EXHIBIT 99.4
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement (the "Option Agreement") by
and between Digital Island, Inc. (the "Corporation") and ______________________
("Optionee") evidencing the stock option (the "Option") granted this day to
Optionee under the terms of the Corporation's 1999 Stock Incentive Plan, and
such provisions are effective immediately. All capitalized terms in this
Addendum, to the extent not otherwise defined herein, shall have the meanings
assigned to them in the Option Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CORPORATE TRANSACTION/CHANGE IN CONTROL
1. To the extent the Option is, in connection with a Corporate
Transaction, to be assumed in accordance with Paragraph 6 of the Option
Agreement, the Option shall not accelerate upon the occurrence of that
Corporate Transaction, and the Option shall accordingly continue, over
Optionee's period of Service after the Corporate Transaction, to become
exercisable for the Option Shares in one or more installments in accordance
with the provisions of the Option Agreement. However, if that Corporate
Transaction is effected more than twelve (12) months after the commencement
date of Optionee's Service, than immediately upon an Involuntary Termination of
Optionee's Service within eighteen (18) months following such Corporate
Transaction, the assumed Option, to the extent outstanding at the time but not
otherwise fully exercisable, shall automatically accelerate so that the Option
shall become immediately exercisable for all the Option Shares at the time
subject to the Option and may be exercised for any or all of those Option
Shares as fully vested shares.
2. The Option shall not accelerate upon the occurrence of a Change
in Control, and the Option shall, over Optionee's period of Service following
such Change in Control, continue to become exercisable for the Option Shares
in one or more installments in accordance with the provisions of the Option
Agreement. However, if that Change in Control is effected more than twelve
months after the commencement date of Optionee's Service, than immediately upon
an Involuntary Termination of Optionee's Service within eighteen (18) months
following such Change in Control, the Option, to the extent outstanding at the
time but not otherwise fully exercisable, shall automatically accelerate so
that the Option shall become immediately exercisable for all the Option Shares
at the time subject to the Option and may be exercised for any or all of those
Option Shares as fully vested shares.
3. The Option as accelerated pursuant to this Addendum shall remain
so exercisable until the earlier of (i) the Expiration Date or (ii) the
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expiration of the one (1)-year period measured from the date of the Optionee's
Involuntary Termination.
4. For purposes of this Addendum the following definitions shall be
in effect:
(i) An Involuntary Termination shall mean the termination of
Optionee's Service by reason of:
(A) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(B) Optionee's voluntary resignation within ninety (90)
days following (A) a change in Optionee's position with the Corporation
(or Parent or Subsidiary employing Optionee) which materially reduces
Optionee's duties and responsibilities or the level of management to
which Optionee reports, (B) a reduction in Optionee's level of
compensation (including base salary, fringe benefits and target bonus
under any corporate performance based bonus or incentive programs) by
more than fifteen percent (15%) or (C) a relocation of Optionee's place
of employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without
Optionee's consent.
(ii) A Change in Control shall be deemed to occur in the event
of a change in ownership or control of the Corporation effected through
either of the following transactions:
(A) the acquisition, directly or indirectly, by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders, or
(B) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (i) have been
Board members continuously since the beginning of such period or (ii)
have been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in clause
(i) who were still in office at the time the Board approved such election
or nomination.
5. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within eighteen (18) months after the
Corporate Transaction or Change in Control and shall supersede any provisions
to the contrary in Paragraph 5 of the Option Agreement.
IN WITNESS WHEREOF, Digital Island, Inc. has caused this Addendum to
be executed by its duly-authorized officer as of the Effective Date specified
below.
DIGITAL ISLAND, INC.
By:
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Title:
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EFFECTIVE DATE:
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