EXHIBIT 10.2.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE,
AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS
PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
PEOPLESUPPORT, INC.
1998 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
(MONTHLY VESTING OVER FOUR YEARS WITH ONE-YEAR CLIFF
AND ONE-YEAR ACCELERATION ON A CHANGE IN CONTROL)
INCENTIVE STOCK This Option is intended to be an incentive stock option
OPTION under section 422 of the Internal Revenue Code and will be
interpreted accordingly.
VESTING Your right to exercise this Option shall commence twelve
months after the Vesting Start Date, as shown on the cover
sheet, and shall vest on a monthly basis thereafter until
fully vested on the fourth anniversary of the Vesting
Start Date, provided your employment with the Company and
its Subsidiaries has not been terminated prior thereto.
The number of Shares which may be purchased under this
Option by you at the Exercise Price shall be equal to the
difference between (i) the product (rounded to the nearest
integer) of the number of full months of your continuous
status as an Employee of the Company (including all days
of any approved leaves of absence) from the Vesting Start
Date times the number of Shares covered by this Option
times 0.0208333, minus (ii) the number of Shares purchased
pursuant to this Option prior to such exercise. The
resulting number of Shares will be rounded to the nearest
whole number. No additional Shares will vest after your
employment by the Company and its Subsidiaries has
terminated for any reason.
VESTING ON A CHANGE If there is a Change in Control and your employment is
IN CONTROL terminated without Cause in connection with or within six
months after the Change in Control, then, in addition to
the Shares set forth in the preceding paragraph, you will
also be able to purchase the lesser of (1) 25 percent of
the Shares subject to this Option or (2) the number of
Shares subject to this Option that are then unvested.
If, prior to the Change in Control, the Company determines
or is informed by the acquiring entity that your
employment will be terminated without cause in connection
with the Change in Control,
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the Company will provide you the right to exercise this Option with
respect to all such vesting Shares immediately prior to the
consummation of the Change in Control and to be treated as a
shareholder of the Company with respect to such Shares in connection
with such transaction.
Notwithstanding the foregoing, if there is a Change in Control for
which the Company desires to use the pooling of interests method of
accounting and the Board of Directors is advised in writing by the
Company's outside accountants or legal counsel that the pooling of
interests method of accounting, otherwise available to the Company and
its surviving or acquiring entity, would be prohibited as a result of
the vesting acceleration provisions set forth in the preceding
paragraphs, then there will be no additional vesting as a result of a
Change in Control.
"Change in Control" means any of the following:
(1) The merger, consolidation, or other reorganization, with or into,
or the sale of all or substantially all of the Company's business
and/or assets as an entirety to, one or more entities that are not
Subsidiaries (a "Business Combination"), unless (A) as a result of the
Business Combination at least 50% of the outstanding securities voting
generally in the election of directors of the surviving or resulting
entity or a parent thereof (the "Successor Entity") immediately after
the reorganization are, or will be, owned, directly or indirectly, in
substantially the same proportions, by stockholders of the Company
immediately before the Business Combination; (B) no person (excluding
the Successor Entity or an Excluded Person) beneficially owns,
directly or indirectly, more than 20% of the outstanding shares of the
combined voting power of the outstanding voting securities of the
Successor Entity, after giving effect to the Business Combination,
except to the extent that such ownership existed prior to the Business
Combination; and (C) at least 50% of the members of the board of
directors of the entity resulting from the Business Combination were
members of the Board of Directors at the time of the execution of the
initial agreement or of the action of the Board of Directors approving
the Business Combination.
For purposes of this definition, the stockholders before and after the
Business Combination shall be determined on the presumptions that (i)
there is no change in the record of ownership of the Company's
securities from the record date for such approval until the
consummation of the Business Combination; and (ii) record owners,
other than affiliates of the Company, of securities of the Company
hold no securities of the other parties to such reorganization.
For purposes of this definition, the term "Excluded Person" means (i)
any person described in and satisfying the conditions of Rule
13d-1(b)(1) under the Securities Exchange Act of 1934, as amended from
time to time (the "Exchange Act"), (ii) any person who is the
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beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of more than 10% of the outstanding Shares of
Common Stock at the time of adoption of this Plan, (or an
affiliate, successor, heir, descendant or related party of
or to any such person), (iii) the Company, or (iv) an
employee benefit plan (or related trust) sponsored or
maintained by the Company or the Successor Entity.
(2) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than an Excluded Person
becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Company representing more than 50% of the combined
voting power of the Company's then outstanding securities
entitled to then vote generally in the election of directors
of the Company, other than as a result of (A) an acquisition
directly from the Company, (B) an acquisition by the
Company, (C) an acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or a
Successor Entity, or (D) an acquisition by any entity
pursuant to a transaction which is expressly excluded under
paragraph (1) above.
TERM Your Option will expire no later than the close of business
at Company headquarters on the day before the tenth
anniversary (fifth anniversary for a 10% owner) of the Date
of Grant, as shown on the cover sheet. (It will expire
earlier if your employment by the Company and its
Subsidiaries terminates, as described below.)
REGULAR If your employment with the Company and its Subsidiaries
TERMINATION terminates for any reason except Cause, death or Disability,
your Option will expire at the close of business at Company
headquarters on the 30th day after your termination date.
CAUSE If your employment 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 employment by the Company or a Subsidiary; or (3)
breach of any material provision of any employment agreement
between you and the Company or a Subsidiary.
DEATH If your employment with the Company and its Subsidiaries
terminates because of your death, your Option will expire at
the close of business at Company headquarters on the date
six months after the date of death. During that six-month
period, your estate or heirs may exercise the vested portion
of your Option.
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DISABILITY If your employment with the Company and its Subsidiaries
terminates because of your Disability, your Option will
expire at the close of business at Company headquarters on
the date six months after your termination date. (However,
if your Disability is not expected to result in death or
last for a continuous period of at least 12 months, your
Option will be eligible for ISO tax treatment only if it is
exercised within three months following the termination of
your employment with the Company and its Subsidiaries.)
"Disability" means that you are unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment.
LEAVES OF ABSENCE For purposes of this Option, your employment does not
terminate when you go on a bona fide leave of absence that
was approved by the Company in writing, if the terms of the
leave provide for continued service crediting, or when
continued service crediting is required by applicable law.
The Company determines which leaves count for this purpose,
and when your employment terminates for all purposes under
the Plan.
NOTICE OF EXERCISE When you wish to exercise this Option, you must notify the
Company by filing the proper "Notice of Exercise" form at
the address given on the form. Your Notice must specify how
many Shares you wish to purchase. Your Notice must also
specify how your Shares should be registered (for example,
in your name only or in your and your spouse's names as
community property or as joint tenants with right of
survivorship). The Notice will be effective when it is
received by the Company. If someone else 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 Exercise Price for the Shares you are
purchasing. Payment may be made in one (or a combination) of
the following forms:
- Your personal check, a cashier's check or a money order.
- Shares which have already been owned by you for more than
twelve months and which are surrendered to the Company.
The value of the Shares, determined as of the effective
date of the option exercise, will be applied to the
Exercise Price.
- To the extent that a public market for the Shares exists
as determined by the Company, by delivery (on a form
prescribed by the Committee) of an irrevocable direction
to a securities broker to sell Shares and to deliver all
or part of the sale proceeds to the Company in payment of
the aggregate Exercise Price.
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WITHHOLDING TAXES You agree to make any arrangements required by the
Company to pay any withholding or other taxes that may
be due as a result of the Option exercise or the sale of
Shares acquired upon exercise of this Option.
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RESTRICTIONS ON By signing this Agreement, you agree not to
EXERCISE AND RESALE exercise this Option or sell any Shares
acquired upon exercise of this Option at a time
when applicable laws, regulations or Company or
underwriter trading policies prohibit exercise
or sale. In connection with any underwritten
public offering by the Company of its equity
securities pursuant to an effective
registration statement filed under the 1933
Act, including the Company's initial public
offering, you shall not exercise this Option
nor sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer
for value or agree to engage in any of the
foregoing transactions with respect to any
shares without the prior written consent of the
Company or its underwriters, for such period of
time after the effective date of such
registration statement as may be requested by
the Company or such underwriters. In order to
enforce the provisions of this paragraph, the
Company may impose stop-transfer instructions
with respect to the shares until the end of the
applicable stand-off period. Such limitation on
exercise shall not alter the vesting schedule
set forth in this Agreement other than to limit
the periods during which this Option shall be
exercisable.
If the sale of Shares under the Plan is not
registered under the Securities Act of 1933,
but an exemption is available which requires an
investment or other representation, you shall
represent and agree at the time of exercise
that the Shares being acquired upon exercise of
this Option are being acquired for investment,
and not with a view to the sale or distribution
thereof, and shall make such other
representations as are deemed necessary or
appropriate by the Company and its counsel.
THE COMPANY'S In the event that you propose to sell, pledge
RIGHT OF FIRST or otherwise transfer to a third party any
REFUSAL Shares acquired under this Agreement, or any
interest in such Shares, the Company shall have
the "Right of First Refusal" with respect to
all (and not less than all) of such Shares. If
you desire to transfer Shares acquired under
this Agreement, you must give a written
"Transfer Notice" to the Company describing
fully the proposed transfer, including the
number of Shares proposed to be transferred,
the proposed transfer price and the name and
address of the proposed transferee. The
Transfer Notice shall be signed both by you and
by the proposed transferee and must constitute
a binding commitment of both parties to the
transfer of the Shares. The Company shall have
the right to purchase all, and not less than
all, of the Shares on the terms described in
the Transfer Notice (subject, however, to any
change in such terms permitted in the next
paragraph) by delivery of a Notice of Exercise
of the Right of First Refusal within 30 days
after the date when the Transfer Notice was
received by the Company. The Company's rights
under this Subsection shall be freely
assignable, in whole or in part.
If the Company fails to exercise its Right of
First Refusal within 30 days after the date
when it received the Transfer Notice, you
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may, not later than 90 days following receipt of
the Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer
Notice on the terms and conditions described in
the Transfer Notice. Any proposed transfer on
terms and conditions different from those
described in the Transfer Notice, as well as any
subsequent proposed transfer by you, shall again
be subject to the Right of First Refusal and shall
require compliance with the procedure described in
the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set
forth in the Transfer Notice within 60 days after
the date the Company received the Transfer Notice
(or within such longer period as may have been
specified in the Transfer Notice); provided,
however, that in the event the Transfer Notice
provided that payment for the Shares was to be
made in a form other than lawful money paid at the
time of transfer, the Company shall have the
option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
The Company's Right of First Refusal shall inure
to the benefit of its successors and assigns and
shall be binding upon any transferee of the
Shares.
The Company's Right of First Refusal shall
terminate in the event that Stock is listed or
traded on an established stock exchange.
TRANSFER OF OPTION Prior to your death, only you may exercise this
Option. You cannot transfer or assign this Option.
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, however, 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 spouse or former
spouse, nor is the Company obligated to recognize
such individual's interest in your Option in any
other way.
RETENTION RIGHTS This Agreement does not give you the right to be
retained by the Company (or any Subsidiaries) in
any capacity. The Company (or Subsidiary) reserves
the right to terminate your employment at any time
and for any reason.
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for
the Shares acquired upon exercise of this Option
has been issued. No adjustments are made for
dividends or other rights if the applicable record
date occurs before your stock certificate is
issued, except as described in the Plan.
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ADJUSTMENTS In the event of a stock split, a stock dividend, a
subdivision of the outstanding stock, a combination or
consolidation of an the outstanding stock into a lesser
number of shares, a recapitalization, reclassification
or a similar change in the Company Stock, the number of
Shares covered by this Option and the Exercise Price per
share may be adjusted pursuant to the Plan. Your Option
shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event the
Company is subject to such corporate activity.
LEGENDS All certificates representing the Shares issued upon
exercise of this Option shall, where applicable, have
endorsed thereon the following legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER,
INCLUDING RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED
TRANSFER OF THE SHARES, SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS
OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD
OF THE SHARES REPRESENTED BY THIS CERTIFICATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS
IS NOT REQUIRED.
APPLICABLE LAW This Agreement will be interpreted and enforced under
the laws of the State of California (without regard
to their choice of law provisions).
THE PLAN AND OTHER The text of the Plan is incorporated in this Agreement
AGREEMENTS by reference. Certain capitalized terms used in this
Agreement are defined 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.
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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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NOTICE OF EXERCISE OF STOCK OPTION
PeopleSupport, Inc.
Attn: Chief Financial Officer
Re: Exercise of Stock Option to Purchase Shares of Company Stock
Ladies and Gentlemen:
Pursuant to the Stock Option Agreement dated __________, 2002 (the "Stock
Option Agreement"), between PeopleSupport, Inc., a Delaware corporation (the
"Company"), and the undersigned, I hereby elect to purchase ___________ shares
of the common stock of the Company (the "Shares"), at the price of $_______per
Share. My check in the amount of $______________ is enclosed.
The undersigned understands there may be tax consequences as a result of
the purchase or disposition of the Shares. The undersigned represents that
he/she has received and reviewed the Plan's federal income tax information and
consulted with any tax consultants he/she deems advisable in connection with the
purchase or disposition of the Shares and the undersigned is not relying on the
Company for any tax advice.
The undersigned acknowledges that he/she has received, read and understood
the Stock Option Agreement and agrees to abide by and be bound by their terms
and conditions. The undersigned represents that the Shares are being acquired
solely for its own account and not as a nominee for any other party, or for
investment, and that the undersigned purchaser will not offer, sell or otherwise
dispose of any such Shares except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Dated:
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(Signature)
---------------------------------
(Please Print Name)
---------------------------------
Social Security No.
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(Full Address)
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