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EXHIBIT 10.15
Neither this warrant nor the shares of stock issuable upon
exercise hereof have been registered under the Securities
Act of 1933, as amended (the "Act"). No sale, transfer or
other disposition of this warrant or such shares may be
effected without (i) an effective registration statement
under the Act related thereto, (ii) an opinion of counsel
for the holder, reasonably satisfactory to the Company, or
(iii) the Company otherwise satisfies itself that such
transaction is exempt from registration.
INTERNAP NETWORK SERVICES CORPORATION
PREFERRED STOCK PURCHASE WARRANT
Date of Issuance: May 5, 1998 Certificate No. PW-2
FOR VALUE RECEIVED, InterNAP Network Services Corporation, a
Washington corporation (the "Company"), hereby grants to First Portland
Corporation (the "Purchaser") or its registered assigns (the "Registered
Holder") the right to purchase from the Company 41,667 shares of Warrant Stock
at a price per share of $.60 (as adjusted from time to time hereunder, the
"Exercise Price"). This Warrant was issued pursuant to the terms of the Warrant
Purchase Agreement, dated as of March __, 1998 (the "Purchase Agreement"),
between the Company and the Purchaser. Certain capitalized terms used herein
are defined in Section 5 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the purchase price for such
securities are subject to adjustments pursuant to the provisions contained in
this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Registered Holder may exercise, in whole
or in part, the purchase rights represented by this Warrant at any time and
from time to time after the Date of Issuance to and including the later of (i)
the tenth anniversary of the final acceptance of equipment by the Company under
the Equipment Financing with the Purchaser and (ii) the fifth anniversary of
the consummation of the public offering of the Company's Common Stock
registered under the Securities Act of 1933 (the "Exercise Period"). The
Company shall give the Registered Holder written notice of the expiration of
the Exercise Period at
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least 30 days but not more than 90 days prior to the end of the Exercise Period.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time");
(a) a completed Exercise Agreement, as described in paragraph 1C
below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Purchaser, in which case
the Registered Holder shall have complied with the provisions set forth
in Section 7 hereof; and
(d) either (1) a check payable to the Company in an amount equal to
the product of the Exercise Price multiplied by the number of shares of
Warrant Stock being purchased upon such exercise (the "Aggregate Exercise
Price"), (2) the surrender to the Company of debt or equity securities of
the Company having a Market Price equal to the Aggregate Exercise Price
of the Warrant Stock being purchased upon such exercise (provided that
for purposes of this subparagraph, the Market Price of any note or other
debt security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus
all accrued and unpaid interest thereon or accrued or declared and unpaid
dividends thereon) or (3) a written notice to the Company that the
Purchaser is exercising the Warrant (or a portion thereof) by authorizing
the Company to withhold from issuance a number of shares of Warrant
Stock issuable upon such exercise of the Warrant which when multiplied by
the Market Price of the Warrant Stock is equal to the Aggregate Exercise
Price (and such withheld shares shall no longer be issuable under this
Warrant).
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
within five business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company
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shall prepare a new Warrant, substantially identical hereto, representing the
rights formerly represented by this Warrant which have not expired or been
exercised and shall, within such five-day period, deliver such new Warrant to
the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Warrant Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Warrant Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Warrant Stock. Each share of Warrant Stock issuable upon exercise of
this Warrant shall, upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Warrant Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. The Company shall from time to time take all such
action as may be necessary to assure that the par value per share of the
unissued Warrant Stock acquirable upon exercise of this Warrant is at all times
equal to or less than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a registered
public offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof, be conditioned upon the
consummation of the public offering or the sale of the Company in which case
such exercise shall not be deemed to be effective until the consummation of
such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Warrant Stock solely for the
purpose of issuance upon the exercise of the
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Warrants, such number of shares of Warrant Stock issuable upon the exercise of
this Warrant. The Company shall take all such actions as may be necessary to
assure that all such shares of Warrant Stock may be so issued without violation
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Warrant Stock may be listed
(except for official notice of issuance which shall be immediately delivered by
the Company upon each such issuance). The Company shall not take any action
which would cause the number of authorized but unissued shares of Warrant Stock
to be less than the number of such shares required to be reserved hereunder for
issuance upon exercise of this Warrant.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
Exercise Agreement shall be substantially in the form set forth in Exhibit I
hereto, except that if the shares of Warrant Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Warrant Stock are to be issued, and if the number of shares of
Warrant Stock to be issued does not include all the shares of Warrant Stock
purchasable hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to be delivered.
Such Exercise Agreement shall be dated the actual date of execution thereof.
1D. Conversion of the Series B Preferred. Notwithstanding any other
provision of this Warrant, if all of the issued and outstanding shares of the
Company's Series B Preferred are converted automatically into shares of Common
Stock pursuant to Section 3(b) of the Company's Certificate of Incorporation
(the "Automatic Conversion"), this Warrant shall no longer be exercisable into
shares of Series B Preferred but immediately upon the consummation of the
Automatic Conversion shall become exercisable into a number of shares of Common
Stock equal to the number of shares of Common Stock issuable upon conversion of
the shares of Series B Preferred issuable upon exercise of this Warrant as of
the consummation of such event at an Exercise Price equal to the Series B
Conversion Price (as defined under the Company's Certificate of Incorporation)
in effect as of the consummation of such event. Following the occurrence of the
Automatic Conversion, the provisions of this Warrant shall continue to apply to
the Warrant Stock which shall then be Common Stock.
Section 2. Adjustment of Exercise Price and Number of Shares. The
Exercise Price and the number of shares of Warrant Stock issuable upon exercise
of this Warrant shall be subject to adjustment from time to time as provided in
this Section 2.
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2A. Subdivision or Combination of Common Stock. If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) the Warrant Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision shall be proportionately
reduced and the number of shares of Warrant Stock obtainable upon exercise of
this Warrant shall be proportionately increased, and if the Company at any time
combines (by reverse stock split or otherwise) the Warrant Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Warrant Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2B. Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets or other
transaction, which in each case is effected in such a way that the holders of
Warrant Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Warrant Stock is referred to herein as "Organic Change." Prior to the
consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the Registered Holder of this
Warrant) to insure that the Registered Holder shall thereafter have the right
to acquire and receive, in lieu of or addition to (as the case may be) the
shares of Warrant Stock immediately theretofore acquirable and receivable upon
the exercise of such holder's Warrant, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for the
number of shares of Warrant Stock immediately theretofore acquirable and
receivable upon exercise of such holder's Warrant had such Organic Change not
taken place. In any such case, the Company shall make appropriate provision (in
form and substance satisfactory to the Registered Holder of this Warrant) with
respect to such holders' rights and interests to insure that the provisions of
this Section 2 and Sections 3 and 4 hereof shall thereafter be applicable to
this Warrant. The Company shall not effect any such consolidation, merger or
sale, unless prior to the consummation thereof, the successor entity (if other
than the Company) resulting from consolidation or merger or the entity
purchasing such assets assumes by written instrument (in form and substance
satisfactory to the Registered Holder of this Warrant), the obligation to
deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
2C. Certain Events. If any event occurs of the type contemplated by
the provisions of this Section 2 but not expressly provided for by such
provisions, then the Company's board of
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directors shall make an appropriate adjustment in the Exercise Price and the
number of shares of Warrant Stock obtainable upon exercise of this Warrant so
as to protect the rights of the holder of this Warrant; provided that no such
adjustment shall increase the Exercise Price or decrease the number of shares
of Warrant Stock obtainable as otherwise determined pursuant to this Section 2.
2D. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder
at least 20 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any Organic Change,
dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
Section 3. Liquidating Dividends. If the Company declares or pays a
dividend upon the Preferred Stock payable otherwise than in cash out of
earnings or earned surplus (determined in accordance with generally accepted
accounting principles, consistently applied) (a "Liquidating Dividend"), then
the Company shall pay to the Registered Holder of this Warrant at the time of
payment thereof the Liquidating Dividend which would have been paid to such
Registered Holder on the Warrant Stock had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such Liquidating
Dividend, or, if no record is taken, the date as of which the record holders of
Preferred Stock entitled to such dividends are to be determined.
Section 4. Purchase Rights. If at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property pro rata to the record holders of
Preferred Stock (the "Purchase Rights"), then the Registered Holder of this
Warrant shall be entitled to acquire, upon the terms applicable to such
Purchase Rights, the Aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Warrant Stock
acquirable upon complete exercise of this Warrant immediately
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before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Preferred Stock are to be determined for the grant, issue or
sale of such Purchase Rights.
Section 5. Definitions. The following terms have meanings set forth
below:
"Common Stock" means, collectively, the Company's Common Stock and
any capital stock of any class of the Company hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of the
Company.
"Equipment Financing" has the meaning set forth in the Purchase
Agreement.
"Market Price" means as to any security the average of the closing
prices of such security's sales on all domestic securities exchanges on which
such security may at the time be listed, or, if there have been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading. If
at any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the "Market
Price" shall be the fair value thereof determined jointly by the Company and the
Registered Holder of this Warrant; provided that if such parties are unable to
reach agreement within a reasonable period of time, such fair value shall be
determined by an appraiser jointly selected by the Company and the Registered
Holder of this Warrant. The determination of such appraiser shall be final and
binding on the Company and the Registered Holder, and the fees and expenses of
such appraiser shall be paid by the Company.
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"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Series B Preferred" means the Company's Series B Preferred Stock,
par value $0.001 per share.
"Warrant Stock" means the Company's Series B Preferred; provided
that if there is a change such that the securities issuable upon exercise of
the Warrants are issued by an entity other than the Company or there is a
change in the type or class of securities so issuable, then the term "Warrant
Stock" shall mean one share of the security issuable upon exercise of the
Warrants if such security is issuable in shares, or shall mean the smallest
unit in which such security is issuable if such security is not issuable in
shares.
Other capitalized terms used in this Warrant but not defined herein
shall have the meanings set forth in the Purchase Agreement.
Section 6. No Voting Rights; Limitations on Liability. This Warrant
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Warrant Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Warrant Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 7. Warrant Transferable. Subject to the transfer conditions
referred to in the legend endorsed hereon, this Warrant and all rights
hereunder are transferable, in whole or in part, without charge to the
Registered Holder, upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
Company.
Section 8. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the purchase rights hereunder, and each of such
new Warrants shall represent such portion of such rights as is designated by
the Registered Holder at the time of such surrender. The date the Company
initially issues this Warrant shall be deemed to be the "Date of Issuance"
hereof regardless of the number of times new
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certificates representing the unexpired and unexercised rights formerly
represented by this Warrant shall be issued.
Section 9. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Company (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the
case of any such mutilation upon surrender of such certificate, the Company
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the same rights represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
Section 10. Notices. Except as otherwise expressly provided herein,
all notices referred to in this Warrant shall be in writing and shall be
delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered, sent
or deposited in the U.S. Mail (i) to the Company, at its principal executive
offices and (ii) to the Registered Holder of this Warrant, at such holder's
address as it appears in the records of the Company (unless otherwise indicated
by any such holder).
Section 11. Amendment and Waiver. Except as otherwise provided
herein, the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holder.
Section 12. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Washington shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Washington without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Washington or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Washington.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by its duly authorized officers under its corporate seal
and to be dated the Date of Issuance hereof.
INTERNAP NETWORK SERVICES
CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its VP Finance & Administration
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[Corporate Seal]
Attest:
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Secretary
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EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-__), hereby agrees to subscribe for the
purchase of __________ shares of the Warrant Stock covered by such Warrant and
makes payment herewith in full therefor at the price per share provided by such
Warrant.
Signature ____________________________
Address ______________________________
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _______________________________________________
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (Certificate No. W-________) with respect to the number of
shares of the Warrant Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
Dated: Signature ____________________________
____________________________
Witness ____________________________
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