EXHIBIT 10.17
AKAMAI TECHNOLOGIES, INC.
Incentive Stock Option Agreement Granted Under
SECOND AMENDED AND RESTATED 1998 STOCK INCENTIVE PLAN, AS AMENDED
1. GRANT OF OPTION.
This Incentive Stock Option Agreement (this "Agreement") evidences the
grant by Akamai Technologies, Inc., a Delaware corporation (the "Company"), on
September 19, 2002 (the "Grant Date") to Paul Sagan, an employee of the Company
(the "Participant"), of an option to purchase, in whole or in part, on the terms
provided herein, in the Company's Second Amended and Restated 1998 Stock
Incentive Plan, as amended (the "Plan"), a total of 375,000 shares (the
"Shares") of common stock, $0.01 par value per share, of the Company ("Common
Stock") at $0.90 per Share. Unless earlier terminated, this option shall expire
on September 19, 2012 (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall, to the
extent it so qualifies, be an incentive stock option as defined in Section 422
of the Internal Revenue Code of 1986, as amended and any regulations promulgated
there under (the "Code"). Under the terms of the Code, all or a portion of this
option may not qualify as an incentive stock option. Except as otherwise
indicated by the context, the term "Participant", as used in this option, shall
be deemed to include any person who acquires the right to exercise this option
validly under its terms.
2. VESTING SCHEDULE.
(a) GENERAL. Subject to the terms and conditions set forth in this
Agreement, including the accelerated vesting provisions set forth in Sections
2(b) and (c) below, this option will be 25% vested on the Grant Date and vest at
the rate of 6.25% per quarter until the option is fully vested three years from
the Grant Date.
(b) ACCELERATED VESTING UPON CERTAIN CORPORATE MILESTONES. In addition to
the vesting set forth above, this option, as to the number of shares set forth
below, shall become vested as to 31,250 shares, on the last day of each of the
first three calendar quarters that the Company has Revenue (as defined below) of
at least $50,000,000 and a Gross Profit Percentage (as defined below) of at
least sixty-five percent.
Notwithstanding the foregoing, upon a Change in Control Event (as defined
in the Plan), the provisions of this Section 2(b) shall cease to apply.
(c) ACCELERATED VESTING UPON A CHANGE IN CONTROL EVENT. If within twelve
months following a Change in Control Event, Mr. Sagan terminates his employment
for Good Reason (as defined below) or if Mr. Sagan is terminated for any reason
other than Cause (as defined below), the number of shares as to which this
option has vested under
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Sections 2(a) and 2(b) shall be increased by the number of shares determined by
a calculation pursuant to Section 2(a) as though the Grant Date were the date
that is one year prior to the Grant Date.
(d) CUMULATIVE. The right of exercise in Sections 2(b) and (c) hereof shall
be cumulative so that to the extent the option is not exercised in any period to
the maximum extent permissible it shall continue to be exercisable, in whole or
in part, with respect to all shares for which it is vested until the earlier of
the Final Exercise Date or the termination of this option under Section 3 hereof
or the Plan.
(e) DEFINITIONS.
(i) Cause shall mean willful misconduct by the Participant or willful
failure by the Participant to perform his responsibilities to the Company
(including, without limitation, breach by the Participant of any provision
of that certain Invention and Non-Disclosure Agreement, dated October 28,
1998, by and between the Company and the Participant (the "Invention
Agreement"), that certain Non-Competetion and Non-Solicitation Agreement,
dated October 28, 1998, by and between the Company and the Participant (the
"Non-Competition Agreement"), or any other employment, consulting,
advisory, nondisclosure, non-competition or other similar agreement between
the Participant and the Company), as determined by the Board of Directors
of the Company, which determination shall be conclusive. The Participant
shall be considered to have been discharged for "cause" if the Company
determines, within 30 days after the Participant's resignation, that
discharge for cause was warranted.
(ii) Good Reason shall mean the occurrence, without the Participant's
written consent, of any of the events or circumstances set forth in clauses
(A) through (E) below. Notwithstanding the occurrence of any such event or
circumstance, such occurrence shall not be deemed to constitute Good Reason
if, prior to the date of termination specified in the notice of termination
given by the Participant in respect thereof, such event or circumstance has
been corrected and the Participant has been reasonably compensated for any
losses or damages resulting there from.
(A) the assignment to the Participant of duties inconsistent in any
material respect with the Participant's position (including status,
offices, titles and reporting requirements), authority or
responsibilities, or any other action or omission by the Company which
results in a material diminution in such position, authority or
responsibilities. Changes in job title, reporting relationship, and
responsibilities alone shall not constitute Good Reason provided the
resulting position does not result in a material diminution in the
Participant's position, authority, or responsibilities.
(B) a material reduction in the Participant's annual base salary as in
effect on the Grant Date or as the same was or may be increased
thereafter from time to time, other than in the case of reductions in
salary or bonus
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eligibility with respect to similarly situated employees of the
Company generally;
(C) the failure by the Company to (1) continue in effect any material
compensation or benefit plan or program (including without limitation
any life insurance, medical, health and accident or disability plan
and any vacation or automobile program or policy) (a "Benefit Plan")
in which the Participant participates or which is applicable to the
Participant immediately prior to the Grant Date, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan or
cash compensation) has been made with respect to such plan or program,
(2) continue the Participant's participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of the Participant's participation relative to other
participants, than the basis existing immediately prior to the Grant
Date or (3) award cash bonuses to the Participant in amounts and in a
manner substantially consistent with past practice in light of the
Company's financial performance; provided, however, that Good Reason
shall not exist if the Company takes measures to discontinue(1), (2)
or (3) above with respect to similarly situated employees of the
Company generally;
(D) a change by the Company in the location at which the Participant
performs his principal duties for the Company to a new location that
is both (i) outside a radius of 35 miles from the Participant's
principal residence immediately prior to the Grant Date and (ii) more
than 20 miles from the location at which the Participant performed his
principal duties for the Company immediately prior to the Grant Date;
and
(E) any material breach by the Company of this Agreement.
(iv) Gross Profit Percentage means the fraction, expressed as a percentage,
the numerator of which is the gross profit of the Company for the
applicable period as reported in the Company's condensed consolidated
financial statements as filed with the Securities and Exchange Commission
in the Company's applicable Form 10-K or Form 10-Q (the "Financial
Statements") and the denominator of which is the total revenue of the
Company for the applicable period as reported in the Financial Statements.
(v) Revenue shall mean revenue, including, but not limited to, one-time
streaming and EdgeSuite event revenue and revenue derived from already
signed relationships ongoing as of the date hereof with Akamai Technologies
Japan KK and Sockeye Networks Inc. that is: (A) derived from products and
services related to contracts that exceed 12 months in original term and
that has the potential to recur indefinitely; or (B) from software licenses
that are sold on a perpetual or term basis and maintenance on such licenses
that is recurring in nature. Notwithstanding the foregoing, the definition
of revenue shall not include: (A) strategic revenue booked from new barter
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deals or one-time special deals; or (B) revenue to be booked from possible
new affiliated deals, not outstanding on the date hereof. All revenue
associated with products or services sold on a recurring basis, including
bursting, is reflected as recurring revenue for external reporting
purposes.
3. EXERCISE OF OPTION.
(a) FORM OF EXERCISE. In order to exercise this option, the Participant
shall notify the Company's third-party stock option plan administrator, Charles
Schwab & Co., or any successor appointed by the Company (the "Plan
Administrator"), of the Participant's intent to exercise this option, and shall
follow the procedures established by the Plan Administrator for exercising stock
options under the Plan and provide payment in full in the manner provided in the
Plan. The Participant may purchase less than the number of shares covered
hereby, provided that no partial exercise of this option may be for any
fractional share.
(b) CONTINUOUS RELATIONSHIP WITH THE COMPANY REQUIRED. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he or she exercises this option, is, and has been at
all times since the Grant Date, an employee, officer or director of, or
consultant or advisor to, the Company or any parent or subsidiary of the Company
as defined in Section 424(e) or (f) of the Code (an "Eligible Participant").
(c) TERMINATION OF RELATIONSHIP WITH THE COMPANY. If the Participant ceases
to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this option shall terminate
three months after such cessation (but in no event after the Final Exercise
Date), provided THAT (i) this option shall be exercisable only to the extent
that the Participant was entitled to exercise this option on the date of such
cessation, and (ii) to the extent that the option or any portion thereof is
exercised at any time later than three months after the date that the
Participant ceases to be an employee of the Company or any parent or subsidiary
of the Company as defined in Section 424(e) or (f) of the Code, the option shall
be a non-qualified stock option. Notwithstanding the foregoing, if the
Participant, prior to the Final Exercise Date, violates the provisions of the
Invention Agreement, the Non-Competition Agreement, or the non-competition or
confidentiality provisions of any other employment contract, confidentiality and
nondisclosure agreement or other agreement between the Participant and the
Company, the right to exercise this option shall terminate immediately upon such
violation.
(d) EXERCISE PERIOD UPON DEATH OR DISABILITY. If the Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant by the
Participant, PROVIDED THAT (i) this option shall be exercisable only to the
extent that this option was exercisable by the Participant on the date of his or
her
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death or disability, (ii) this option shall not be exercisable after the Final
Exercise Date, and (iii) to the extent that the option or any portion thereof is
exercised at any time later than one year after the Participant's termination as
an employee of the Company or any parent or subsidiary of the Company (as
defined in Section 424(e) or (f) of the Code) by reason of his or her disability
(as defined in Section 22(e)(3) of the Code), the option shall be a
non-qualified stock option.
(e) DISCHARGE FOR CAUSE. If the Participant, prior to the Final Exercise
Date, is discharged by the Company for Cause, the right to exercise this option
shall terminate immediately upon the effective date of such discharge.
4. WITHHOLDING.
No Shares will be issued pursuant to the exercise of this option unless and
until the Participant pays to the Company, or makes provision satisfactory to
the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
5. NONTRANSFERABILITY OF OPTION.
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
6. DISQUALIFYING DISPOSITION.
If the Participant disposes of Shares acquired upon exercise of this option
within two years from the Grant Date (or, in the case of Shares acquired upon
exercise of an additional grant, the date of any such addendum) or one year
after such Shares were acquired pursuant to exercise of this option, the
Participant shall notify the Company in writing of such disposition.
7. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
At any time in which an adjustment pursuant to the provisions of Section
8(a) of the Plan is made to the Shares set forth in Section 1 hereof, a similar
adjustment shall be made to the shares set forth in Section 2(b) hereof.
8. PROVISIONS OF THE PLAN.
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
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IN WITNESS WHEREOF, the Company has caused this option to be executed under
its corporate seal by its duly authorized officer. This option shall take effect
as a sealed instrument.
AKAMAI TECHNOLOGIES, INC.
Dated: September 20, 2002
By: /s/ George H. Conrades
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George H. Conrades
Chairman and CEO
PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions thereof. The undersigned hereby acknowledges receipt of a copy of
the Company's Second Amended and Restated 1998 Stock Incentive Plan, as amended.
PARTICIPANT:
/s/ Paul Sagan
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Signature
Name: Paul Sagan
Address:
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