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EXHIBIT 10.27
INTERNAP NETWORK SERVICES CORPORATION
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
SEPTEMBER 17, 1999
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TABLE OF CONTENTS
PAGE
SECTION 1. ISSUANCE OF INVESTOR SHARES AND WARRANT.......................................1
SECTION 2. CLOSING, DELIVERY AND PAYMENT.................................................2
2.1 Closing.......................................................................2
2.2 Deliveries....................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................2
3.1 Organization, Good Standing and Qualification.................................2
3.2 Capitalization; Voting Rights.................................................3
3.3 Authorization; Binding Obligations............................................4
3.4 Compliance With Other Instruments.............................................4
3.5 Information...................................................................4
3.6 Other Registration Rights.....................................................4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR....................................5
4.1 Requisite Power and Authority.................................................5
4.2 Investment Representations....................................................5
4.3 Transfer Restrictions.........................................................6
4.4 No Public Market..............................................................6
SECTION 5. CONDITIONS TO THE INVESTOR'S AND COMPANY'S OBLIGATIONS AT THE CLOSING.........7
SECTION 6. STANDSTILL AGREEMENT..........................................................7
SECTION 7. MISCELLANEOUS.................................................................8
7.1 Governing Law.................................................................8
7.2 Survival......................................................................8
7.3 Successors and Assigns........................................................8
7.4 Entire Agreement..............................................................8
7.5 Severability..................................................................8
7.6 Amendment and Waiver..........................................................8
7.7 Notices.......................................................................8
7.8 Expenses......................................................................9
7.9 Titles and Subtitles..........................................................9
7.10 Counterparts..................................................................9
i.
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.11 Broker's Fees.................................................................9
7.12 Pronouns......................................................................9
7.13 California Corporate Securities Law...........................................9
ii.
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LIST OF EXHIBITS
EXHIBIT A Warrant
EXHIBIT B Amended and Restated Rights Agreement
EXHIBIT C Lock-up Letter
1.
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INTERNAP NETWORK SERVICES CORPORATION
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is
Tendered into effective as of September 17, 1999, by and among INTERNAP NETWORK
SERVICES CORPORATION, a Washington corporation (the "Company"), and INKTOMI
CORP., a Delaware corporation (the "Investor").
RECITALS
WHEREAS, the Investor desires to purchase shares of the Company's Common
Stock (the "Common Stock") and a Warrant to purchase additional shares of Common
Stock (the "Warrant"); and
WHEREAS, the Company desires to issue and sell Common Stock and the
Warrant to the Investor on the terms and conditions set forth herein
concurrently or immediately following the closing of the initial public offering
of the Company's Common Stock (the "IPO").
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. ISSUANCE OF INVESTOR SHARES AND WARRANT.
Subject to the terms and conditions hereof, at the Closing, the Company
will, for an aggregate purchase price of $20,000,000 payable to the Company by
the Investor:
(a) issue and sell to the Investor, and the Investor will
purchase from the Company, an aggregate number of shares of Common Stock (the
"Investor Shares") determined by dividing (i) $20,000,000 by (ii) the per share
"Proceeds to InterNAP" specified on the cover page of the final prospectus (the
"Final Prospectus") relating to the IPO (such per share price is referred to
herein as the "Common Stock Purchase Price"); and
(b) issue to the Investor the Warrant, in the form of EXHIBIT A
attached hereto. The number of shares of Common Stock the Investor may purchase
pursuant to the Warrant ("Warrant Shares") shall be equal to fifty percent (50%)
of the number of Investor Shares purchased by the Investor at the Closing. The
price per share at which the Investor may purchase Warrant Shares shall be one
hundred fifty percent (150%) of the Common Stock Purchase Price. The parties
agree that the Company's agreement to issue the Warrant is made as an inducement
solely in connection with the Investor's agreement to purchase the Investor
Shares, and not for any other reason.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
1.
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SECTION 2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The purchase and sale of the Investor Shares and the
issuance of the Warrant shall take place at a closing (the "Closing") at the
offices of Xxxxxx Godward LLP, 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx
00000-0000, on the date of the closing of the IPO or at such later time or place
as the parties may mutually agree (such date is hereinafter referred to as the
"Closing Date").
2.2 DELIVERIES.
(a) COMPANY DELIVERIES. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to the Investor the following:
(i) Certificates representing the Investor Shares;
(ii) The Warrant;
(iii) The Amended and Restated Investor Rights Agreement
in the form attached hereto as EXHIBIT B (the "Rights Agreement"); provided,
that the Company may amend the form of the Rights Agreement to provide for
certain piggy-back registration rights to be granted to lenders pursuant to the
Standby Loan Facility dated August 27, 1999 (the "Standby Loan Facility") so
long as such piggy-back rights are junior to the rights of Inktomi.
(b) PURCHASER DELIVERIES. At the Closing, the Investor shall
deliver to the Company the following:
(i) A wire transfer of immediately available funds or a
cashier's check in the amount of $20,000,000; and
(ii) A lock-up letter in the form attached hereto as
EXHIBIT C.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Investor as of the
date of this Agreement as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized and validly existing under the laws of the State of
Washington. The Company has all requisite corporate power and authority to own
and operate its properties and assets, to execute and deliver this Agreement,
the Warrant and the Rights Agreement, to issue and sell the Investor Shares, the
Warrant and the Warrant Shares (upon exercise of the Warrant), to carry out the
provisions of this Agreement and the Rights Agreement and to carry on its
business as presently conducted and as presently proposed to be conducted. The
Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
its activities and of its properties (both owned and leased)
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
2.
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makes such qualification necessary, except for those jurisdictions in which
failure to do so would not have a material adverse effect on the Company or its
business.
3.2 CAPITALIZATION; VOTING RIGHTS. As of August 31, 1999, the authorized
capital stock of the Company consists of 100,000,000 shares of Common Stock (par
value $0.001 per share), 4,108,381 shares of which are issued and outstanding,
and 50,069,615 shares of Preferred Stock (par value $0.001 per share), 6,666,667
of which are designated Series A Preferred Stock, all of which are issued and
outstanding, 13,773,318 of which are designated Series B Preferred Stock,
13,173,182 of which are issued and outstanding, and 29,629,630 of which are
designated Series C Preferred Stock, all of which are issued and outstanding. At
the Closing, the authorized and outstanding capitalization of the Company will
be as set forth in the Final Prospectus. All issued and outstanding shares of
the Company's capital stock (a) have been duly authorized and validly issued,
(b) are fully paid and non-assessable and (c) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities. The
rights, preferences, privileges and restrictions of the Investor Shares are as
stated in the Articles of Incorporation, as amended and restated, of the Company
(the "Articles"). Each series of Preferred Stock is convertible into Common
Stock on a one-for-one basis and will automatically convert into Common Stock at
the time of the closing of the IPO. The Warrant Shares have been duly and
validly reserved for issuance. Other than (1) the aggregate of 13,535,000 shares
of Common Stock reserved for issuance under the Company's 1998 Stock
Option/Stock Issuance Plan, 1999 Equity Incentive Plan, 1999 Employee Stock
Purchase Plan and 1999 Non-Employee Directors' Stock Option Plan, (2) warrants
to purchase an aggregate of 600,136 shares of Series B Preferred Stock, (3)
registration rights held by holders of 52,965,499 shares of Common Stock and
Preferred Stock pursuant to that certain Amended and Restated Rights Agreement
dated January 28, 1999, which will be replaced by the Rights Agreement the form
of which is attached hereto as EXHIBIT B, and (4) warrants to purchase an
aggregate of up to 200,000 shares of Common Stock pursuant to the Standby Loan
Facility, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
shareholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. Of the reserved shares of
Common Stock described in item (1) of the preceding sentence, (i) options to
purchase 6,136,622 shares have been granted and are currently outstanding, and
(ii) 7,398,378 shares of Common Stock remain available for issuance to officers,
directors, employees and consultants pursuant to such Stock Option Plan. When
issued in compliance with the provisions of this Agreement and the Articles, the
Investor Shares and the Warrant Shares will be validly issued, fully paid and
non-assessable, and will be free of any liens or encumbrances; provided,
however, that the Investor Shares and the Warrant Shares may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein or as otherwise required by such laws at the time a transfer is proposed.
Except as described in this Section 3.2, there are no options, warrants, calls,
rights, commitments or agreements of any character, written or oral, to which
the Company is a party or by which it is bound that obligate the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the capital stock of the Company.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
3.
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3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part
of the Company, its officers, directors and shareholders necessary for the
authorization of this Agreement and the Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Warrant, Warrant Shares and
Investor Shares pursuant hereto (or upon exercise of the Warrant as the case may
be) has been taken or will be taken prior to the Closing. The Agreement, the
Warrant and the Rights Agreement, when executed and delivered, will be valid and
binding obligations of the Company enforceable in accordance with their terms,
except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; (b) general principles of equity that restrict the
availability of equitable remedies; and (c) to the extent that the
enforceability of the indemnification provisions in Section 2.9 of the Rights
Agreement may be limited by applicable laws.
3.4 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of any term of its Articles of Incorporation or Bylaws, or in any material
respect of any term or provision of any material mortgage, indenture, contract,
agreement, instrument, judgment or decree to which it is a party or by which it
is bound and is not in material violation of any order, or to the Company's
knowledge, any statute, law, rule or regulation applicable to the Company. The
execution, delivery, and performance of and compliance with this Agreement, the
Warrant and the Rights Agreement, and the issuance and sale of the Investor
Shares, the Warrant and Warrant Shares pursuant hereto (or upon exercise of the
Warrant as the case may be), will not, with or without the passage of time or
giving of notice, result in any such material violation, or be in conflict with
or constitute a default under any such term, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.
3.5 INFORMATION. The Company's Registration Statement on Form S-1 (File
No. 333-84035) as amended by Amendment No. 1 and as subsequently amended (the
"Registration Statement") and the Final Prospectus do not and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
3.6 OTHER REGISTRATION RIGHTS. The piggy-back registration rights the
Company shall grant to certain lenders pursuant to the Standby Loan Facility
will be junior to the registration rights granted to Inktomi pursuant to the
Rights Agreement in the event that Inktomi is entitled to and exercises such
registration rights.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
4.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
The Investor hereby represents and warrants to the Company as follows:
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. The Investor has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement, the Warrant and the Rights Agreement and to carry out their
provisions. All action on the Investor's part required for the lawful execution
and delivery of this Agreement, the Warrant and the Rights Agreement have been
or will be effectively taken prior to the Closing. Upon their execution and
delivery, this Agreement, the Warrant and the Rights Agreement will be valid and
binding obligations of the Investor, enforceable in accordance with their terms,
except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights, (b) general principles of equity that restrict the
availability of equitable remedies and (c) to the extent that the enforceability
of the indemnification provisions of Section 2.9 of the Rights Agreement may be
limited by applicable laws.
4.2 INVESTMENT REPRESENTATIONS. The Investor understands that the
Investor Shares, the Warrant and the Warrant Shares may not be registered under
the Securities Act on the ground that the sale provided for in this Agreement
and the issuance of securities hereunder is exempt pursuant to Section 4(2) of
the Securities Act, and that the Company's reliance on such exemption is
predicated in part on the Investor's representations set forth herein. The
Investor hereby represents and warrants as follows:
(a) INVESTOR BEARS ECONOMIC RISK. The Investor has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. The Investor must bear the economic risk
of this investment indefinitely unless the Investor Shares, the Warrant or the
Warrant Shares are registered pursuant to the Securities Act, or an exemption
from registration is available.
(b) ACQUISITION FOR OWN ACCOUNT. The Investor is acquiring the
Investor Shares, the Warrant and the Warrant Shares for the Investor's own
account for investment only, and not with a view towards their distribution.
(c) INVESTOR CAN PROTECT ITS INTEREST. The Investor represents
that by reason of its, or of its management's, business or financial experience,
the Investor has the capacity to protect its own interests in connection with
the transactions contemplated by this Agreement, the Warrant and the Rights
Agreement. Further, the Investor is aware of no publication of any advertisement
in connection with the purchase of securities contemplated by this Agreement.
(d) ACCREDITED INVESTOR. The Investor represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
5.
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(e) COMPANY INFORMATION. The Investor has received and read the
Registration Statement and has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. The Investor has also had the opportunity to ask
questions of and receive answers from the Company and its management regarding
the terms and conditions of this investment.
(f) RULE 144. The Investor acknowledges and agrees that the
Investor Shares, the Warrant and, if issued, the Warrant Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. The Investor has been advised
or is aware of the provisions of Rule 144 promulgated under the Securities Act
as in effect from time to time, which permits limited resale of shares purchased
in a private placement subject to the satisfaction of certain conditions,
including, among other things: the availability of certain current public
information about the Company, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any
three-month period not exceeding specified limitations. The Investor
acknowledges that if the applicable requirements of Rule 144 are not met,
registration under the Securities Act or compliance with another exemption from
registration will be required for any disposition of its stock. The Investor
understands that although Rule 144 is not exclusive, the Securities and Exchange
Commission has expressed its opinion that persons proposing to sell restricted
securities received in a private offering other than in a registered offering or
pursuant to Rule 144 will have a substantial burden of proof establishing that
an exemption from registration is available for such offers or sales and that
such persons and the brokers who participate in the transactions do so at their
own risk.
4.3 TRANSFER RESTRICTIONS. The Investor acknowledges and agrees that the
Investor Shares, the Warrant and, if issued, the Warrant Shares are subject to
restrictions on transfer as set forth in the Rights Agreement. The Investor
covenants that, in the absence of an effective registration statement covering
the securities in question, it will sell, transfer or otherwise dispose of the
Warrant, Warrant Shares and Investor Shares only in a manner consistent with its
representations and covenants set forth in this Agreement, the Warrant and the
Rights Agreement. In connection therewith, the Investor acknowledges that the
Company shall make a notation on its stock records regarding the restrictions on
transfer set forth in this Agreement and the Warrant and shall transfer shares
on the books of the Company only to the extent not inconsistent therewith.
4.4 NO PUBLIC MARKET. The Investor understands that no public market now
exists for any of the securities issued by the Company, and there is no
assurance a public market will be created.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
6.
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SECTION 5. CONDITIONS TO THE INVESTOR'S AND COMPANY'S OBLIGATIONS AT THE
CLOSING.
The obligation of the Company to issue Investor Shares and the Warrant
to the Investor at the Closing shall be subject to the fulfillment on or before
the Closing of each of the following conditions:
(a) PERFORMANCE. The Investor and the Company shall have
performed and complied in all material respects with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by them on or before Closing.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Sections 3 and 4 shall be true and correct as of the
date hereof and as of the Closing Date.
(c) CERTIFICATES. The Investor and the Company shall each have
received an accurate certificate signed by an executive officer of the other,
dated as of the Closing Date, certifying as to the fulfillment of the conditions
in Sections 5(a) and (b).
(d) LEGAL INVESTMENT. On the Closing Date, the sale and issuance
of the Investor Shares and the Warrant shall be legally permitted by all laws
and regulations to which the Investor and the Company are subject.
(e) CONSENTS, PERMITS AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement, the Warrant and
the Rights Agreement, and no preliminary or permanent injunction or other
binding order, decree or ruling issued by a court or governmental agency shall
be in effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement.
(f) IPO. The IPO shall have closed within ninety (90) days of
the date hereof.
SECTION 6. STANDSTILL AGREEMENT.
For a period of two years after the date hereof, the Investor shall not,
and shall cause each of its parents (if any) and subsidiaries to not, acquire
beneficial ownership (as such term is defined in Rule 13d-3 of the Exchange Act)
of any securities of the Company in addition to the Investor Shares, the
Warrant, and the Warrant Shares, that would result in the aggregate beneficial
ownership of the Investor and its parents and subsidiaries of capital stock of
the Company (as defined below) equaling or exceeding ten percent (10%) of the
outstanding capital stock of the Company. The Investor or any of its parents and
subsidiaries shall not purchase any securities of the Company without having
given ten (10) days prior written notice to the Company or without having
received the prior written consent of the Company. Upon notice
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
7.
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thereof, the Company shall inform the Investor whether such purchases cause the
aggregate beneficial ownership of the Investor and its Affiliates to equal or
exceed ten percent (10%) of the outstanding capital stock of the Company.
SECTION 7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Washington as such laws are applied to agreements
between Washington residents entered into and performed entirely in Washington.
7.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Investor and the closing
of the transactions contemplated hereby; provided, however, that the
representations and warranties set forth in Section 3 shall expire on the first
anniversary of the Closing Date, and no claim based on an alleged breach of such
representations and warranties may be asserted after such date. All statements
as to factual matters contained in any certificate or other instrument delivered
by or on behalf of the Company pursuant hereto in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the Company hereunder solely as of the date of such certificate or
instrument.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Investor Shares, the Warrant and/or the
Warrant Shares from time to time.
7.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Rights Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
7.5 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified only
upon the written consent of the Company and the Investor.
7.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
8.
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communications shall be sent to the Company and the Investor at the address as
set forth on the signature pages hereof or at such other address as the Company
or the Investor may designate by ten (10) days advance written notice to the
other parties hereto.
7.8 EXPENSES. Each party to this Agreement shall pay all costs and
expenses, including any legal expenses, it incurs with respect to the
negotiation, execution, delivery, performance and enforcement of the Agreement.
7.9 TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.11 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 7.11 being untrue.
7.12 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
7.13 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
[This Space Intentionally Left Blank.]
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
9.
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IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
and Warrant Purchase Agreement as of the date set forth in the first paragraph
hereof.
COMPANY:
INTERNAP NETWORK SERVICES
CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: President and Chief Executive
Officer
------------------------------
Address: 000 Xxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
INVESTOR:
INKTOMI CORP.
By: /s/ XXXXXXX XXXXXX
---------------------------------
Name: Xxxxxxx Xxxxxx
-------------------------------
Title: Vice President of Marketing
------------------------------
Address: 0000 Xxxx Xxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Vice President of
Business Development
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
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EXHIBIT A
NO. COMW-1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
INTERNAP NETWORK SERVICES CORPORATION
SEPTEMBER ___, 1999
(VOID AFTER SEPTEMBER ___, 2001)
This certifies that INKTOMI CORP. or its assigns (the "Holder"), for value
received, is entitled to purchase from INTERNAP NETWORK SERVICES CORPORATION, a
Washington corporation (the "Company"), having a place of business at 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000, a maximum of ______________ fully
paid and nonassessable shares of the Company's Common Stock ("Common Stock") for
cash at an initial exercise price equal to $______ per share (the "Stock
Purchase Price") at any time or from time to time up to and including 5:00 p.m.
(Pacific time) on September ___, 2001 (the "Expiration Date") upon surrender to
the Company at its principal office (or at such other location as the Company
may advise the Holder in writing) of this Warrant properly endorsed with the
Form of Subscription attached hereto duly filled in and signed and, if
applicable, upon payment in cash or by check of the aggregate Stock Purchase
Price for the number of shares for which this Warrant is being exercised
determined in accordance with the provisions hereof. The Stock Purchase Price
and the number of shares purchasable hereunder are subject to adjustment as
provided in Section 3 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the holder
of record hereof, at any time or from time to time, from the date hereof up to
the Expiration Date for all or any part of the shares of Common Stock (but not
for a fraction of a share) which may be purchased hereunder. The Company agrees
that the shares of Common Stock purchased under this Warrant shall be and are
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered, properly endorsed, the completed, executed Form of Subscription
delivered and
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payment made for such shares. Certificates for the shares of Common Stock so
purchased, together with any other securities or property to which the Holder
hereof is entitled upon such exercise, shall be delivered to the Holder hereof
by the Company at the Company's expense within a reasonable time after the
rights represented by this Warrant have been so exercised. In case of a purchase
of less than all the shares that may be purchased under this Warrant, the
Company shall cancel this Warrant and execute and deliver a new Warrant or
Warrants of like tenor for the balance of the shares purchasable under the
Warrant surrendered upon such purchase to the Holder hereof within a reasonable
time. Each stock certificate so delivered shall be in such denominations of
Common Stock as may be requested by the Holder hereof and shall be registered in
the name of such Holder.
1.2 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock is
greater than the Stock Purchase 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 Form of Subscription
and notice of such election in which event the Company shall issue to the Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)
----
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common 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 Common Stock (at the date of such
calculation)
B = Stock Purchase Price (as adjusted to the date
of such calculation)
For purposes of the above calculation, fair market value of one share of Common
Stock shall be (i) the average of the closing selling prices of the Common Stock
on the stock exchange determined by the Company's board of directors to be the
primary market for the Common Stock over the ten (10) trading day period (or
such shorter period immediately following the closing of an initial public
offering) ending on the date prior to the date the Holder exercises its rights
under this Section 1.2, as such prices are officially quoted in the composite
tape of the transactions on such exchange, or if the foregoing does not apply,
(ii) if the Common Stock is traded over-the-counter, the average of the closing
bid prices (or, if such information is available, the closing selling prices) of
the Common Stock over the ten (10) trading day period (or such shorter period
immediately following the closing of an initial public offering) ending on the
date prior to
2.
17
the date the Holder exercises its rights under this Section 1.2,
as such prices are reported by the National Association of Securities Dealers
through its Nasdaq National Market, any successor system or any exchange on
which it is listed, whichever is applicable, or (iii) if there is no public
market for the Common Stock, the price shall be determined by mutual agreement
of the Holder and the Company, and if the Holder and the Company are unable to
agree, by an investment banker of national reputation selected by the Company
and reasonably acceptable to the Holder.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all shares of Common Stock that may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required to
provide for the exercise of the rights represented by this Warrant. The Company
will take all such action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange upon which the Common Stock may be listed; provided, however, that the
Company shall not be required to effect a registration under Federal or State
securities laws with respect to such exercise except pursuant to valid
registration rights held by the Holder. The Company will not take any action
that would result in any adjustment of the Stock Purchase Price (as set forth in
Section 3 hereof) if the total number of shares of Common Stock issuable after
such action upon exercise of all outstanding warrants, together with all shares
of Common Stock then outstanding and all shares of Common Stock then issuable
upon exercise of all options and upon the conversion of all convertible
securities then outstanding, would exceed the total number of shares of Common
Stock then authorized by the Company's Articles of Incorporation, as amended
(the "Articles").
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a greater number
of shares, the Stock Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall
3.
18
be combined into a smaller number of shares, the Stock Purchase Price in effect
immediately prior to such combination shall be proportionately increased.
3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY,
RECLASSIFICATION. If at any time or from time to time the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Common Stock or any shares of stock or other securities which
are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution,
(b) any cash paid or payable otherwise than as a cash dividend,
or
(c) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3.1 above), then and in each such case, the
Holder hereof shall, upon the exercise of this Warrant, be entitled to receive,
in addition to the number of shares of Common Stock receivable thereupon, and
without payment of any additional consideration therefor, the amount of stock
and other securities and property (including cash in the cases referred to in
clause (b) above and this clause (c)) which such Holder would hold on the date
of such exercise had he been the holder of record of such Common Stock as of the
date on which holders of Common Stock received or became entitled to receive
such shares or all other additional stock and other securities and property.
3.3 CERTAIN EVENTS. If any change in the outstanding Common Stock of
the Company or any other event occurs as to which the other provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with such
provisions, then the Board of Directors of the Company shall make an adjustment
in the number and class of shares available under the Warrant, the Stock
Purchase Price or the application of such provisions, so as to protect such
purchase rights as aforesaid. The adjustment shall be such as will give the
Holder of the Warrant upon exercise for the same aggregate Stock Purchase Price
the total number, class and kind of shares as he would have owned had the
Warrant been exercised prior to the event and had he continued to hold such
shares until after the event requiring adjustment.
3.4 NOTICES OF CHANGE.
(a) Immediately upon any adjustment in the number or class of
shares subject to this Warrant and of the Stock Purchase Price, the Company
shall give written notice thereof to the Holder, setting forth in reasonable
detail and certifying the calculation of such adjustment.
4.
19
(b) The Company shall give written notice to the Holder at least
ten (10) business days prior to the date on which the Company closes its books
or takes a record for determining rights to receive any dividends or
distributions.
4. MERGER, CONSOLIDATION, SALE, REORGANIZATION OR LIQUIDATION. Upon a
merger, consolidation, acquisition of all or substantially all of the property
or stock, reorganization or liquidation of the Company (collectively, a
"Reorganization") prior to the Expiration Date, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for their shares of Common Stock, this Warrant shall be canceled and all rights
granted hereunder shall terminate; provided, however, that the Company shall
have delivered to the Holder written notice of the Reorganization at least
fifteen (15) days prior to such Reorganization and that the Holder shall have
the right immediately prior to the Reorganization to exercise this Warrant; and,
provided further, that if the Holder has not notified the Company of its intent
to exercise this Warrant before its termination, then this Warrant shall
automatically be deemed to have been exercised under Section 1.2 at the closing
of the Reorganization.
5. ISSUE TAX. The issuance of certificates for shares of Common Stock upon
the exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.
6. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
7. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such Holder for the Stock Purchase Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by its creditors.
8. WARRANTS TRANSFERABLE. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the holder hereof (except
for transfer taxes), upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant, when endorsed in blank, shall be deemed negotiable,
and that the holder hereof, when this Warrant shall have been so endorsed, may
be treated by the Company, at the
5.
20
Company's option, and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the Company any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered owner hereof as the owner
for all purposes.
9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Common Stock issued upon exercise of this Warrant, shall survive the
exercise of this Warrant.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. NOTICES. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be delivered
or shall be sent by certified mail, postage prepaid, to each such holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant or such other address
as either may from time to time provide to the other.
12. BINDING EFFECT ON SUCCESSORS. All of the obligations of the Company
relating to the Common Stock issuable upon the exercise of this Warrant shall
survive the exercise and termination of this Warrant. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof.
13. 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 Washington.
14. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
15. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Stock Purchase Price.
[THIS SPACE INTENTIONALLY LEFT BLANK]
6.
21
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this ______ day of
_____________, 1999.
INTERNAP NETWORK SERVICES CORPORATION
a Washington corporation
By:_________________________________________
Title:______________________________________
ATTEST:
_______________________________
Secretary
22
EXHIBIT A
SUBSCRIPTION FORM
Date: _________________, 19___
INTERNAP NETWORK SERVICES CORPORATION
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
Ladies and Gentlemen:
[ ] The undersigned hereby elects to exercise the warrant issued to it by
______________ (the "Company") and dated ___________ _____, ____ Warrant
No. COMW-___ (the "Warrant") and to purchase thereunder
__________________________________ shares of the Common Stock of the
Company (the "Shares") at a purchase price of
___________________________________________ Dollars ($__________) per
Share or an aggregate purchase price of __________________________________
Dollars ($__________) (the "Purchase Price").
[ ] The undersigned hereby elects to convert _______________________ percent
(____%) of the value of the Warrant pursuant to the provisions of Section
1.2 of the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
INKTOMI CORP.
By:__________________________________
Title:_______________________________
23
EXHIBIT B
AMENDED AND RESTATED RIGHTS AGREEMENT
24
INTERNAP NETWORK SERVICES CORPORATION
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SEPTEMBER __, 1999
25
TABLE OF CONTENTS
PAGE
----
SECTION 1 GENERAL........................................................1
1.1 Definitions.......................................................1
SECTION 2 RESTRICTIONS ON TRANSFER; REGISTRATION.........................3
2.1 Restrictions On Transfer..........................................3
2.2 Demand Registration...............................................4
2.3 Piggyback Registrations...........................................6
2.4 Form S-3 Registration.............................................8
2.5 Expenses Of Registration..........................................9
2.6 Obligations Of The Company........................................9
2.7 Termination Of Registration Rights...............................11
2.8 Delay Of Registration; Furnishing Information....................11
2.9 Indemnification..................................................11
2.10 Assignment Of Registration Rights................................14
2.11 Amendment Of Registration Rights.................................14
2.12 Limitation On Subsequent Registration Rights.....................15
2.13 "Market Stand-Off" Agreement.....................................15
2.14 Rule 144 Reporting...............................................16
SECTION 3 COVENANTS OF THE COMPANY......................................16
3.1 Basic Financial Information And Reporting........................16
3.2 Inspection Rights................................................17
3.3 Confidentiality Of Records.......................................17
3.4 Reservation Of Common Stock......................................17
3.5 Stock Vesting....................................................17
3.6 Board Election Rights............................................18
3.7 Employee Confidentiality, Nonraiding and Noncompetition
Agreement........................................................18
3.8 Directors' Liability And Indemnification.........................18
3.9 Board Of Directors Approval......................................18
3.10 Real Property Holding Corporation................................18
3.11 Qualified Small Business Stock...................................19
26
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
3.12 Termination Of Covenants.........................................19
3.13 Visitation Rights................................................19
SECTION 4 RIGHT TO MAINTAIN INTEREST....................................20
4.1 Subsequent Offerings.............................................20
4.2 Exercise Of Rights...............................................20
4.3 Issuance Of Equity Securities To Other Persons...................20
4.4 Termination Of Rights To Maintain Interest.......................21
4.5 Transfer Of Rights To Maintain Interest..........................21
4.6 Excluded Securities..............................................21
SECTION 5 MISCELLANEOUS.................................................22
5.1 Governing Law....................................................22
5.2 Survival.........................................................22
5.3 Successors and Assigns...........................................22
5.4 Entire Agreement.................................................22
5.5 Severability.....................................................22
5.6 Amendment and Waiver.............................................22
5.7 Delays or Omissions..............................................23
5.8 Notices..........................................................23
5.9 Attorneys' Fees..................................................23
5.10 Titles and Subtitles.............................................23
5.11 Counterparts.....................................................23
27
INTERNAP NETWORK SERVICES CORPORATION
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of
the ___ day of September, 1999, by and among INTERNAP NETWORK SERVICES
CORPORATION, a Washington corporation (the "Company") and (i) INKTOMI
CORPORATION, a Delaware corporation ("Inktomi"), (ii) the holders of the
Company's Series C Preferred Stock ("Series C Stock") listed on EXHIBIT A
hereto, (iii) the holders of the Company's Series B Preferred Stock ("Series B
Stock") listed on EXHIBIT B hereto, and (iv) the individuals holding the
Company's common stock ("Common Stock") and Series A Preferred Stock ("Series A
Stock") set forth on Exhibit B hereto (the "Founders"). The parties described in
clause (ii) shall be referred to hereinafter, collectively, as the "Investors"
and each individually as an "Investor." The parties described in clauses (iii)
and (iv) shall be referred to hereinafter, collectively, as the "Prior
Shareholders."
RECITALS
WHEREAS, the Company has issued shares of Common Stock, Series A Stock,
Series B Stock and Series C Stock and has granted certain registration rights to
certain holders thereof pursuant to Section 2 of that certain Amended and
Restated Investor Rights Agreement dated January 28, 1999, as amended (the
"Prior Agreement");
WHEREAS, the Company proposes to sell and issue to Inktomi shares of
Common Stock and the Warrant to purchase shares of Common Stock pursuant to, and
on terms contemplated by, that certain Common Stock and Warrant Purchase
Agreement dated September ___, 1999 (the "Inktomi Agreement");
WHEREAS, as a condition of entering into the Inktomi Agreement, Inktomi
has requested that the Company extend to it registration rights as set forth
below; and
WHEREAS, the Company, the Investors, and the Prior Shareholders desire
to amend and restate the Prior Agreement and to accept the rights and
obligations created pursuant hereto which shall supersede the Prior Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Inktomi Agreement, the parties mutually agree as follows:
SECTION 1 GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
28
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"FOUNDERS" means all holders of Common Stock and Series A Preferred
Stock as of the date of this agreement and their authorized transferees.
"FOUNDERS' STOCK" means all Common Stock and Series A Preferred Stock of
the Company held by the Founders, upon the Closing, and any Common Stock issued
or issuable with respect to such Common Stock upon any recapitalizations, stock
splits, stock dividends or similar distributions.
"HOLDER" means any holder of outstanding Registrable Securities that
have not been sold to the public, but only if such holder is an Investor or a
holder of Series B Stock (or, solely with regards to Sections 2.3, 2.5, 2.8(b),
2.9, 2.13 and 5.6(b), a Founder) or an assignee or transferee of registration
rights in accordance with Section 2.10 hereof.
"INITIATING HOLDERS" means Holders who in the aggregate hold at least
forty percent (40%) of the Registrable Securities.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"REGISTER," "REGISTERED" AND "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company issued or
issuable upon conversion of the Shares; (b) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such above-described securities;
and (c) Common Stock of the Company issued to Inktomi pursuant to the Inktomi
Agreement and upon exercise of the Warrant. For purposes of the registration
rights granted to holders of Company securities pursuant to Section 2.3 hereof
and for purposes of the obligations imposed upon holders of Registrable
Securities under Sections 2.9 and 2.13, but not for the definition of Initiating
Holders or for purposes of Section 5.6(a), "Registrable Securities" shall
include Founders' Stock. Notwithstanding the foregoing, Registrable Securities
shall not include any securities sold by a person to the public either pursuant
to a registration statement or Rule 144 or sold in a private transaction in
which the transferor's rights under Section 2 of this Agreement are not
assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares
determined by calculating the total number of shares of the Company's Common
Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
2.
29
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Fifteen Thousand Dollars ($15,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SEC" OR "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities pursuant to this
Agreement, as well as fees and disbursements of legal counsel for the selling
Holders, except as to those included in Registration Expenses, as defined above.
"SHARES" shall mean (i) the Company's Series B Stock held by the Prior
Shareholders as of the date hereof listed on EXHIBIT B hereto and their
permitted assigns, and (ii) the Company's Series C Stock held by the Investors
listed on EXHIBIT A hereto and their permitted assigns.
"WARRANT" shall mean that certain Common Stock Warrant to be issued to
Inktomi by the Company pursuant to the Inktomi Agreement.
SECTION 2 RESTRICTIONS ON TRANSFER; REGISTRATION
2.1 RESTRICTIONS ON TRANSFER
(a) Each Holder and Inktomi agree not to make any disposition of
all or any portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be
bound by the terms of this Agreement, (B) such Holder or Inktomi, as the case
may be, shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and (C) if reasonably requested by the
Company, such Holder or Inktomi, as the case may be, shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (i)
and (ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder or Inktomi, as the case may be, which is
(A) a partnership to its partners or former partners in
3.
30
accordance with partnership interests, (B) a corporation to its shareholders in
accordance with their interest in the corporation, (C) a limited liability
company to its members or former members in accordance with their interest in
the limited liability company, (D) to the Holder's family member or trust for
the benefit of an individual Holder or (E) an "affiliate (as defined in the
Securities Act) of such Holder or Inktomi, as the case may be, provided that
such affiliate is an "accredited investor" (as defined in the Securities Act);
provided that in each case the transferee will be subject to the terms of this
Agreement to the same extent as if he, she or it were an original signatory
hereunder.
(b) Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of the Agreement)
be stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws or as provided elsewhere in this Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION
(a) (i) Subject to the conditions of this Section 2.2, if the
Company shall receive a written request from the Initiating Holders that the
Company file a registration statement under the Securities Act covering the
registration of at least twenty-five percent (25%) of the Registrable Securities
held by such Initiating Holders and having an aggregate offering price to the
public in excess of five million dollars ($5,000,000) (a "Qualified Public
Offering"), then the Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all Holders and, subject to the
limitations of this Section 2.2, use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of all Registrable
Securities and the Holders request to be registered.
(ii) Subject to the conditions of this Section 2.2, if
the Company shall receive a written request from Inktomi that the Company file a
registration statement under the
4.
31
Securities Act covering the registration of any of the Registrable Securities
held by Inktomi and having an aggregate offering price in excess of five million
dollars ($5,000,000), then the Company shall, within thirty (30) days of the
receipt thereof, give written notice of such request to all Holders and, subject
to the limitations of this Section 2.2, use its best efforts to effect, as soon
as practicable, the registration under the Securities Act of all Registrable
Securities that Inktomi and the Holders request to be registered.
(b) If the Initiating Holders or Inktomi, as the case may be,
intend to distribute the Registrable Securities covered by their request by
means of an underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 2.2 or any request pursuant to Section 2.4
and the Company shall include such information in the written notice referred to
in Section 2.2(a) or Section 2.4(a), as applicable. In such event, the right of
any Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. Should any Holder or Inktomi, as
the case may be, propose to distribute his, her or its, securities through such
underwriting, such Holder or Inktomi shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders or by Inktomi
if Inktomi initiated the registration (which underwriter or underwriters shall
be reasonably acceptable to the Company). Notwithstanding any other provision of
this Section 2.2 or Section 2.4, if the underwriter advises the Company that
marketing factors require a limitation of the number of securities to be
underwritten (including Registrable Securities) then the Company shall so advise
Inktomi and all Holders of Registrable Securities that would otherwise be
underwritten pursuant hereto, and the number of shares that may be included in
the underwriting shall be allocated,
(i) in the case of an underwritten registration
initiated by the Initiating Holders, to the Holders of such Registrable
Securities on a pro rata basis based on the number of Registrable Securities
held by all such Holders (including the Initiating Holders but not including the
Founders); and
(ii) in the case of an underwritten registration
initiated by Inktomi, first to Inktomi until all shares of Registrable
Securities that Inktomi desires to register are included in such registration
and second to the remaining Holders of such Registrable Securities on a pro rata
basis based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders but not including the Founders).
Any Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) as to any Holder, prior to October 29, 2001,
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(ii) as to Inktomi, prior to one hundred eighty (180)
days following the closing of the Company's Initial Offering;
(iii) as to any Holder, after the Company has effected
two (2) registrations pursuant to Section 2.2(a)(i), and such registrations have
been declared effective;
(iv) as to Inktomi, after the Company has affected one
(1) registration pursuant to Section 2.2(a)(ii), and such registrations have
been declared or ordered effective;
(v) during the period starting with the date of the
filing, and ending on the date one hundred eighty (180) days following the
effective date, of the registration statement pertaining to the Initial
Offering; provided that the Company makes reasonable good faith efforts to cause
such registration statement to become effective;
(vi) if within thirty (30) days of receipt of a written
request pursuant to Section 2.2(a)(i) from Initiating Holders the Company gives
notice to the Holders of the Company's intention to make its Initial Offering
within ninety (90) days;
(vii) if within thirty (30) days of receipt of a written
request pursuant to Section 2.2(a)(ii) from Inktomi the Company gives notice to
Inktomi of the Company's intention to file a registration statement on Form S-1
or Form S-3 within ninety (90) days; provided, however, that if the Company
gives the foregoing notice, then Inktomi shall be entitled to include its
Registrable Securities in such registration statement in accordance with the
provisions of Section 2.3 as if Inktomi were a "Holder" and pari passu with the
Holders referred to in Section 2.3(a)(ii) who elect to participate in such
registration; or
(viii) if the Company shall furnish to Holders
requesting a registration pursuant to this Section 2.2 or to Inktomi if Inktomi
is requesting such a registration, a certificate signed by the Chairman of the
Board stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such registration statement to be effected at such time, in which event the
Company shall have the right to defer such filing for one period of not more
than ninety (90) days after receipt of the request of the Initiating Holders or
Inktomi, as the case may be; provided, however, that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period.
2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder; provided, however, that no Holder shall be
eligible to so participate in such registration if such Holder could have sold
such Registrable Securities on an unrestricted basis pursuant to Rule 144 of the
Securities Act during the
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four-week period immediately preceding the effectiveness of such registration;
provided further, that such participation right shall not be granted to any
Holders following the fifth anniversary of the closing of the Initial Offering.
Each Holder desiring to include in any such registration statement all or any
part of the Registrable Securities held by it shall, within fifteen (15) days
after the above-described notice from the Company, so notify the Company in
writing. Such notice shall state the intended method of disposition of the
Registrable Securities by such Holder. If a Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated,
(i) first, to the Company;
(ii) second, to the Holders who are (a) Investors, (b)
holders of Series B Stock, and (c) Xxxxxx X. Xxxxxx, Xx. on a pro rata basis
based on the total number of Registrable Securities held by such Holders and Xx.
Xxxxxx;
(iii) third, to Xxxxxx X. Xxxxxx, Xx.;
(iv) fourth, to Holders who are Founders (other than Xx.
Xxxxxx) on a pro rata basis based on the total number of Registrable Securities
held by such Holders; and
(v) fifth, to any other shareholders of the Company
(other than a Holder) on a pro rata basis.
No such reduction shall (y) reduce the securities being offered by the Company
for its own account to be included in the registration and underwriting, or (z)
reduce the amount of securities of Xxxxxx X. Xxxxxx, Xx. and the selling Holders
who are Investors or holders of Series B Stock to below twenty-five percent
(25%) of the total amount of securities to be included in such registration,
unless such offering is the Initial Offering and such registration does not
include shares of any other selling shareholders, in which event any or all of
the Registrable Securities of the Holders (including Xx. Xxxxxx) may be excluded
in accordance with the preceding sentence. In no event will shares of any other
selling shareholder be included in such registration which would reduce the
number of shares which may be included by Holders without the written
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consent of Holders of not less than sixty-six and two-thirds percent (66 2/3%)
of the Registrable Securities proposed to be sold in the offering.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.5 hereof.
2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of at least fifteen percent (15%) of the Registrable
Securities or from Inktomi a written request or requests that the Company effect
a registration on Form S-3 (or any successor to Form S-3) or any similar
short-form registration statement and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such
Holder, Holders, or Inktomi, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders of Registrable
Securities or to Inktomi, as the case may be; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of the
Registrable Securities of such Holder, Holders or Inktomi as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 2.4:
(i) if Form S-3 (or any successor or similar form) is
not available for such offering;
(ii) if the Holders or Inktomi, as the case may be,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public, net of
underwriting costs, of less than five hundred thousand dollars ($500,000);
(iii) if the Company shall furnish to the Holders or to
Inktomi, as the case may be, a certificate signed by the Chairman of the Board
of Directors of the Company stating that in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such Form S-3 Registration to be effected at such time,
in which event the Company shall have the right to defer the filing of the Form
S-3 registration statement for one period of not more than ninety (90) days
after receipt of the request of the Holder, Holders or Inktomi under this
Section 2.4; provided, that such right to delay a request shall be exercised by
the Company not more than once in any twelve (12) month period;
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(iv) if the Company has, within the six (6) month period
preceding the date of such request, already effected one (1) registration on
Form S-3 for the Holders or Inktomi pursuant to this Section 2.4;
(v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance;
or
(vi) as to Inktomi, after the Company shall have
effected two (2) registrations pursuant to Section 2.4, and such registrations
have been declared effective.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders or Inktomi, as the case may be. Subject to
Section 2.5 below, all Selling Expenses incurred in connection with
registrations requested pursuant to this Section 2.4 shall be paid by the
selling Holders or Inktomi pro rata in proportion to the number of shares sold
by each, and by the Company, if it participates in such registration, pro rata
in proportion to the number of shares sold by it.
2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any registration under
Section 2.3 or Section 2.4 herein shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations under those sections,
shall be borne by the holders of the securities so registered pro rata on the
basis of the number of shares so registered. The Company shall not, however, be
required to pay for expenses of any registration proceeding begun pursuant to
Section 2.2 or 2.4, the request of which has been subsequently withdrawn by the
Holders requesting such registration or Inktomi, as the case may be, unless (a)
the withdrawal is based upon material adverse information concerning the Company
of which the Holders requesting such registration or Inktomi, as the case may
be, were not aware at the time of such request or (b) the Holders of a majority
of Registrable Securities or Inktomi, as the case may be, agree to forfeit
their, or its, right to one requested registration pursuant to Section 2.2 or
Section 2.4, as applicable, in which event such right shall be forfeited by all
Holders in the case of a forfeiture by any Holder. If the Holders or Inktomi are
required to pay the Registration Expenses, such expenses shall be borne by the
holders of securities (including Registrable Securities) requesting such
registration in proportion to the number of shares for which registration was
requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders or Inktomi, as
the case may be, shall not forfeit their, or its, rights pursuant to Section 2.2
or Section 2.4 to a demand registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of either
the Holders of a majority of the Registrable Securities registered thereunder or
of Inktomi, keep such registration statement effective for up
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36
to ninety (90) days or, if earlier, until the Holder, Holders or Inktomi, as the
case may be, shall have completed the distribution related thereto.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders or to Inktomi, as the case may be,
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they, or it, as the case may be, may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them or it, as the
case may be.
(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders or Inktomi, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting or Inktomi, as the case may be, shall also
enter into and perform his, her or its obligations under such an agreement.
(f) Notify Inktomi or each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(g) Furnish, at the request of either a majority of the Holders
participating in the registration or Inktomi, as the case may be, on the date
that such Registrable Securities are delivered to the underwriters for sale, if
such securities are being sold through underwriters, or, if such securities are
not being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration or to Inktomi, as the case may
be, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities or to Inktomi, as the case may be, and
(ii) a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration or to Inktomi, as the case may be, addressed to
the underwriters, if any, and if
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permitted by applicable accounting standards, to the Holders requesting
registration of Registrable Securities or to Inktomi, as the case may be..
2.7 TERMINATION OF REGISTRATION RIGHTS
(a) All registration rights granted to Holders under this
Section 2 shall terminate and be of no further force and effect five (5) years
after the date of the Company's Initial Offering. In addition, the registration
rights of a Holder shall expire if (a) the Company has completed its Initial
Offering and is subject to the provisions of the Exchange Act, (b) such Holder
(together with its affiliates, partners and former partners) holds less than one
percent (1%) of the Company's outstanding Common Stock (treating all share of
convertible Preferred Stock on an as converted basis) and (c) all Registrable
Securities held by and issuable to such Holder (and its affiliates, partners and
former partners) may be sold under Rule 144 during any ninety (90) day period.
(b) All registration rights granted to Inktomi under this
Section 2 shall terminate and be of no further force and effect two (2) years
after the date of the Company's Initial Offering. In addition, the registration
rights of Inktomi shall expire if (a) the Company has completed its Initial
Offering and is subject to the provisions of the Exchange Act, (b) Inktomi
(together with its affiliates) holds less than one percent (1%) of the Company's
outstanding Common Stock and (c) all Registrable Securities held by and issuable
to Inktomi (and its affiliates) may be sold under Rule 144 during any ninety
(90) day period.
2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION
(a) Neither Inktomi nor any Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders or Inktomi, as the case may be, shall furnish to the Company such
information regarding such Holders or Inktomi, the Registrable Securities held
by such Holders or Inktomi and the intended method of disposition of such
securities as shall be required to effect the registration of their Registrable
Securities.
(c) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of subsection 2.2(b), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in Section 2.2 or Section 2.4,
whichever is applicable.
2.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, Inktomi, the partners, officers, directors and
legal counsel of each Holder or Inktomi, any underwriter (as defined in the
Securities Act) for such Holder or Inktomi and
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each person, if any, who controls such Holder, Inktomi or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse Inktomi and each such Holder, partner, officer, director,
legal counsel, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 2.9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by Inktomi and each such Holder, partner, officer,
director, legal counsel, underwriter or controlling person of Inktomi or such
Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held such Holder are included in the securities as to
which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, officers and
legal counsel, and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter, Inktomi or any of Inktomi's
directors, officers or any person who controls Inktomi, if any, and any other
Holder selling securities under such registration statement or any of such
Holder's other partners, directors or officers or any person who controls such
Holder, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, controlling person,
underwriter, Inktomi or any of Inktomi's directors or officers or any person who
controls Inktomi, if any, or other such Holder, or partner, director, officer or
controlling person of such other Holder may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder under an instrument duly executed
by such Holder and stated to be specifically for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, legal counsel,
controlling person, underwriter Inktomi or any of Inktomi's directors, officers,
legal counsel or controlling person, if any, or other Holder, or partner,
officer, director, legal counsel or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was such a
Violation; provided,
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however, that the indemnity agreement contained in this Section
2.9(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder or Inktomi, as the case may be, which consent shall not be
unreasonably withheld; provided further, that in no event shall any indemnity
under this Section 2.9 exceed the proceeds from the offering received by such
Holder or Inktomi, as the case may be.
(c) To the extent permitted by law, Inktomi will, if Registrable
Securities held by Inktomi are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, officers and legal counsel, and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors or
officers of such Holder or any person who controls such Holder, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
Holder, or partner, director, officer or controlling person of such other Holder
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by Inktomi under an
instrument duly executed by Inktomi and stated to be specifically for use in
connection with such registration; and Inktomi will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, legal
counsel, controlling person, underwriter or other Holder, or partner, officer,
director, legal counsel or controlling person of such other Holder in connection
with investigating or defending any such loss, claim, damage, liability or
action if it is judicially determined that there was such a Violation; provided,
however, that the indemnity agreement contained in this Section 2.9(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided further, that in no
event shall any indemnity under this Section 2.9 exceed the proceeds from the
offering received by such Holder.
(d) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the
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indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.9.
(e) If the indemnification provided for in this Section 2.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder or by Inktomi hereunder exceed the proceeds from the offering received by
such Holder or Inktomi.
(f) The obligations of the Company, the Holders and Inktomi
under this Section 2.9 shall survive completion of any offering of Registrable
Securities in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be assigned
(a) by a Holder to a transferee or assignee of Registrable Securities which (i)
previously holds Registrable Securities, (ii) is a subsidiary, parent, general
partner, limited partner or retired partner of a Holder, or is a Holder's family
member or trust for the benefit of an individual Holder, or (iii) acquires at
least Seventy-five Thousand (75,000) shares of Registrable Securities (as
adjusted for stock splits and combinations); and (b) by Inktomi to a transferee
or assignee of Registrable Securities which (i) previously holds Registrable
Securities, (ii) is a subsidiary or parent of Inktomi or an entity that
controls, is controlled by or is under common control with Inktomi, or (iii)
acquires at least Seventy-five Thousand (75,000) shares of Registrable
Securities (as adjusted for stock splits and combinations); provided, however,
(X) the transferor shall, within ten (10) days after such transfer, furnish to
the Company written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned and (Y) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company, the Holders of at least sixty-six and two-thirds
percent (66 2/3%) of the Registrable Securities then outstanding; provided,
however, that any amendment adversely affecting the rights of Inktomi
14.
41
under this Section 2 shall require the written consent of Inktomi. Any amendment
or waiver effected in accordance with this Section 2.11 shall be binding upon
Inktomi, each Holder and the Company. By acceptance of any benefits under this
Article 2, Inktomi and Holders of Registrable Securities hereby agree to be
bound by the provisions hereunder.
2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of sixty-six and two-thirds percent (66 2/3%) of the Registrable
Securities then outstanding, enter into any agreement with any holder or
prospective holder of any securities of the Company that would grant such holder
or prospective holder rights to register its shares in any registration filed
under this Section 2, unless under the terms of such agreement, such holder or
prospective holder may include such securities only to the extent that the
inclusion of its securities will not reduce the amount of Registrable Securities
of the Holders and that is included; provided, however, if such rights are pari
passu or superior to Inktomi's rights, the Company shall not enter into such
agreement granting such rights without the written consent of Inktomi. The
Holders and Inktomi hereby acknowledge that they are familiar with that certain
Standby Loan Facility dated August 27, 1999 (the "Xxxxxxxxx Loan Facility") and
the Credit Agreement and other instruments [to be] entered into pursuant to the
Xxxxxxxxx Loan Facility, and that the Company will grant certain registration
rights to the persons named as Lenders in the Xxxxxxxxx Loan Facility with
respect to the securities that may be issued to such Lenders on conversion of
the Xxxxxxxxx Loan Facility and pursuant to the Common Stock warrants provided
for therein (the "Xxxxxxxxx Warrants").
2.13 "MARKET STAND-OFF" AGREEMENT.
(a) Each Holder and Inktomi hereby agree that it shall not sell
or otherwise transfer or dispose of any Common Stock (or other securities) of
the Company held by he, she or it (other than those included in the
registration) for a period specified by the representative of the underwriters
of Common Stock (or other securities) of the Company not to exceed one hundred
eighty (180) days following the effective date of a registration statement of
the Company filed under the Securities Act, provided that all officers,
directors and affiliates of the Company and holders of at least two percent (2%)
of the Company's voting securities enter into similar agreements.
(b) Each Holder and Inktomi agree to execute and deliver such
other agreements as may be reasonably requested by the Company or the
underwriter that are consistent with the foregoing or that are necessary to give
further effect thereto. In addition, if requested by the Company or the
representative of the underwriters of Common Stock (or other securities) of the
Company, each Holder and Inktomi shall provide, within ten (10) days of such
request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the
Company's securities pursuant to a registration statement filed under the
Securities Act. The obligations described in this Section 2.13 shall not apply
to a registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.
15.
42
2.14 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the sale of the
Registrable Securities to the public without registration, the Company agrees to
use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a Holder or Inktomi, as the case may be, own any
Registrable Securities, furnish to such Holder and Inktomi forthwith upon
request: a written statement by the Company as to its compliance with the
reporting requirements of said Rule 144 of the Securities Act and with the
reporting requirements of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as a
Holder or Inktomi, as the case may be, may reasonably request in availing
himself, herself or itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.
2.15 REGISTRATION RIGHTS UNDER PRIOR AGREEMENT. The registration rights
contained in this Agreement set forth the sole and entire agreement among the
Company, Inktomi, the Investors and the Prior Shareholders on the subject matter
hereof and supersede any and all rights granted and covenants made under the
Prior Agreement (and the undersigned parties to the Prior Agreement hereby amend
such agreements such that the registration rights provided for herein shall
apply to all parties under the Prior Agreement).
SECTION 3 COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING
(a) The Company will maintain true books and records of account
in which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year of
the Company, and in any event within one hundred twenty (120) days thereafter,
the Company will furnish each Investor and holder of Series B Stock a
consolidated balance sheet of the Company, as at the end of such fiscal year,
and a consolidated statement of income and a consolidated statement of cash
flows of the Company, for such year, all prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail. Such financial statements shall be accompanied by a report
and opinion thereon by independent public accountants of national standing
selected by the Company's Board of Directors.
16.
43
(c) The Company will furnish each Investor and holder of Series
B Stock, as soon as practicable after the end of the first, second and third
quarterly accounting periods in each fiscal year of the Company, and in any
event within forty-five (45) days thereafter, a consolidated balance sheet of
the Company as of the end of each such quarterly period, and a consolidated
statement of income and a consolidated statement of cash flows of the Company
for such period and for the current fiscal year to date, prepared in accordance
with generally accepted accounting principles, with the exception that no notes
need be attached to such statements and year-end audit adjustments may not have
been made.
(d) So long as an Investor or holder of Series B Stock (with its
affiliates) shall own at least Four Hundred Thousand (400,000) shares of
Registrable Securities (as adjusted for stock splits and combinations) (each, a
"Major Investor), the Company will furnish each such Major Investor (i) at least
thirty (30) days prior to the beginning of each fiscal year, an annual budget
and operating plans for such fiscal year (broken down by month) (and as soon as
available, any subsequent revisions thereto); and (ii) as soon as practicable
after the end of each month, and in any event within forty-five (45) days
thereafter, a consolidated balance sheet as of the end of each such month, and a
consolidated statement of income and a consolidated statement of cash flows of
the Company for such month and for the current fiscal year to date, including a
comparison to plan figures for such period, prepared in accordance with
generally accepted accounting principles consistently applied, with the
exception that no notes need be attached to such statements and year-end audit
adjustments may not have been made.
3.2 INSPECTION RIGHTS. Each Investor and holder of Series B Stock shall
have the right to visit and inspect any of the properties of the Company or any
of its subsidiaries, and to discuss the affairs, finances and accounts of the
Company or any of its subsidiaries with its officers, and to review such
information as is reasonably requested all at such reasonable times and as often
as may be reasonably requested; provided, however, that the Company shall not be
obligated to disclose information about the Company to a competitor of the
Company.
3.3 CONFIDENTIALITY OF RECORDS. Each Investor and holder of Series B
Stock agrees to use, and to use its best efforts to insure that its authorized
representatives use, the same degree of care as such Investor and holder of
Series B Stock uses to protect its own confidential information to keep
confidential any information furnished to it which the Company identifies as
being confidential or proprietary (so long as such information is not in the
public domain), except that such Investor and holder of Series B Stock may
disclose such proprietary or confidential information to any partner, subsidiary
or parent of such Investor and holder of Series B Stock for the purpose of
evaluating its investment in the Company as long as such partner, subsidiary or
parent is advised of the confidentiality provisions of this Section 3.3.
3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to time upon such
conversion.
3.5 STOCK VESTING. Unless otherwise approved by the Board of Directors,
all stock options and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers shall
be subject to vesting as follows: (a) twenty-five percent (25%) of such stock
shall vest at the end of the first year following the
17.
44
earlier of the date of issuance or such person's services commencement date with
the company, and (b) seventy-five percent (75%) of such stock shall vest in
equal monthly increments over the remaining three (3) years. With respect to any
shares of stock purchased by any such person, the Company's repurchase option
shall provide that upon such person's termination of employment or service with
the Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person.
3.6 BOARD ELECTION RIGHTS. For so long as H&Q InterNAP Investors, LP and
TI Ventures, LP ("H&Q") collectively hold at least one million (1,000,000)
shares of Registrable Securities, H&Q shall have the right to designate one (1)
nominee to be elected to the Board of Directors at each election of directors.
For so long as Xxxxxx Xxxxxxx Venture Partners ("MSVP") holds at least one
million (1,000,000) shares of Registrable Securities, MSVP shall have the right
to designate one (1) nominee to be elected to the Board of Directors at each
election of directors.
3.7 EMPLOYEE CONFIDENTIALITY, NONRAIDING AND NONCOMPETITION AGREEMENT.
The Company shall require all employees and consultants to execute and deliver
an Employee Confidentiality, Nonraiding and Noncompetition Agreement and an
Employee Inventions Agreement in the forms attached as EXHIBIT F-1 and F-2,
respectively, to that certain Series C Preferred Stock Purchase Agreement dated
January 28, 1999 (the "Series C Purchase Agreement") or Proprietary Information
and Inventions Agreement.
3.8 DIRECTORS' LIABILITY AND INDEMNIFICATION. The Company's Articles of
Incorporation and Bylaws shall provide (a) for elimination of the liability of
director to the maximum extent permitted by law and (b) for indemnification of
directors for acts on behalf of the Company to the maximum extent permitted by
law.
3.9 BOARD OF DIRECTORS APPROVAL. The Company shall not, without the
approval of a majority of the Board of Directors, with all directors voting,
take any of the following actions:
(a) incur any debt or obligation, including capital lease or
purchase obligations, in excess of two hundred fifty thousand dollars
($250,000);
(b) initiate or establish any compensation program or plan,
including any program or plan concerning the base salary or bonus of officers;
(c) establish any stock option plans or programs or award any
stock options pursuant to such programs or plans;
(d) hire or appoint any officers of the Company;
(e) enter into any agreement for the purchase or lease of any
real estate; or
(f) implement or revise any annual budget or other operating
plan.
3.10 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it
will operate in a manner such that it will not become a "United States real
property holding
18.
45
corporation" ("USRPHC") as that term is defined in Section 897(c)(2) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
"Code"). The Company agrees to make determinations as to its status as a USRPHC,
and will file statements concerning those determinations with the Internal
Revenue Service, in the manner and at the times required under Reg. Section
1.897-2(h), or any supplementary or successor provision thereto. Within thirty
(30) days of a request from an Investor or any of its partners, the Company will
inform the requesting party, in the manner set forth in Reg. Section 1.897-
2(h)(1)(iv) or any supplementary or successor provision thereto, whether that
party's interest in the Company constitutes a United States real property
interest (within the meaning of Section 897(c)(1) of the Code and the
regulations thereunder) and whether the Company has provided to the Internal
Revenue Service all required notices as to its USRPHC status.
3.11 QUALIFIED SMALL BUSINESS STOCK. The Company covenants that so long
as any of the shares of Series C Preferred Stock, or the Common Stock into which
such shares are converted, are held by an Investor (or authorized transferee in
whose hands such shares or Common Stock are eligible to qualify as Qualified
Small Business Stock as defined in Section 1202(c) of the Code), it will use
commercially reasonable efforts (including complying with any applicable filing
or reporting requirements imposed by the Code on issuers of Qualified Small
Business Stock) to cause such shares of Series C Preferred Stock, or the Common
Stock into which they are converted, to qualify as Qualified Small Business
Stock; provided, however, that "commercially reasonable efforts" as used in this
Section 3.29 shall not be construed to require the Company to operate its
business in a manner that would adversely affect its business, limit its future
prospects or alter the timing or resource allocation related to its planned
operations or financing activities.
3.12 TERMINATION OF COVENANTS. All covenants of the Company contained in
this Section 3 of this Agreement shall expire and terminate as to each Investor
and holder of Series B Stock upon the earlier of (i) the effective date of the
registration statement pertaining to the Initial Offering or (ii) upon (a) the
sale, lease or other disposition of all or substantially all of the assets of
the Company or (b) an acquisition of the Company by another corporation or
entity by consolidation, merger or other reorganization in which the holders of
the Company's outstanding voting stock immediately prior to such transaction
own, immediately after such transaction, securities representing less than fifty
percent (50%) of the voting power of the corporation or other entity surviving
such transaction, provided that this Section 3.11(ii)(b) shall not apply to a
merger effected exclusively for the purpose of changing the domicile of the
Company (a "Change in Control").
3.13 VISITATION RIGHTS. So long as Fidelity Investors II Limited
Partnership and FTT Ventures Inc. or their affiliates (collectively, "Fidelity")
shall own 666,667 shares of Series C Preferred Stock, the Company shall allow
one representative designated by Fidelity to attend all meetings of the
Company's Board of Directors in a nonvoting capacity, and in connection
therewith, the Company shall give such representative copies of all notices,
minutes, consents and other materials, financial or otherwise, which the Company
provides to its Board of Directors; provided, however, that the Company reserves
the right to exclude such representative from access to any material or meeting
or portion thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve the attorney-client privilege, to
protect highly confidential proprietary information or for other similar
reasons.
19.
46
SECTION 4 RIGHT TO MAINTAIN INTEREST
4.1 SUBSEQUENT OFFERINGS. Each Investor and holder of Series B Stock
shall have a right to purchase its Pro Rata Share (as defined herein) of all
Equity Securities, as defined below, that the Company may, from time to time,
propose to sell and issue after the date of this Agreement, other than the
Equity Securities excluded by Section 4.6 hereof. The Company may, at its
election, sell such Investor and holder of Series B Stock its Pro Rata Amount of
Equity Securities at the initial closing of the sale of Equity Securities or at
a subsequent closing of which shall take place within ninety (90) days of the
initial closing. The Pro Rata Share of an Investor and holder of Series B Stock
shall be equal to the ratio of (a) the number of shares of the Company's Common
Stock (including all shares of Common Stock issued or issuable upon conversion
of the Preferred Stock) which such Investor and holder of Series B Stock is
deemed to hold immediately prior to the issuance of such Equity Securities to
(b) the total number of shares of the Company's outstanding Common Stock
(including all shares of Common Stock issued or issuable upon conversion of the
Preferred Stock) immediately prior to the issuance of the Equity Securities. The
term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock or
other security of the Company, (ii) any security convertible, with or without
consideration, into any Common Stock, Preferred Stock or other security
(including any option to purchase such a convertible security), (iii) any
security carrying any warrant or right to subscribe to or purchase any Common
Stock, Preferred Stock or other security or (iv) any such warrant or right.
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Investor and holder of Series B Stock written
notice before such issuance or within ten (10) days thereafter, describing the
type of Equity Securities, the price and number of shares and the general terms
and conditions upon which the Company proposes to issue or has issued the same.
Each Investor and holder of Series B Stock shall have thirty (30) days from the
giving of such notice to agree to purchase up to the amount of Equity Securities
equal to Pro Rata Share of such Equity Securities of the Investor and holder of
Series B Stock for the price and upon the general terms and conditions specified
in the notice by giving written notice to the Company and stating therein the
quantity of Equity Securities to be purchased. Any such purchase shall occur at
the initial closing of the sale of Equity Securities or, at the Company's
election, at a subsequent closing within ninety (90) days of the initial
closing. Notwithstanding the foregoing, the Company shall not be required to
offer or sell such Equity Securities to any Investor and holder of Series B
Stock who would cause the Company to be in violation of applicable federal
securities laws by virtue of such offer or sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the
Investors and holders of Series B Stock elect to purchase their Pro Rata Share
of the Equity Securities, then the Company shall promptly notify in writing the
Investors and holders of Series B Stock who do so elect and shall offer such
Investors and holders of Series B Stock the right to acquire such unsubscribed
shares. Each Investor and holder of Series B Stock shall have fifteen (15) days
after receipt of such notice to notify the Company of its election to purchase
all or a portion thereof of the unsubscribed shares. If the Investors and
holders of Series B Stock fail to exercise in full the right to maintain
interest within said forty-five (45) day period set forth in Section 4.2 and
4.3, the Company shall have ninety (90) days thereafter to sell the Equity
Securities in respect of which the rights of the Investors and holders of Series
B Stock were not exercised, at a
20.
47
price and upon general terms and conditions no more favorable to the purchasers
thereof than specified in the Company's notice to the Investors and holders of
Series B Stock pursuant to Section 4.2 hereof. If the Company has not sold such
Equity Securities within ninety (90) days of the notice provided pursuant to
Section 4.2, the Company shall not thereafter issue or sell any Equity
Securities without first offering such securities to the Investors and holders
of Series B Stock in the manner provided above.
4.4 TERMINATION OF RIGHTS TO MAINTAIN INTEREST. The rights to maintain
interest established by this Section 4 shall not apply to, and shall terminate
upon (i) the effective date of the registration statement pertaining to the
Initial Offering or (ii) a Change in Control.
4.5 TRANSFER OF RIGHTS TO MAINTAIN INTEREST. The rights to maintain
interest of each Investor and holder of Series B Stock under this Section 4 may
be transferred to the same parties, subject to the same restrictions as any
transfer of registration rights pursuant to Section 2.10.
4.6 EXCLUDED SECURITIES. The rights to maintain interest established by
this Section 4 shall have no application to any of the following Equity
Securities:
(a) shares of Common Stock (and/or options, warrants or other
Common Stock purchase rights issued pursuant to such options, warrants or other
rights) issued or to be issued to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase or stock option plans or other arrangements that are approved by a
majority of the entire Board of Directors;
(b) stock issued pursuant to any rights or agreements
outstanding as of the date of this Agreement, options and warrants outstanding
as of the date of this Agreement; and stock issued pursuant to any such rights
or agreements granted after the date of this Agreement, provided that the rights
to maintain interest established by this Section 4 applied with respect to the
initial sale or grant by the Company of such rights or agreements;
(c) capital stock or warrants or options to purchase capital
stock issued in connection with bona fide acquisitions, mergers or similar
transactions, the terms of which are approved by a majority of the entire Board
of Directors of the Corporation;
(d) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares;
(f) capital stock, or options or warrants to purchase capital
stock, issued to financial institutions or lessors in connection with commercial
credit arrangements, equipment financings or any similar transactions approved
by a majority of the entire Board of Directors;
(g) shares of Common Stock issued in a public offering prior to
or in connection with which all outstanding shares of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock will be converted to
Common Stock;
21.
48
(h) shares of Common Stock and the Warrant issued to Inktomi
pursuant the Inktomi Agreement and the Common Stock issued on the exercise of
the Warrant; and
(i) the Xxxxxxxxx Warrants and shares of Common Stock issued
upon exercise of the Xxxxxxxxx Warrants and on conversion of the Xxxxxxxxx Loan
Facility.
SECTION 5 MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Washington as applied to agreements among
Washington residents entered into and to be performed entirely within
Washington.
5.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
5.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Inktomi Agreement, the Series C Purchase Agreement and the other documents
delivered pursuant thereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
5.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
5.6 AMENDMENT AND WAIVER
(a) Except as otherwise expressly provided and subject to
Section 5.6(b) below, this Agreement may be amended or modified only upon the
written consent of the Company and the Holders of at least sixty-six and
two-thirds percent (66 2/3%) of the Registrable Securities.
22.
49
(b) Except as otherwise expressly provided, no amendment or
modification of this Agreement shall adversely affect the rights of the Holders
under this Agreement without the written consent of the Holders of at least
sixty-six and two-thirds percent (66 2/3%) of the Registrable Securities.
(c) Notwithstanding the foregoing, this Agreement may be amended
with only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.
5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Holder upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (c) five
(5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the party to be
notified at the address as set forth on the signature pages hereof or EXHIBIT A
or EXHIBIT B hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.
5.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
23.
50
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement as of the date set forth in the first paragraph hereof.
COMPANY:
INTERNAP NETWORK SERVICES
CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
51
INKTOMI CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
52
INVESTORS:
XXXXXX XXXXXXX VENTURE PARTNERS III,
L.P.
By: Xxxxxx Xxxxxxx Venture Partners
III, L.L.C.
Its: General Partner
By: Xxxxxx Xxxxxxx Venture
Capital III, Inc.
Its: Institutional Managing
Member
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXX XXXXXXX VENTURE INVESTORS
III, L.P.
By: Xxxxxx Xxxxxxx Venture Partners
III, L.L.C.
Its: General Partner
By: Xxxxxx Xxxxxxx Venture
Capital III, Inc.
Its: Institutional Managing
Member
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE XXXXXX XXXXXXX VENTURE PARTNERS
ENTREPRENEUR FUND, L.P.
By: Xxxxxx Xxxxxxx Venture Partners
III, L.L.C.
Its: General Partner
By: Xxxxxx Xxxxxxx Venture
Capital III, Inc.
Its: Institutional Managing
Member
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
53
OAK INVESTMENT PARTNERS VIII,
LIMITED PARTNERSHIP
By: Oak Associates VIII, LLC
Its: General Partner
By:
---------------------------------
Xxxxxxx X. Xxxxxx
Managing Member
OAK VIII AFFILIATES FUND, LIMITED
PARTNERSHIP
By: Oak VIII Affiliates, LLC
Its: General Partner
By:
---------------------------------
Xxxxxxx X. Xxxxxx
Managing Member
FIDELITY INVESTORS II LIMITED
PARTNERSHIP
By: Fidelity Investors Management,
LLC
Its:General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
FTT VENTURES LIMITED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
54
GC&H INVESTMENTS
By:
Name: Xxxx X. Xxxxxxx
Title: Executive Partner
EVEREN SECURITIES, INC. CUSTODIAN
FBO XXXXXX X. XXXX, M.D., XXXX XXX
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
KIRLAN VENTURE CAPITAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
KIRLAN VENTURE PARTNERS II, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXX X. XXXXXXX
REGIS FAMILY LIMITED PARTNERSHIP
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
55
XXXXXXX INVESTORS, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BRINC LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXX XXXXXXX
------------------------------------
XXXXXXXX X. XXXXX
------------------------------------
XXXXX XXXXXXXXX
------------------------------------
XXXXXX XXXXXX
------------------------------------
XXXXX XXXXXX
XXXXXX X. XXXXXX & XXXXXXXX
XXXXX-XXXXXX XX TEN
------------------------------------
XXXXXX X. XXXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
56
XXXXXXXX XXXXX-XXXXXX
DOLL TECHNOLOGY INVESTMENT FUND
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DOLL TECHNOLOGY AFFILIATES FUND, LP
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DOLL TECHNOLOGY SIDE FUND, LP
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXXXXXXX XXXX
GAK LIMITED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
57
H&Q INTERNAP INVESTORS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE XXXX XXXXX MELLEA SEPARATE
PROPERTY TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXXXX XXXX
------------------------------------
XXXX XXXXXXX
------------------------------------
XXXXXXX X. XXXXXXX
------------------------------------
XXX XXXXXX
------------------------------------
XXXX XXXXXX
------------------------------------
XXX AND XXXXX XXXXXXXX JT TEN
------------------------------------
XXX XXXXXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
58
------------------------------------
XXXXX XXXXXXXX
------------------------------------
XXX XXXXXXXXXX
PS CAPITAL VENTURES, LP
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXXXXX XXXXX
SEAPOINT VENTURES, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PS CAPITAL VENTURES, LP
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE XXXXXXXXX FAMILY TRUST, XXXXXX
X. XXXXXXXXX, XX. AND XXXXX X.
XXXXXXXXX TRUSTEES
By:
---------------------------------
Name:
-------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
59
Title:
------------------------------
------------------------------------
XXXXXX X. XXXXXXXXX, XX.
------------------------------------
XXXXX X. XXXX
------------------------------------
XXXX XXXXX
THE XXXXXX X. XXXXXXX REVOCABLE
LIVING TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXXXXXXXX X. XXXXX
TI VENTURES, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
VULCAN VENTURES INCORPORATED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
60
------------------------------------
XXXX XXXXXX
------------------------------------
XXXXX XXXXXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
61
SERIES B PREFERRED SHAREHOLDERS:
PS CAPITAL HOLDINGS, L.P.
By: PS Capital, Inc.
By:
---------------------------------
Xxxxxxx X. Xxxxx
Vice President
------------------------------------
XXXXXXXX X. XXXXX
------------------------------------
XXXXX X. XXXXXXXXX
------------------------------------
XXXXXX XXXXXX
------------------------------------
XXXXX XXXXXX
------------------------------------
XXXXXX X. XXXXXX
THE XXXXXX X. XXXXXXX REVOCABLE
LIVING TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
62
THE XXXXXX X. XXXXXXX CHARITABLE
REMAINDER TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXX XXXXXXXXXX
XXXXXX AND XXXXX XXXX TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXX XXXXXX
------------------------------------
XXXXXX X. XXXXXXXXX, XX.
THE XXXXXXXXX XXXXXXXXX EDUCATION
TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXX XXXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
63
H&Q INTERNAP INVESTORS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TI VENTURES, LP
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
KIRLAN I
By: Kirlan Venture Capital, Inc.
---------------------------------
Its:
-----------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
KIRLAN VENTURE PARTNERS II, L.P.
By: Kirlan Venture Capital, Inc.
Its:
-----------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
64
VULCAN VENTURES INCORPORATED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXXX INVESTORS, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
GAK LIMITED
By:
---------------------------------
Name: Xxxxxx Xxxxx
-------------------------------
Title: General Partner
------------------------------
DOLL TECHNOLOGY INVESTMENT FUND
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DOLL TECHNOLOGY AFFILIATES FUND,
L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
65
DOLL TECHNOLOGY SIDE FUND, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BRINC LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE XXXX XXXXX MELLEA SEPARATE
PROPERTY TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE XXXXX TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXXXXXXX XXXXX AND XXXXXXXXX
XXXXXXXXX
------------------------------------
XXXXXXXXXXX XXXXX
------------------------------------
XXXXXXXXX XXXXXXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
66
------------------------------------
XXXXXXXX X. XXXXXXXXX
------------------------------------
XXXXXXX XXXXX
------------------------------------
XXX AND XXXXX XXXXXXXX
------------------------------------
XXX XXXXXXXX
------------------------------------
XXXXX XXXXXXXX
------------------------------------
XXXX XXXXXXX
------------------------------------
XXXX XXXXXXX
------------------------------------
XXXX XXXXX
------------------------------------
XXXXXXX XXXXX
------------------------------------
XXXXXX XXXX
------------------------------------
XXXXX XXXXXXXX
------------------------------------
XXXXXXXXX XXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
67
------------------------------------
XXXX XXXXXX
------------------------------------
XXXX AND XXX XXXXXX
------------------------------------
XXXX XXXXXX
------------------------------------
XXX XXXXXX
XXXXXX IRREVOCABLE TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXXXXX XXXXXXXXX
------------------------------------
XXXXXX X. XXXXXXXXX
------------------------------------
XXXXX X. XXXXXXXXX
------------------------------------
XXXX X. XXXXXXX
XXXXX XXXX XXXXXXXXX'X CHILDREN'S
TRUST
By:
---------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
68
Name:
-------------------------------
Title:
------------------------------
------------------------------------
XXXXXXXXXX X. XXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
69
SERIES A PREFERRED SHAREHOLDERS:
------------------------------------
XXXXXX X. XXXXXX, XX.
------------------------------------
XXXXXX XXXXXX
------------------------------------
XXXX X. XXXXXXX
------------------------------------
XXXXX XXXXXXX
XXXX X. XXXXXXX, CUSTODIAN FBO XXXXX
X. XXXXXXX UTMA
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXX X. XXXXXXX, CUSTODIAN FBO XXXX
X. XXXXXXX UTMA
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXXXX FAMILY L.L.C.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
70
COMMON STOCK SHAREHOLDERS:
------------------------------------
XXXXXXX X. XXXXXXXX
------------------------------------
XXXXXXXXXXX X. XXXXXXX
CDW LIMITED PARTNERSHIP
By: CDW Services, Inc.
General Partner
By:
---------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
-------------------------------
Title: President
------------------------------
------------------------------------
XXXX X. XXXXXXX
------------------------------------
XXXXX X. XXXXXXXX
------------------------------------
OPHIR RONEN
------------------------------------
XXX XXXXXXXXXXX
------------------------------------
XXXXXXXX XXXXXX
------------------------------------
XXX XXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
71
FOUNDERS:
------------------------------------
XXXXXX X. XXXXXX, XX.
------------------------------------
XXXX X. XXXXXXX
------------------------------------
XXXXXXX X. XXXXXXXX
------------------------------------
XXXXXXXXXXX X. XXXXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
72
EXHIBIT A
INVESTORS
SERIES C PREFERRED SHAREHOLDERS
Xxxxxx Xxxxxxx Venture Partners III, X.X.
Xxxxxx Xxxxxxx Venture Investors III, L.P.
The Xxxxxx Xxxxxxx Venture Partners Entrepreneur Fund, L.P.
Oak Investment Partners VIII, Limited Partnership
Oak VIII Affiliate Fund, Limited Partnership
Fidelity Investors II Limited Partnership
FTT Ventures Limited
Xxxxxxx Investors, LLC
BRINC LLC
Xxxx Xxxxxx
Xxxxxxxx X. Xxxxx
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxx X. Xxxxxx & Xxxxxxxx Xxxxx-Xxxxxx XX TEN
Doll Technology Affiliates Fund, LP
Doll Technology Investment Fund
Doll Technology Side Fund, LP
Xxxxxxxxx Xxxx
Everen Securities, Inc. Custodian FBO Xxxxxx X. Xxxx, M.D., Xxxx XXX
GAK Limited
GC&H Investments
H&Q InterNAP Investors, L.P.
The Xxxx Xxxxx Mellea Separate Property Trust
Xxxxxx Xxxx
Kirlan Venture Capital, Inc.
Kirlan Venture Partners II, LP
Xxxx Xxxxxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxx Xxxxxx
Xxxx Xxxxxx
Xxx and Xxxxx Xxxxxxxx, JT TEN
Xxx Xxxxxxxxxx
PS Capital Ventures, LP
Regis Family Limited Partnership
Xxxxxxx Xxxxx
Seapoint Ventures LLC
The Xxxxxxxxx Family Trust, Xxxxxx X. Xxxxxxxxx, Xx. and Xxxxx X. Xxxxxxxxx
Trustees
73
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxxx X. Xxxx
Xxxx Xxxxx
The Xxxxxx X. Xxxxxxx Revocable Living Trust
Xxxxxxxxxx X. Xxxxx
TI Ventures, LP
Vulcan Ventures Incorporated
Xxxx Xxxxxx
Xxxxx Xxxxxxxx
74
EXHIBIT B
PRIOR SHAREHOLDERS
SERIES B PREFERRED SHAREHOLDERS
H&Q InterNAP Partners, LP H&Q InterNAP Investors, L.P.
TI Ventures, XX
Xxxxxx I
Kirlan Venture Partners II, L.P.
PS Capital Holdings, L.P.
Vulcan Ventures Incorporated
Xxxxxxx Investors, LLC
Xxxxxxxx X. Xxxxx
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxx X. Xxxxxx
GAK Limited
The Xxxxxx X. Xxxxxxx Revocable Living Trust
Xxxxxx X. Xxxxxxx Charitable Remainder Trust
Xxxxxx and Xxxxx Xxxx Trust
Xxx Xxxxxx
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxx Xxxxxx
BRINC LLC
Xxx Xxxxxxxxxx
Xxxxxxx Xxxxx
Xxx and Xxxxx Xxxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxx
Xxxxx Xxxxxxxx
Doll Technology Affiliates Fund, LP
Doll Technology Side Fund, LP
Doll Technology Investment Fund
Xxxxxxxxx Xxxx
Xxxx Xxxxxx
The Xxxx Xxxxx Mellea Separate Property Trust
The Xxxxxxxxxxx and Xxxxxxxxx Xxxxx Children's Trust
Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxxxxxx X. Xxxxx and Xxxxxxxxx Xxxxx
75
Xxxx X. Xxxxxxx
Xxxxx Xxxx Xxxxxxxxx'x Children's Trust
Xxxxxxxx X. Xxxxxxxxx
The Xxxxxxxxx Xxxxxxxxx Education Trust
Alexandria H. Xxxxx
Xxxx and Xxx Xxxxxx
Xxxxxx Irrevocable Trust
76
SERIES A PREFERRED SHAREHOLDERS
Xxxxxx Xxxxxx
Xxxxxx X. Xxxxxx, Xx.
Xxxx X. XxXxxxx
Xxxxx XxXxxxx
Xxxx X. XxXxxxx, Custodian FBO Xxxxx X. XxXxxxx, UTMA
Xxxx X. XxXxxxx, Custodian FBO Xxxx X. XxXxxxx, UTMA
COMMON STOCK SHAREHOLDERS
Xxxxxxx X. Xxxxxxxx
Xxxxxxxxxxx X. Xxxxxxx
CDW Limited Partnership
Xxxx X. XxXxxxx
Xxxxx X. Xxxxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxxxxxx
Xxxxxxxx Xxxxxx
Xxx Xxxx
FOUNDERS
Xxxxxx X. Xxxxxx, Xx.
Xxxx X. XxXxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxxxxxx X. Xxxxxxx
77
EXHIBIT C
LOCK-UP LETTER
78
EXHIBIT A
(FORM OF LOCK-UP LETTER]
_______________, 1999
Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. Incorporated
Credit Suisse First Boston
Xxxxxxxxx, Lufkin & Xxxxxxxx
Xxxxxxxxx & Xxxxx
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with InterNAP Network Services Corporation, a
Washington corporation (the "COMPANY"), providing for the public offering (the
"PUBLIC OFFERING") by the several Underwriters, including Xxxxxx Xxxxxxx (the
"UNDERWRITERS"), of shares (the "SHARES") of the Common Stock ($.001 par value)
of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date of the final prospectus relating to the Public Offering (the "PROSPECTUS"),
and ending 180 days after such date of the Prospectus, (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clauses (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement, (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering, (c) if the
undersigned is an individual, transfers of any shares of the Common Stock or
securities convertible into or exchangeable or exercisable for the Common Stock
either during his or her lifetime or on death by will or intestacy to his or her
immediate family or to a trust the beneficiaries of which are exclusively the
undersigned and/or a member or members of his or her
1
79
immediate family or (d) if the undersigned is a corporation or a partnership,
transfers of shares of Common Stock or securities convertible into or
exchangeable or exercisable for the Common Stock as a distribution to partners
or shareholders of the undersigned; provided, however, that prior to any such
transfer in clauses (c) or (d) above each transferee shall execute an agreement,
satisfactory to Xxxxxx Xxxxxxx, pursuant to which each transferee shall agree to
receive and hold such shares of Common Stock, or securities convertible into or
exchangeable or exercisable for the Common Stock, subject to the provisions
hereof, and there shall be no further transfer except in accordance with the
provisions hereof. For the purposes of this paragraph, "immediate family" shall
mean spouse, lineal descendant, father, mother, brother or sister of the
transferor.
In addition, the undersigned agrees that, without the prior written
consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
It is understood that, if the Company notifies you that it does not intend
to proceed with the Public Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, the undersigned will be released from
the undersigned's obligations under this agreement.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
_________________________________________
(Name)
Address:
_________________________________________
_________________________________________
2
