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EXHIBIT 10.14
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") OR THE LAWS OF ANY STATE. 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 AND ITS COUNSEL, 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: September 1, 1998
FOR VALUE RECEIVED, InterNAP Network Services Corporation, a Washington
corporation (the "Company"), hereby grants to Phoenix Leasing Incorporated (the
"Purchaser") or its registered assigns (the "Registered Holder") the right to
purchase from the Company 75,001 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 the date hereof (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
adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
A. 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 least 30 days but not more than 90 days prior to the end of the
Exercise Period.
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B. 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) Certificate for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to the Purchaser
promptly after the date of the Exercise Time. Unless this Warrant has expired
or all of the purchaser rights represented hereby have been exercised, the
Company, 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 promptly 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.
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(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 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.
C. 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
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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.
D. 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.
A. 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.
B. 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 and Holder shall make appropriate provision (in form and
substance satisfactory to the Registered Holder of this Warrant) to insure that
the Registered Holder shall thereupon receive or 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
applicable case, the Company shall make appropriate provision (in form
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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.
C. 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 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.
D. 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. General Information Covenants.
A. Information Rights. The Company shall deliver to the Registered
Holder (i) within 120 days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company as of the end of such year and a
consolidated statement of income, retained earnings and cash flows for such
year, which year-end financial reports shall be in reasonable detail and
certified by independent public accountants of nationally recognized standing
selected by the Company, and (ii) within 45 days after the end of each fiscal
quarter, unaudited
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consolidated statements of income, retained earnings and cash flows of the
Company for such quarter and a consolidated balance sheet as of the end of such
quarter, which shall be certified by the Company's chief financial officer. In
addition, the Company shall deliver to the Registered Holder any other
information or data generally provided by the Company to its stockholders or
which the Registered Holder reasonably requests. The Company shall permit
representatives of the Registered Holder to visit the Company's and its
subsidiaries' facilities, inspect their books and records and discuss their
business affairs with their officers and key employees, in each case during
reasonable business hours and in a manner not disruptive to their business
operations. The Company's obligations under this Section 4A. shall terminate at
such time that the Company becomes subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended.
B. Notices. The Company shall give written notice to the Registered
Holder of (i) any declaration or payment of dividends or distributions on the
Series B Preferred or the Common Stock at least 15 days prior to the record date
therefor (or the payment date if no record date is taken), (ii) any liquidation,
dissolution or winding up of the Company at least 30 days prior to the date
thereof, (iii) the filing of any registration statement with the Securities and
Exchange Commission covering the Common Stock promptly after such filing and
(iv) the occurrence of any material adverse change affecting the Company
promptly after the Company's discovery or otherwise obtaining knowledge thereof.
C. Current Public Information. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act of 1934 and the rules
and regulations adopted by the Securities and Exchange Commission thereunder
and shall take such further action as the Registered Holder may reasonably
request, all to the extent required to enable the Registered Holder to sell
Restricted Securities as defined in Rule 144 of the Securities and Exchange
Commission pursuant to (i) Rule 144 adopted by the Securities and Exchange
Commission under the Securities Act (as such rule may be amended from time to
time) or any similar rule or regulation hereafter adopted by the Securities and
Exchange Commission or (ii) a registration statement on Form S-2 or S-3 or any
similar registration form hereafter adopted by the Securities and Exchange
Commission. Upon request, the Company shall deliver to the Registered Holder a
written statement as to whether it has complied with such requirements.
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.
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"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 date 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 by the Company's Board of Directors, provided that if within
a reasonable period of time the Registered Holder disagrees with such
determination 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 Company and the Registered Holder shall each be
responsible for one-half of the fees and expenses of such appraiser.
"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 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 of 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.
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Section 7. Warrant Transferable. Subject to the transfer conditions
referred to in the legend endorsed hereon and all applicable state and federal
securities laws, 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; provided, however, that in no event shall
more than five (5) Warrants be issued and outstanding. 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 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. Remedies. The Company stipulates that the remedies at law of
the Purchaser in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate to the fullest extent permitted by law, and that
such terms may be specifically enforced by a decree for the
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specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
Section 13. Enforcement Costs. If any party to, or beneficiary of, this
Warrant seeks to enforce its rights hereunder by legal proceedings or
otherwise, then the non-prevailing party shall pay all reasonable costs and
expenses incurred by the prevailing party, including, without limitation, all
reasonable attorneys' fees (including the allocable costs of in-house counsel).
Section 14. 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.
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/ XXXX X. XXXXXXX
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Its: VP Finance & Administration
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(Corporate Seal)
Attest:
/s/ XXXX X. XXXXXXX
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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
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Address
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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
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Witness
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