EXHIBIT 10.26
AKAMAI TECHNOLOGIES, INC.
Incentive Stock Option Agreement
Granted Under 1998 Stock Incentive Plan
1. Grant of Option.
This Incentive Stock Option Agreement (this "Agreement") evidences the
grant by Akamai Technologies, Inc., a Delaware corporation (the "Company"), on
May 15, 2003 (the "Grant Date") to Xxxxxxx Xxxxxxx, 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 (the "Plan"), a total of 575,000 shares (the "Shares") of common
stock, $0.01 par value per share, of the Company ("Common Stock") at $3.71 per
Share. Unless earlier terminated, this option shall expire on May 14, 2013 (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"). 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. To the extent that the option does not on the date of
grant, or hereafter ceases to, qualify as an incentive stock option, it shall be
a non-qualified 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
Section 2(b) below, this option will become exercisable ("vest") as
to 25% of the original number of Shares on 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 Grant Date
until the third anniversary of the Grant Date. For purposes of this
Section 2(a) the Vesting Start Date shall be May 15, 2003.
(b) Accelerated Vesting upon Certain Corporate Milestones. In addition
to the scheduled vesting reflected in Section 2(a), this option
shall become vested as to an additional 47,916 shares, as of the
last day of each of the first three fiscal quarters during which the
Company has Revenue (as defined below) of at least
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$50,000,000 and a Gross Profit Percentage (as defined below) of at
least sixty-five percent (65%).
(c) When used in this Agreement, the following terms shall have the
meanings provided:
(i) "Revenue" shall mean, for so long as the Company is required to
make periodic reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), Total Revenue as reported in the
Company's consolidated financial statements filed with the
Securities and Exchange Commission on Form 10-K or Form 10-Q
("Public Company Financial Statements"). If, at any time, the
Company is not required to make periodic reports under the Exchange
Act, "Revenue" shall mean Total Revenue as set forth on regularly
prepared quarterly financial statements prepared by management
("Private Company Financial Statements").
(ii) "Gross Profit Percentage" for a calendar quarter means a
fraction, expressed as a percentage, the numerator of which is
Revenue for such fiscal quarter minus Cost of Service (or equivalent
measure) for such fiscal quarter, as reported in the Public Company
Financial Statements or Private Company Financial Statements, as
applicable at such time, and the denominator of which is the Revenue
for such fiscal quarter.
For purposes of the foregoing definitions in clauses (i) and (ii),
"Company" shall mean Akamai Technologies, Inc, and its wholly-owned
subsidiaries.
(d) The right of exercise 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) Change in Control. Upon a Change in Control Event (as defined in the
Plan), the number of Shares as to which this option has vested shall be
calculated pursuant to Section 2(a) as though the Grant Date were the date that
is one year prior to the Grant Date.
3. Exercise of Option.
Form of Exercise. In order to exercise this option, the Participant shall
notify the Company's third-party stock option plan administrator, Xxxxxxx Xxxxxx
& 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
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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 non-competition or
confidentiality provisions of any 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" (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of such
discharge. "Cause" shall mean willful misconduct by the Participant or willful
failure by the Participant to perform his or her responsibilities to the Company
(including, without limitation, breach by the Participant of any
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provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company), as determined by the Company, which determination shall be conclusive.
The Participant shall be considered to have been discharged for "cause" if the
Company determines, prior to or simultaneously with the Participant's
resignation, that discharge for cause was warranted.
(f) Discharge for Reasons Other Than Cause. If the Participant, prior to
the Final Exercise Date, is discharged by the Company for a reason other than
"cause" (as defined above), then 100% of all Shares shall be deemed vested as of
the termination date. The period of time for exercise of vested options under
this paragraph (f) shall be as set forth in paragraph (c) above.
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 the 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. 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: May 15, 2003 /s/ Xxxxxx X. Xxxxxxxx
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Signature
Xxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
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.
PARTICIPANT:
/s/ Xxxxxxx Xxxxxxx
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Signature
Name: Xxxxxxx Xxxxxxx
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SCHEDULE A
Number of shares as to which this option qualifies as an incentive stock option
on the Grant Date:
107,816
Number of shares as to which this option is a non-qualified stock option on the
Grant Date:
467,184
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