exv10w2



 






Exhibit 10.2

Non-Employee Directors

With Full Acceleration of Vesting




PeopleSupport, Inc.

2004 STOCK INCENTIVE PLAN



STOCK OPTION AGREEMENT




	 	 	 
	Tax Treatment

	 	This Option is not intended to be an incentive stock option under
Section 422 of the Internal Revenue Code, as provided in the Notice of
Stock Option Grant. Even if this Option is designated as an incentive
stock option, it shall be deemed to be a nonstatutory option to the
extent required by the $100,000 annual limitation under Section 422(d)
of the Internal Revenue Code.
	 
	 	 
	Vesting

	 	This Option becomes exercisable in installments, as shown in the Notice
of Stock Option Grant. This Option will in no event become exercisable
for additional shares after your Service has terminated for any reason.






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Non-Employee Directors

With Full Acceleration of Vesting




	 	 	 
	Vesting on a

Change in Control

	 	In the event of a Change in Control (as hereinafter defined), all of
the remaining unvested shares subject to this Option at the time of
such event shall accelerate and become immediately exercisable upon the
effective date of such event.
	 
	 	 
	 

	 	A “Change in Control” shall mean the occurrence of any of the following
events:







          (i) A change in the composition of the Board of Directors occurs, as a
result of which fewer than one-half of the incumbent directors are
directors who:




               (A) Had been directors of the Company on the “look-back date” (as
hereinafter defined) (the “original directors”); and




               (B) Were elected, nominated for election or appointed to the Board of
Directors with the affirmative vote of at least a majority of the
aggregate of the original directors, or a committee thereof, who were
still in office at the time of the election, nomination or appointment
and the directors whose election, nomination or appointment was
previously so approved (the “continuing directors”); or




          (ii) Any “person” (as hereinafter defined) who by the acquisition or
aggregation of securities, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act (as defined in the Plan)),
directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company’s then outstanding
securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the
“Base Capital Stock”); except that any change in the relative
beneficial ownership of the Company’s securities by any person
resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any decrease thereafter
in such person’s ownership of securities, shall be disregarded until
such person increases in any manner, directly or indirectly, such
person’s beneficial ownership of any securities of the Company; or




          (iii) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if
persons who were not stockholders of the Company immediately prior to
such merger, consolidation or other reorganization own immediately
after such merger, consolidation or other reorganization 50% or more of
the voting power of the outstanding securities of each of (A) the
continuing or surviving entity and (B)
any direct or indirect parent corporation of such continuing or
surviving entity; or




          (iv) The sale, transfer or other disposition of all or substantially
all of the Company’s assets.




     For purposes of subsection (i) above, the term “look-back” date shall
mean the later of (1) the Effective Date (as defined in the Plan) or
(2) the date 24 months prior to the date of the event that may
constitute a Change in Control.




     For purposes of subsection (ii) above, the term “person” shall have the
same meaning as when used in Sections 13(d) and 14(d) of the Exchange
Act but shall exclude (1) a trustee or other fiduciary holding
securities under an employee benefit plan maintained by the Company or
a Parent (as defined in the Plan) or Subsidiary (as defined in the
Plan) and (2) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of the Stock.




     Notwithstanding the foregoing, a transaction shall not constitute a
Change in Control if its sole purpose is to change the state of the
Company’s incorporation or to create a holding company that will be
owned in substantially the same proportions by the persons who held the
Company’s securities immediately before such transaction, and a Change
in Control shall not be deemed to occur if the Company files a
registration statement with the Securities and Exchange Commission for
the initial offering of Stock to the public.



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Non-Employee Directors

With Full Acceleration of Vesting




	 	 	 
	Term

	 	This Option expires in any event at the close of business at Company
headquarters on the day before the 10th anniversary of the Grant Date,
as shown on the Notice of Stock Option Grant (fifth anniversary for a
more than 10% stockholder as provided under the Plan if this is an
incentive stock option). This Option may expire earlier if your
Service terminates, as described below.
	 
	 	 
	Regular Termination

	 	If your Service terminates for any reason except for Cause (as
hereafter defined), death or “Total and Permanent Disability” (as
defined in the Plan), then this Option will expire at the close of
business at Company headquarters on the date twelve (12) months after
the date your Service terminates (or, if earlier, the Expiration Date).
The Company has discretion to determine when your Service terminates
for all purposes of the Plan and its determinations are conclusive and
binding on all persons.
	 
	 	 
	Cause

	 	If your Service with the Company and its subsidiaries is terminated for
Cause, your Option shall immediately expire. “Cause” means: (1)
conviction of a felony involving moral turpitude; (2) commission of any
act of criminal fraud, misappropriation of funds or embezzlement in
connection with your Service with the Company or a subsidiary; or (3)
breach of any material provision of service agreement between you and
the Company or a subsidiary.
	 
	 	 
	Death

	 	If you die, then this Option will expire at the close of business at
Company headquarters on the date 12 months after the date your Service
terminates (or, if earlier, the Expiration Date). During that period
of up to 12 months, your estate or heirs may exercise the Option.
	 
	 	 
	Disability

	 	If your Service terminates because of your Total and Permanent
Disability, then this Option will expire at the close of business at
Company headquarters on the date 12 months after the date your Service
terminates (or, if earlier, the Expiration Date).
	 
	 	 
	Leaves of Absence

	 	For purposes of this Option, your Service does not terminate when you
go on a military leave, a sick leave or another bona fide leave of
absence, if the leave was approved by the Company in writing and if
continued crediting of Service is required by the terms of the leave or
by applicable law. But your Service terminates when the approved leave
ends, unless you immediately return to active work.
	 
	 	 
	 

	 	If you go on a leave of absence, then the vesting schedule specified in
the Notice of Stock Option Grant may be adjusted in accordance with the
Company’s leave of absence policy or the terms of your leave. If you
commence working on a part-time basis, then the vesting schedule
specified in the Notice of Stock Option Grant may be adjusted in
accordance with the Company’s part-time work policy or the terms of an
agreement between you and the Company pertaining to your part-time
schedule.
	 
	 	 
	Restrictions on

Exercise

	 	The Company will not permit you to exercise this Option if the issuance
of shares at that time would violate any law or regulation. The
inability of the Company to obtain approval from any regulatory body
having authority deemed by the Company to be necessary to the lawful
issuance and sale of the Company stock pursuant to this Option shall
relieve the Company of any liability with respect to the non-issuance
or sale of the Company stock as to which such approval shall not have
been obtained. However, the Company shall use its best efforts to
obtain such approval.






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Non-Employee Directors

With Full Acceleration of Vesting




	 	 	 
	Notice of Exercise

	 	When you wish to exercise this Option you must notify the Company by
either completing the attached “Notice of Exercise of Stock Option”
form and filing it with the Company or by personally authorizing an
option exercise with the Company’s retained broker. You must specify
how many shares you wish to purchase. You must also specify how your
shares should be registered. The notice will be effective when it is
received by the Company or its retained broker. If your beneficiary
wants to exercise this Option after your death, that person must prove
to the Company’s satisfaction that he or she is entitled to do so.
	 
	 	 
	Form of Payment

	 	When you submit your notice of exercise, you must include payment of
the Option exercise price for the shares you are purchasing. Payment
may be made in the following form(s):







	 	•	 	Your personal check, a cashier’s check or a money order.
	 
	 	•	 	Certificates for shares of Company stock that you own, along
with any forms needed to effect a transfer of those shares to the
Company. The value of the shares, determined as of the effective date
of the Option exercise, will be applied to the Option exercise price.
Instead of surrendering shares of Company stock, you may attest to the
ownership of those shares on a form provided by the Company and have
the same number of shares subtracted from the Option shares issued to
you. However, you may not surrender, or attest to the ownership of
 shares of Company stock in payment of the exercise price if your action
would cause the Company to recognize a compensation expense (or
additional compensation expense) with respect to this Option for
financial reporting purposes.
	 
	 	•	 	By delivering on a form approved by the Committee of an
irrevocable direction to a securities broker approved by the Company to
sell all or part of your Option shares and to deliver to the Company
from the sale proceeds in an amount sufficient to pay the Option
exercise price and any withholding taxes. The balance of the sale
proceeds, if any, will be delivered to you. The directions must be
given by signing a special “Notice of Exercise” form provided by the
Company.
	 
	 	•	 	Irrevocable directions to a securities broker or lender
approved by the Company to pledge Option shares as security for a loan
and to deliver to the Company from the loan proceeds an amount
sufficient to pay the Option exercise price and any withholding taxes.
The directions must be given by signing a special “Notice of Exercise”
form provided by the Company.
	 
	 	•	 	Any other form permitted by the Committee in its sole
discretion.





	 	 	 
	 

	 	Notwithstanding the foregoing, payment may not be made in any form that
is unlawful, as determined by the Committee in its sole discretion.
	 
	 	 
	Withholding Taxes
and Stock
Withholding

	 	You will not be allowed to exercise this Option unless you make
arrangements acceptable to the Company to pay any withholding taxes
that may be due as a result of the Option exercise. These arrangements
may include withholding shares of Company stock that otherwise would be
issued to you when you exercise this Option. The value of these
shares, determined as of the effective date of the Option exercise,
will be applied to the withholding taxes.






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Non-Employee Directors

With Full Acceleration of Vesting




	 	 	 
	Restrictions on

Resale

	 	By signing this Agreement, you agree not to sell any Option shares at a
time when applicable laws, Company policies or an agreement between the
Company and its underwriters prohibit a sale (e.g., a lock-up period
after the Company goes public). This restriction will apply as long as
you are an employee, consultant or director of the Company or a
subsidiary of the Company.
	 
	 	 
	Transfer of Option

	 	In general, only you can exercise this Option prior to your death. You
cannot transfer or assign this Option, other than as designated by you
by will or by the laws of descent and distribution, except as provided
below. For instance, you may not sell this Option or use it as
security for a loan. If you attempt to do any of these things, this
Option will immediately become invalid. You may in any event dispose
of this Option in your will. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of
exercise from your former spouse, nor is the Company obligated to
recognize your former spouse’s interest in your Option in any other
way.
	 
	 	 
	 

	 	However, if this Option is designated as a nonstatutory stock option in
the Notice of Stock Option Grant, then the “Committee” (as defined in
the Plan) may, in its sole discretion, allow you to transfer this
Option as a gift to one or more family members. For purposes of this
Agreement, “family member” means a child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law or sister-in-law (including
adoptive relationships), any individual sharing your household (other
than a tenant or employee), a trust in which one or more of these
individuals have more than 50% of the beneficial interest, a foundation
in which you or one or more of these persons control the management of
assets, and any entity in which you or one or more of these persons own
more than 50% of the voting interest.
	 
	 	 
	 

	 	In addition, if this Option is designated as a nonstatutory stock
option in the Notice of Stock Option Grant, then the Committee may, in
its sole discretion, allow you to transfer this option to your spouse
or former spouse pursuant to a domestic relations order in settlement
of marital property rights.
	 
	 	 
	 

	 	The Committee will allow you to transfer this Option only if both you
and the transferee(s) execute the forms prescribed by the Committee,
which include the consent of the transferee(s) to be bound by this
Agreement.
	 
	 	 
	Retention Rights

	 	Neither your Option nor this Agreement gives you the right to be
retained by the Company or a subsidiary of the Company in any capacity.
The Company and its subsidiaries reserve the right to terminate your
Service at any time, with or without cause.
	 
	 	 
	Stockholder Rights

	 	You, or your estate or heirs, have no rights as a stockholder of the
Company until you have exercised this Option by giving the required
notice to the Company and paying the exercise price. No adjustments
are made for dividends or other rights if the applicable record date
occurs before you exercise this Option, except as described in the
Plan.
	 
	 	 
	Adjustments

	 	In the event of a stock split, a stock dividend or a similar change in
Company stock, the number of shares covered by this Option and the
exercise price per share may be adjusted pursuant to the Plan.
	 
	 	 
	Applicable Law

	 	This Agreement will be interpreted and enforced under the laws of the
State of Delaware (without regard to their choice-of-law provisions).






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Non-Employee Directors

With Full Acceleration of Vesting




	 	 	 
	The Plan and Other
Agreements

	 	The text of the Plan is incorporated in this Agreement by reference.
All capitalized terms in the Stock Option Agreement shall have the
meanings assigned to them in the Plan. This Agreement and the Plan
constitute the entire understanding between you and the Company
regarding this Option. Any prior agreements, commitments or
negotiations concerning this Option are superseded. This Agreement may
be amended only by another written agreement, signed by both parties.






BY SIGNING THE COVER SHEET OF THIS AGREEMENT,

YOU AGREE TO ALL OF THE TERMS AND CONDITIONS

DESCRIBED ABOVE AND IN THE PLAN.





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