WARRANT TO PURCHASE SERIES B CONVERTIBLE PREFERRED STOCK OF SPS COMMERCE, INC. Void after *February 3, 2016

Exhibit 10.23

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND APPLICABLE LAWS.

Warrant to Purchase 235,000 Shares of Series B
Convertible Preferred Stock (subject to
adjustment)

WARRANT TO PURCHASE SERIES B CONVERTIBLE PREFERRED STOCK
OF
SPS COMMERCE, INC.
Void after *February 3, 2016

This certifies that, for value received, Xxxxxxx Capital Finance, L.L.C., a Delaware limited liability company (“Xxxxxxx”), or its assigns (“Holder”) is entitled, subject to the terms set forth below, to purchase from SPS Commerce, Inc. (the “Company”), a Delaware corporation, 235,000 shares of the Series B Convertible Preferred Stock of the Company, as constituted on the date hereof (the “Warrant Issue Date”), upon surrender hereof, at the principal office of the Company referred to below, with the subscription form attached hereto duly executed, and simultaneous payment therefor in lawful money of the United States or otherwise as hereinafter provided, at the Exercise Price as set forth in Section 2 below. The number, character and Exercise Price of such shares of Series B Convertible Preferred Stock are subject to adjustment as provided below. The term “Warrant” as used herein shall include this Warrant, and any warrants delivered in substitution or exchange therefor as provided herein. This Warrant is issued in connection with the Loan and Security Agreement (the “Loan Agreement”), made as of *February 3, 2006 by and between Xxxxxxx and the Company.

1. Term of Warrant. Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole or in part, at any time, or from time to time, during the term commencing on the Warrant Issue Date and ending at 5:00 p.m., New York City time, on *February 3, 2016, and shall be void thereafter.

2. Exercise Price. The exercise price at which this Warrant may be exercised shall be $.97875 per share of Series B Convertible Preferred Stock (“Exercise Price”), as adjusted from time to time pursuant to Section 12 hereof.

3. Exercise of Warrant.

(a) The purchase rights represented by this Warrant are exercisable by the Holder in whole or in part, at any time, or from time to time, during the term hereof as described in Section 1 above, by the surrender of this Warrant and the Notice of Exercise, annexed hereto

as Annex A, duly completed and executed on behalf of the Holder, at the principal office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company), upon payment (i) in cash or by check acceptable to the Company, (ii) by cancellation by the Holder of indebtedness or other obligations of the Company to the Holder, or (iii) by a combination of (i) and (ii), of the purchase price of the shares to be purchased.

(b) This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Series B Convertible Preferred Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date. As promptly as practicable on or after such date and in any event within ten days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new warrant of like tenor exercisable for the number of shares for which this Warrant may then be exercised.

(c) Net Issue Exercise. Notwithstanding any provisions herein to the contrary, if the fair market value of one share of Series B Convertible Preferred Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise and notice of such election in which event the Company shall issue to the Holder a number of shares of Series B Convertible Preferred Stock computed using the following formula:


		X =		Y * (A – B) A


			X =		the number of shares of Series B Convertible Preferred Stock to be issued to the Holder

			Y =		the number of shares of Series B Convertible Preferred Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)

			A =		the fair market value of one share of the Company’s Series B Convertible Preferred Stock (at the date of such calculation)

			B =		Exercise Price (as adjusted to the date of such calculation)

For purposes of the above calculation, fair market value of one share of Series B Convertible Preferred Stock shall be determined by the Company’s Board of Directors in good faith; provided, however, that where there exists a public market for the Company’s Common Stock at the time of such exercise, the fair market value per share shall be the product of (i) the average of

the closing bid and asked prices of the Common Stock quoted in the Over-The-Counter Market Summary or the last reported sale price of the Common Stock or the closing price quoted on the Nasdaq National Market or on any exchange on which the Common Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the five (5) trading days prior to the date of determination of fair market value and (ii) the number of shares of Common Stock into which each share of Series B Convertible Preferred Stock is convertible at the time of such exercise. Notwithstanding the foregoing, in the event the Warrant is exercised in connection with the Company’s initial public offering of Common Stock, the fair market value per share shall be the product of (i) the per share offering price to the public of the Company’s initial public offering, and (ii) the number of shares of Common Stock into which each share of Series B Convertible Preferred Stock is convertible at the time of such exercise.

4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

5. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

6. Rights of Stockholders. Subject to Sections 10, 12 and 14 of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Series B Convertible Preferred Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised as provided herein.

7. Transfer of Warrant.

(a) Warrant Register. The Company will maintain a register (the “Warrant Register”) containing the names and addresses of the Holder or Holders. Any Holder of this Warrant or any portion thereof may change his or her address as shown on the Warrant Register by written notice to the Company requesting such change. Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

(b) Warrant Agent. The Company may, by written notice to the Holder, appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 7(a) above, issuing the Series B Convertible Preferred Stock or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant, or any or all of the foregoing. Thereafter, any such registration, issuance, exchange, or replacement, as the case may be, shall be made at the office of such agent.

(c) Transferability and Nonnegotiability of Warrant. This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of investment representation letters reasonably satisfactory to the Company, if such are requested by the Company). Subject to the provisions of this Warrant with respect to compliance with the Securities Act of 1933, as amended (the “Act”), title to this Warrant may be transferred by endorsement (by the Holder executing the Assignment Form, annexed hereto as Annex B) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery.

(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant for exchange, properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on assignments and transfers contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof.

(e) Compliance with Securities Laws.

(i) The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Series B Convertible Preferred Stock or Common Stock to be issued upon exercise hereof or conversion thereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Series B Convertible Preferred Stock or Common Stock to be issued upon exercise hereof or conversion thereof except under circumstances that will not result in a violation of the Act or any state securities laws. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of Series B Convertible Preferred Stock or Common Stock so purchased are being acquired solely for the Holder’s own account and not as a nominee for any other party, for investment; and not with a view toward distribution or resale in violation of the Act.

(ii) The Holder of this Warrant, by acceptance hereof, represents and warrants to the Company that such Holder is an “accredited investor” as that term is defined in Regulation D promulgated under the Act and, either alone or with such advisers as it may select, has such knowledge and experience in financial and business matters that it is capable of evaluating the

merits and risks of its investment in this Warrant and the shares of Series B Convertible Preferred Stock or Common Stock to be issued upon exercise hereof or conversion thereof.

(iii) The Company did not offer this Warrant and the shares of Series B Convertible Preferred Stock or Common Stock to be issued upon exercise hereof or conversion thereof to the Holder by any form of general solicitation or general advertising, including, but not limited to, any advertisement, article, notice or similar media or broadcast over television or radio, or any seminar or meeting whose attendees were invited by any general solicitation or general advertising.

(iv) The Holder acknowledges, and upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that it has received a copy of that certain Information Statement of the Company dated *[February 3, 2006] and reviewed and discussed the Company’s business, affairs and current prospects with such officers and others (including its purchaser representative, if applicable) as it has deemed appropriate or desirable in connection with the transactions contemplated hereby. The Holder further acknowledges, and upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that it has requested, received and reviewed such information, undertaken such investigation and made such further inquiries of officers of the Company and others as it has deemed appropriate or desirable in connection with such transactions.

(v) The Holder understands, and upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that it understands, that it must bear the economic risk of its investment for an indefinite period of time because the Series B Convertible Preferred Stock and Common Stock are not, and will not be, registered under the Act or any applicable state securities laws, except as may be otherwise be determined by the Company or in connection with the Fourth Amended and Restated Registration Rights Agreement, dated as of May 16, 2003, by and among the Company and the parties who have executed the counterpart signature pages thereto or are otherwise bound thereby, as such agreement may be amended and/or restated from time to time (the “Registration Rights Agreement”), and such shares may not be resold unless subsequently registered under the Act and such other federal or state securities laws or unless an exemption from such registration is available. The Holder understands, and upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that it understands, that, except as may be otherwise be determined by the Company or pursuant to the Registration Rights Agreement, it is not contemplated that any registration will be made under the Act or any state securities laws.

(vi) This Warrant and all shares of Series B Convertible Preferred Stock or Common Stock issued upon exercise hereof or conversion thereof shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws):

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT (i) PURSUANT TO REGISTRATION UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR (ii) IF, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THE PROPOSED SALE OR TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS WITHOUT REGISTRATION.

8. Representations and Warranties of Company. In connection with the transactions provided for herein, the Company hereby represents and warrants to the Holder that:

(a) Organization, Good Standing, and Qualification. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties, taken as a whole.

(b) Authorization. The Company has all necessary corporate power and authority to execute, deliver and perform its obligations under this Warrant. All corporate action has been taken on the part of the Company, its officers, directors, and stockholders necessary for the due authorization, execution and delivery of this Warrant by the Company and the performance by the Company of its obligations hereunder. This Warrant has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights. The shares of Series B Convertible Preferred Stock issuable upon exercise of this Warrant and the shares of Common Stock of the Company issuable upon conversion of such shares of Series B Convertible Preferred Stock have been duly and validly authorized and reserved for issuance by the Company.

(c) Compliance with Other Instruments. The authorization, execution and delivery of this Warrant by the Company, the consummation of the transactions contemplated hereby and the performance by the Company of its obligations hereunder will not (i) violate any judgment, order, decree, injunction, law or regulation applicable to the Company; (ii) violate any term or provision of the Certificate of Incorporation, as amended (the “Certificate”) or bylaws of the Company; (iii) violate, or result in a breach or default under, any other agreement or instrument to which the Company is a party or by which it is bound or to which its properties or

assets are subject, except for such violations, breaches or defaults which, individually or in the aggregate, will not result in a material adverse effect upon the business operations, properties, assets, results of operations or condition (financial or otherwise) of the Company, taken as a whole, the enforceability of any material provision of this Warrant or the ability of the Holder to enforce its rights and remedies under this Warrant; or (iv) result in the creation of any lien, claim or other encumbrance on any of the property or other assets of the Company.

(d) Valid Issuance of Preferred and Common Stock. The shares of Series B Convertible Preferred Stock, when issued, sold, and delivered in accordance with the terms of this Warrant for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and will be issued in compliance with all applicable federal and state securities laws, and none of such shares will be in violation of any preemptive rights of any person granted by the Company. The issuance and delivery of the shares of Common Stock of the Company that are issuable upon conversion of the Series B Convertible Preferred Stock, if any, when issued and delivered upon such conversion in accordance with the terms of Series B Convertible Preferred Stock, will be duly and validly issued, fully paid and nonassessable and will be issued in compliance with all applicable federal and state securities laws, and none of such shares of Common Stock will be in violation of any preemptive rights of any person granted by the Company.

9. Reservation of Stock. The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Series B Convertible Preferred Stock a sufficient number of shares to provide for the issuance of Series B Convertible Preferred Stock upon the exercise of this Warrant (and shares of its Common Stock for issuance on conversion of such Series B Convertible Preferred Stock) and, from time to time, will take all steps necessary to amend its Certificate to provide sufficient reserves of shares of Series B Convertible Preferred Stock issuable upon exercise of this Warrant (and shares of its Common Stock for issuance on conversion of such Series B Convertible Preferred Stock). The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Series B Convertible Preferred Stock upon the exercise of this Warrant.

10. Notices.

(a) Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted pursuant to Section 12 hereof, the Company shall issue a certificate signed by an authorized officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and number of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant.

(b) In case:

(i) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or

(ii) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation, or

(iii) of any voluntary dissolution, liquidation or winding-up of the Company,

then, and in each such case, the Company will mail or cause to be mailed to the Holder or Holders a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (B) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Series B Convertible Preferred Stock or Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Series B Convertible Preferred Stock or Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be personally delivered, or mailed by overnight delivery, at least ten days prior to the date therein specified.

(c) All such notices, advices and communications shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery and (ii) in the case of mailing, on the next business day following the date of such mailing by overnight delivery.

11. Amendments.

(a) Any term of this Warrant may be amended with the written consent of the Company and the Holder.

(b) No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

12. Adjustments. The Exercise Price and the number of shares purchasable hereunder are subject to adjustment from time to time as follows:

12.1 Conversion or Redemption of Series B Convertible Preferred Stock. Should all of the Company’s Series B Convertible Preferred Stock be, or if outstanding would be, at any time prior to the expiration of this Warrant or any portion thereof, redeemed or converted into shares of the Company’s Common Stock in accordance with Section 4.3.4(b) of the Certificate, then this Warrant shall become immediately exercisable for that number of shares

of the Company’s Common Stock equal to the number of shares of the Common Stock that would have been received if this Warrant had been exercised in full and the Series B Convertible Preferred Stock received thereupon had been simultaneously converted immediately prior to such event, and the Exercise Price (per share of such Common Stock) shall immediately be adjusted to equal the quotient obtained by dividing (x) the aggregate Exercise Price of the maximum number of shares of Series B Convertible Preferred Stock for which this Warrant was exercisable immediately prior to such conversion or redemption, by (y) the number of shares of Common Stock for which this Warrant is exercisable immediately after such conversion or redemption. For purposes of the foregoing Section 12.1, the “Certificate” shall mean the Certificate of Incorporation of the Company as amended and/or restated and effective immediately prior to the redemption or conversion of all of the Company’s Series B Convertible Preferred Stock.

12.2 Merger, Sale of Assets, etc. If at any time while this Warrant, or any portion hereof, is outstanding and unexpired there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular merger in which the Company is the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, and in lieu of the number of shares of Series B Convertible Preferred Stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, the number of shares of stock, securities or assets as would be issuable or payable with respect to or in exchange for the number of shares that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 12. The foregoing provisions of this Section 12.2 shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the holder hereof for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company’s or any successor’s Board of Directors. In all events, appropriate adjustment (as determined in good faith by the Company’s or any successor’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

12.3 Reclassification, etc. If the Company, at any time while this Warrant, or any portion hereof, remains outstanding and unexpired by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall

thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 12. No adjustment shall be made pursuant to this Section 12.3, upon any conversion or redemption of the Series B Convertible Preferred Stock which is the subject of Section 12.1.

12.4 Split, Subdivision or Combination of Shares. If the Company at any time while this Warrant, or any portion hereof, remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Exercise Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination.

12.5 Adjustments for Dividends in Stock or Other Securities or Property. If while this Warrant, or any portion hereof, remains outstanding and unexpired, then all holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 12.

12.6 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 12, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant.

12.7 No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 12 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment.

13. Registration Rights and Voting and Co-Sale Agreements. Upon exercise of this Warrant, and as a condition precedent to the Company issuing any shares of Series B Convertible Preferred Stock to the Holder in connection therewith, the Holder shall duly complete, execute and deliver the Notices of Adoption, annexed hereto as Annex C and Annex D, by which the Holder shall become a party to the Registration Rights Agreement and to the Fourth Amended and Restated Voting and Co-Sale Agreement, dated as of May 16, 2003, by and among the Company and the parties who have executed the counterpart signature pages thereto or are otherwise bound thereby, as such agreement may be amended and/or restated from time to time.

14. Information. So long as the Holder holds the Warrant and/or shares of Preferred Stock or Common Stock, the Company shall deliver to the Holder, promptly after mailing (i) the fiscal year end unqualified audited financial statements of the Company, prepared in accordance with generally accepted accounting principles, consistently applied (which shall not contain any “going concern” exception) no later than 180 days after the related fiscal year end, and (ii) copies of all notices, reports, financial statements, proxies or other written communication delivered or mailed to all holders of the Series B Convertible Preferred Stock or otherwise to all holders of the same class of stock held by the Holder.

15. Descriptive Headings and Governing Law. The description headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware without regard to conflicts of law provisions.

[The Remainder Of This Page Is Intentionally Left Blank.]

IN WITNESS WHEREOF, the parties have executed this Warrant as of the date set forth below.

Dated: February 3, 2006


XXXXXXX CAPITAL FINANCE, L.L.C.		SPS COMMERCE, INC.

By:	/s/ Xxxx X. Xxxxxxxxx Name: Xxxx X. Xxxxxxxxx	By:	/s/ Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
	Title: President		Title: Chief Financial Officer

ANNEX A

NOTICE OF EXERCISE


To:		SPS COMMERCE, INC.

(1) The undersigned hereby (A) elects to purchase ___shares of Series B Convertible Preferred Stock of SPS Commerce, Inc., pursuant to the provisions of Section 3(a) of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full, or (B) elects to exercise this Warrant for the purchase of___shares of Series B Convertible Preferred Stock, pursuant to the provisions of Section 3(c) of the attached Warrant.

(2) In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Series B Convertible Preferred Stock or the Common Stock to be issued upon conversion thereof are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Series B Convertible Preferred Stock or Common Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws.

(3) The undersigned represents and warrants to the Company that the undersigned is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”) and, either alone or with such advisers as it may select, has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the shares of Series B Convertible Preferred Stock or Common Stock to be issued upon exercise hereby or conversion thereof.

(4) In exercising this Warrant, the undersigned hereby confirms and acknowledges that the Company did not offer the shares of Series B Convertible Preferred Stock or Common Stock to be issued upon exercise hereby or conversion thereof to the Holder by any form of general solicitation or general advertising, including, but not limited to, any advertisement, article, notice or similar media or broadcast over television or radio, or any seminar or meeting whose attendees were invited by any general solicitation or general advertising.

(5) In exercising this Warrant, the undersigned hereby confirms and acknowledges that it has received a copy of that certain Information Statement of the Company dated *[January ___, 2006] and reviewed and discussed the Company’s business, affairs and current prospects with such officers and others (including its purchaser representative, if applicable) as it has deemed appropriate or desirable in connection with the transactions contemplated hereby. In exercising this Warrant, the undersigned hereby confirms and acknowledges that it has requested, received and reviewed such information, undertaken such investigation and made such further inquiries of officers of the Company and others as it has deemed appropriate or desirable in connection with such transactions.

A-1

(6) In exercising this Warrant, the undersigned understands that it must bear the economic risk of its investment for an indefinite period of time because the Series B Convertible Preferred Stock and Common Stock are not, and will not be, registered under the Act or any applicable state securities laws, except as may be otherwise be determined by the Company or in connection with the Fourth Amended and Restated Registration Rights Agreement, dated as of May 16, 2003, by and among the Company and the parties who have executed the counterpart signature pages thereto or are otherwise bound thereby, as such agreement may be amended and/or restated from time to time (the “Registration Rights Agreement”), and such shares may not be resold unless subsequently registered under the Act and such other federal or state securities laws or unless an exemption from such registration is available. The undersigned further understands that, except as may be otherwise be determined by the Company or pursuant to the Registration Rights Agreement, it is not contemplated that any registration will be made under the Act or any state securities laws.

(7) Please issue a certificate or certificates representing said shares of Series B Convertible Preferred Stock in the name of the undersigned or in such other name as is specified below:

(Name)

(8) Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below:


Name:
Date:

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ANNEX B

ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under the within Warrant, with respect to the number of shares of Series B Convertible Preferred Stock (or Common Stock) set forth below:


Name of Assignee		Address		No. of Shares

and does hereby irrevocably constitute and appoint Attorney to make such transfer on the books of SPS Commerce, Inc., maintained for the purpose, with full power of substitution in the premises.

The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the shares of stock to be issued upon exercise hereof or conversion thereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any shares of stock to be issued upon exercise hereof or conversion thereof except under circumstances which will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws. Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of stock so purchased are being acquired for investment and not with a view toward distribution or resale.

The undersigned, by assignment hereof, agrees to be bound by the terms and conditions of this Warrant as the Holder of this Warrant.


Name:
Dated:

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ANNEX C

NOTICE OF ADOPTION
(Registration Rights Agreement)

This Notice of Adoption (“Adoption Notice”) is executed by the undersigned (the “Adopting Party”) pursuant to the terms of that certain Fourth Amended and Restated Registration Rights Agreement dated as of May 16, 2003, as may be amended from time to time (the “Agreement”), by and among SPS Commerce, Inc., a Delaware corporation, and the other parties thereto. Capitalized terms used but not defined herein will have the respective meanings ascribed to such terms in the Agreement. By the execution and delivery of this Adoption Notice, the Adopting Party agrees as follows:

1. Acknowledgment. Adopting Party acknowledges that Adopting Party is purchasing the shares of the Company’s capital stock set forth below (the “Shares”).

2. Agreement. Adopting Party: (i) agrees that the Shares acquired by Adopting Party will be bound by and subject to the terms of the Agreement; and (ii) hereby adopts the Agreement with the same force and effect as if Adopting Party were originally an “Investor.”

3. Notice. Any notice required or permitted by the Agreement will be given to Adopting Party at the address or facsimile listed beside Adopting Party’s signature below.

IN WITNESS WHEREOF, the Adopting Party has caused this Notice of Adoption to be executed by its duly authorized representative as of the date first written below.


Shares Purchased:
Class of Stock:		Printed Name of Adopting Party

Date:




		Signature
Address


Facsimile: (___)
		Printed Name and Title of Authorized
		Signatory of Adopting Party

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ANNEX D

NOTICE OF ADOPTION
(Voting and Co-Sale Agreement)

This Notice of Adoption (“Adoption Notice”) is executed by the undersigned (the “Adopting Party”) pursuant to the terms of that certain Fourth Amended and Restated Voting and Co-Sale Agreement dated as of May 16, 2003, as may be amended from time to time (the “Agreement”), by and among SPS Commerce, Inc., a Delaware corporation, and the other parties thereto. Capitalized terms used but not defined herein will have the respective meanings ascribed to such terms in the Agreement. By the execution and delivery of this Adoption Notice, the Adopting Party agrees as follows: