EXHIBIT 10.26
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
January 4, 2005 (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 and in the Company's Second Amended and Restated 1998 Stock
Incentive Plan, as amended (the "Plan") a total of 250,000 shares (the "Shares")
of common stock, $0.01 par value per share, of the Company ("Common Stock") at
$12.20 per Share. Unless earlier terminated, this option shall expire on January
4, 2015 (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. Schedule A hereto sets
forth the number of shares with respect to which this option qualifies as an
incentive stock option as of the date of grant. 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), (c) and (d) below, this option will become exercisable ("vest") as to 25%
of the original number of Shares on the first anniversary of the Grant Date and
as to an additional 6.25% of the original number of Shares at the end of each
successive full three-month period following the first anniversary of the Grant
Date until the fourth anniversary of the Grant Date.
(b) 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, the number of shares as to which this option has vested under
Section 2(a) 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 two years prior to the Grant Date.
(c) Accelerated Vesting Upon a Termination Without Cause.
(i) If, on or prior to December 31, 2005, Mr. Sagan's employment with
the Company is involuntarily terminated for any reason other than Cause,
the number of shares as to which this option has vested under Section 2(a)
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 18
months prior to the Grant Date.
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(ii) If, during 2006, Mr. Sagan's employment with the Company is
involuntarily terminated for any reason other than Cause, the number of
shares as to which this option has vested under Section 2(a) 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 12 months
prior to the Grant Date.
(iii) If, during 2007, Mr. Sagan's employment with the Company is
involuntarily terminated for any reason other than Cause, the number of
shares as to which this option has vested under Section 2(a) 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 6 months prior
to the Grant Date.
(d) Acceleration 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, 100% of the unvested Shares shall automatically become
vested as of the date of death, in the case of death, or final determination of
disabled status, in the case of disability.
(e) Cumulative. The right of exercise in Sections 2(b), (c) and (d)
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.
(f) 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 (A) that certain Invention and Non-Disclosure Agreement, dated October
28, 1998, by and between the Company and the Participant (the "Invention
Agreement"), (B) that certain Non-Competition and Non-Solicitation
Agreement, dated October 28, 1998, by and between the Company and the
Participant (the "Non-Competition Agreement"), (C) that certain offer
letter agreement dated January 4, 2005 between the Company and the
Participant (the "Employment Agreement") or (D) any other employment,
consulting, advisory, nondisclosure, non-competition or other similar
agreement between the Participant and the Company)], or a willful
violation of Company policies including, without limitation, the Code of
Business Ethics (or successor policy), in any instance 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 makes a preliminary determination, within 30
days after the Participant's resignation, that discharge for cause was
warranted, provided that, prior to making any final determination of
discharge for Cause, the Company gives the Participant reasonable notice
and opportunity to be heard. In addition, if the Participant resigns,
signs a release with the Company, and the Company then makes such a
determination of discharge for Cause, then such release shall not negate
the Participant's reasonable notice and opportunity to be heard nor the
Participant's right to raise defenses and/or claims against the Company
regarding such determination.
(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.
(A) the assignment to the Participant of duties inconsistent in
any material respect with the Participant's position (including
status, offices, titles and reporting
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requirements), authority or responsibilities as set forth in the
Employment Agreement, 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 of
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 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; other than in the cases of (1), (2) or (3) above of
such failures by the Company that apply 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 or the
Employment Agreement.
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
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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, the Employment Agreement,
the Code of Business Ethics (or successor policy) 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 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.
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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.
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.
[end of text]
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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: February 14, 2005 By: /s/ George H. Conrades
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George H. Conrades, Chairman & 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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Paul Sagan
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Schedule A
Number of shares as to which this option qualifies as an incentive stock option
on the Grant Date:
32,784
Number of shares as to which this option is a non-qualified stock option on the
Grant Date:
217,216
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