /s/ BHARAT DESAI
                                            ------------------------------------
                                            Bharat Desai, President

                                       38

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