<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INTERNAP NETWORK SERVICES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1. Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5. Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
6. Amount Previously Paid:
------------------------------------------------------------------------
7. Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
8. Filing Party:
------------------------------------------------------------------------
9. Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
------------------------
MARCH 20, 2000
------------------------
Dear InterNAP Shareholder:
It is my pleasure to invite you to InterNAP Network Services Corporation's
2000 Annual Meeting of Shareholders (the "Annual Meeting"). This year's meeting
will be held at the Sheraton Seattle Hotel, 1400 Sixth Avenue, Seattle,
Washington 98101, on Wednesday, April 26, 2000 at 9:00 a.m., local time.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and proxy statement.
You will notice in reading the proxy statement that Robert J. Lunday, Jr., a
director of the Company since its inception, is not standing for re-election. We
want to express our appreciation to Bob for his valuable contributions to the
Company during his service on the Board.
Whether or not you plan to attend the Annual Meeting, we hope that you will
have your shares represented by marking, signing, dating and returning your
proxy card in the enclosed envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy card. You
may, of course, attend the Annual Meeting and vote in person even if you have
previously returned your proxy card.
Very truly yours,
/s/ Anthony C. Naughtin
Anthony C. Naughtin
Chief Executive Officer and President
<PAGE>
INTERNAP NETWORK SERVICES CORPORATION
TWO UNION SQUARE
601 UNION STREET
SEATTLE, WASHINGTON 98101
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2000
------------------------
To the Shareholders of
Internap Network Services Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of INTERNAP
NETWORK SERVICES CORPORATION, a Washington corporation (the "Company"), will be
held on April 26, 2000 at 9:00 a.m. local time at the Sheraton Seattle Hotel,
1400 Sixth Avenue, Seattle, Washington 98101 for the following purposes:
(1) To elect one director to hold office until the 2003 Annual Meeting of
Shareholders.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending 2000.
(3) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the proxy
statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 1, 2000 as
the record date for the determination of shareholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Paul E. McBride
Paul E. McBride
Vice President of Finance and Administration,
Chief Financial Officer and Secretary
Seattle, Washington
March 20, 2000
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE
RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
INTERNAP NETWORK SERVICES CORPORATION
TWO UNION SQUARE
601 UNION STREET
SEATTLE, WASHINGTON 98101
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2000
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
InterNAP Network Services Corporation, a Washington corporation ("InterNAP" or
the "Company"), for use at the Annual Meeting of Shareholders to be held on
April 26, 2000, at 9:00 a.m. local time (the "Annual Meeting"), or at any
adjournment or postponement thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting. The Annual Meeting will be held at
the Sheraton Seattle Hotel, 1400 Sixth Avenue, Seattle, Washington 98101. The
Company intends to mail this proxy statement and accompanying proxy card on or
about March 20, 2000 to all shareholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to shareholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March 1,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 1, 2000 the Company had outstanding and entitled to
vote 132,994,182 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
In connection with Proposal 1, the nominee for election as director in who
receives the greatest number of votes, present in person or represented by proxy
at the Annual Meeting, will be elected director. Abstentions and broker
non-votes will have no effect on the outcome of Proposal 1. Proposal 2 will be
approved if it receives the affirmative vote of a majority of the votes cast on
such matter, present in person or represented by proxy at the Annual Meeting.
Abstentions and broker non-votes will have no effect on the outcome of
Proposal 2. All votes will be tabulated by the inspector of election appointed
for the meeting, who will separately tabulate affirmative and negative votes.
<PAGE>
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office (Two Union
Square, 601 Union Street, Seattle, Washington 98101) a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
SHAREHOLDER PROPOSALS
The deadline for submitting a shareholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of shareholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is November 21, 2000.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Articles of Incorporation and Bylaws
provide that the Board of Directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy (including a vacancy created by
an increase in the number of directors) shall serve for the remainder of the
full term of the class of directors in which the vacancy occurred and until such
director's successor is elected and qualified.
The Board of Directors is presently composed of seven members. There are two
directors in the class ("Class I") whose terms of office expire in 2000. There
is one nominee for election to Class I at the Annual Meeting. The other Class I
position will be vacant following the Annual Meeting. The single nominee for
election to Class I is currently a director of the Company who was previously
elected by the shareholders. If elected at the Annual Meeting, this nominee
would serve until the 2003 annual meeting and until his or her successor is
elected and has qualified, or until such director's earlier death, resignation
or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, FOR the
election of the nominee named below. Should this nominee be unavailable for
election as a result of an unexpected occurrence, these shares will be voted for
the election of a substitute nominee proposed by management. The person
nominated for election to Class I has agreed to serve if elected, and management
has no reason to believe he will be unable to serve.
NOMINEE FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING
Robert D. Shurtleff, Jr. (age 45) has served as a director of InterNAP since
January 1997. In 1999, Mr. Shurtleff founded S.L. Partners, a strategic
consulting group focused on early stage companies. From 1988 to 1998,
Mr. Shurtleff held various positions at Microsoft Corporation, including Program
Management and Development Manager and General Manager Workgroup Solutions
Product Unit. Mr. Shurtleff is currently a director of two private companies and
also serves on technical advisory boards of several private companies. Prior to
working at Microsoft Corporation, Mr. Shurtleff worked at Hewlett Packard
Company from 1979 to 1988. Mr. Shurtleff holds a Bachelor of Arts degree in
computer science from the University of California at Berkeley.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEE.
2
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
Fredric W. Harman (age 39) has served as a director of InterNAP since
January 1999. Since 1994, Mr. Harman has served as a Managing Member of the
General Partners of venture capital funds affiliated with Oak Investment
Partners. Mr. Harman served as a General Partner of Morgan Stanley Venture
Capital, L.P. from 1991 to 1994. Mr. Harman serves as a director of Inktomi
Corporation, ILOG, S.A., Primus Knowledge Solutions, Quintas Corporation and
several privately held companies. Mr. Harman holds a Bachelor of Science degree
and a Masters degree in electrical engineering from Stanford University and a
Master of Business Administration from Harvard University.
Kevin L. Ober (age 38) has served as a director of InterNAP since
October 1997. Since February 2000, Mr. Ober has been a founding General Partner
of a new venture capital fund. Mr. Ober was a member of the investment team at
Vulcan Ventures Incorporated between November 1993 and January 2000. Prior to
working at Vulcan Ventures, Mr. Ober served in various positions at Conner
Peripherals, Inc., a computer hard disk drive manufacturer. Mr. Ober holds a
Master of Business Administration from Santa Clara University and Bachelor of
Science degree in business administration from St. John's University.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
Eugene Eidenberg (age 60) has served as a director and chairman of InterNAP
since November 1997. Mr. Eidenberg has served as a Principal of Hambrecht &
Quist Venture Associates since 1998 and was an advisory director at the San
Francisco investment banking firm of Hambrecht & Quist from 1995 to 1998.
Mr. Eidenberg served for 12 years in a number of senior management positions
with MCI Communications Corporation. His positions at MCI included Senior Vice
President for Regulatory and Public Policy, President of MCI's Pacific Division,
Executive Vice President for Strategic Planning and Corporate Development and
Executive Vice President for MCI's international businesses. Mr. Eidenberg is
currently a director of AAPT Ltd. and several private companies. Mr. Eidenberg
holds a Ph.D. and a Master of Arts degree from Northwestern University and a
Bachelor of Arts degree from the University of Wisconsin.
William J. Harding (age 51) has served as a director of InterNAP since
January 1999. Since 1994, Dr. Harding has been an employee and Principal of
Morgan Stanley & Co. Incorporated. In addition, Dr. Harding has served as a
managing member of Morgan Stanley Venture Partners, L.L.C., the general partner
of Morgan Stanley Dean Witter Venture Partners. Prior to joining Morgan Stanley
Dean Witter, he was a General Partner of several venture capital partnerships
affiliated with J.H. Whitney & Co. Dr. Harding was associated with Amdahl
Corporation from 1976 to 1985, serving in various technical and business
positions. He is currently a director of ScanSoft, Inc., Persistence
Software, Inc., Commerce One, Inc. and several private companies. Dr. Harding
holds a Ph.D. in engineering from Arizona State University and a Master of
Science degree in systems engineering and Bachelor of Science degree in
engineering mathematics from the University of Arizona.
Anthony C. Naughtin (age 44) founded InterNAP and has served as our Chief
Executive Officer and President since May 1996. Mr. Naughtin has also served as
our director since October 1997. Prior to founding InterNAP, he was vice
president for commercial network services at ConnectSoft, Inc., an Internet and
e-mail software developer, from May 1995 to May 1996. From February 1992 to
May 1995, Mr. Naughtin was the director of sales at NorthWestNet, an NSFNET
regional network. Mr. Naughtin has served as a director of Fine.com
International Corp., a services-computer processing and data preparation company
since December 1996. Mr. Naughtin holds a Bachelor of Arts in communications
from the University of Iowa and is a graduate of the Creighton School of Law.
3
<PAGE>
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1999, the Board of Directors held
13 meetings. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee reviews the Company's accounting practices, internal
accounting controls and financial results and oversees the engagement of the
Company's independent auditors. The Audit Committee consists of Kevin L. Ober,
Frederic W. Harman and William J. Harding. The Audit Committee held three
meetings in 1999.
The Compensation Committee reviews and recommends to the Board of Directors
the compensation and benefits of all our officers and establishes and reviews
general policies relating to compensation and benefits for our employees. The
Compensation Committee consists of Robert J. Lunday, Jr. (through April 26,
2000), Kevin L. Ober and Robert D. Shurtleff, Jr. The Compensation Committee
held nine meetings in 1999.
During the fiscal year ended December 31, 1999, each Board member attended
at least 75% of the aggregate of the meetings of the Board and of the committees
on which he served, held during the period for which he was a director or
committee member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31, 2000 and
has further directed that management submit the selection of independent
auditors for ratification by the shareholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
its inception in 1996. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Shareholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the shareholders for ratification as a matter of
good corporate practice. If the shareholders fail to ratify the selection, the
Audit Committee and the Board will reconsider whether to retain that firm. Even
if the selection is ratified, the Audit Committee and the Board in their
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best
interests of the Company and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 29, 2000 information regarding
the beneficial ownership of the Common Stock by (i) each person known by the
Company to beneficially own more than 5% of the Common Stock, (ii) each director
and director nominee of the Company, (iii) each of the Company's executive
officers for whom compensation is reported in this proxy statement, and
(iv) all directors and executive officers of the Company as a group. Except as
otherwise noted, the Company believes that the
4
<PAGE>
beneficial owners of the Common Stock listed below, based on information
furnished by such owners, have sole voting and investment power with respect to
such shares.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
---------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------ ---------- --------
<S> <C> <C>
Morgan Stanley Dean Witter
Venture Partners (1)
C/o Morgan Stanley Dean Witter
Venture Partners
1221 Avenue of the Americas
New York, NY 10020........................................ 18,598,518 14.0%
William J. Harding (1)...................................... 18,598,518 14.0
H&Q InterNAP Investors, L.P. (2)
c/o Hambrecht & Quist LLC
One Bush Street
San Francisco, CA 94104................................... 14,260,268 10.7
TI Ventures, LP (2)
c/o Hambrecht & Quist LLC
One Bush Street
San Francisco, CA 94104................................... 14,260,268 10.7
Eugene Eidenberg(2)......................................... 14,260,268 10.7
Oak Investment Partners VIII, L.P.(3)
c/o Oak Investment Partners VIII, L.P.
525 University Avenue, Suite 1300
Palo Alto, CA 94301....................................... 12,296,668 9.2
Fredric W. Harman(3)........................................ 12,296,668 9.2
Robert J. Lunday, Jr.(4).................................... 10,686,788 8.0
Vulcan Ventures Incorporated
110--100th Avenue Northeast, Suite 550
Bellevue, WA 98004........................................ 9,472,142 7.1
Kevin L. Ober(5)............................................ 480,000 *
Paul E. McBride(6).......................................... 5,379,608 4.0
Anthony C. Naughtin(7)...................................... 4,602,760 3.4
Christopher D. Wheeler(8)................................... 4,584,760 3.4
Robert D. Shurtleff, Jr.(9)................................. 1,888,296 1.4
Charles M. Ortega(10)....................................... 358,950 *
All directors and executive officers as a group
(10 persons)(11).......................................... 64,884,048 48.2
</TABLE>
- ------------------------
* Less than 1%
(1) Consists of 1,560,000 shares held by Morgan Stanley Venture Investors III,
L.P., 710,834 shares held by The Morgan Stanley Venture Partners
Entrepreneur Fund, L.P. and 16,247,684 shares held by Morgan
5
<PAGE>
Stanley Venture Partners III, L.P. The institutional managing member of the
general partner of Morgan Stanley Dean Witter Venture Partners is a
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co., the parent of
Morgan Stanley & Co. Incorporated. Dr. William J. Harding, one of our
directors, is a managing member of the general partner of Morgan Stanley
Dean Witter Venture Partners. Dr. Harding disclaims beneficial ownership of
the shares held by Morgan Stanley Dean Witter Venture Partners, except to
the extent of his proportionate interest therein.
(2) Consists of 7,103,916 shares held by H&Q InterNAP Investors, L.P., 6,676,352
shares held by TI Ventures, LP, 233,333 shares issuable upon exercise of
vested options that are held by Mr. Eugene Eidenberg and 166,667 shares
issuable upon exercise of options held by Mr. Eidenberg that are exercisable
within 60 days of February 29, 2000 but subject to repurchase by InterNAP
under terms set forth in a notice of grant of stock option. Mr. Eidenberg,
the chairman of our Board of Directors, is a Principal of Hambrecht and
Quist Venture Associates. Mr. Eidenberg disclaims beneficial ownership of
the shares held by H&Q InterNAP Investors, L.P. and TI Ventures, LP.
(3) Consists of 12,063,032 shares held by Oak Investment Partners VIII, L.P. and
233,636 shares held by Oak VIII Affiliates Fund L.P. Mr. Fredric W. Harman,
one of our directors, is a managing member of the general partners of
venture capital funds affiliated with Oak Investment Partners. Mr. Harman
disclaims beneficial ownership of the shares held by Oak Investment Partners
VIII, L.P. and Oak VIII Affiliates Fund L.P.
(4) Includes 10,000,000 shares subject to an option under a Shareholders
Agreement dated October 1, 1997, in favor of original Class A Members of
InterNAP Network Services, L.L.C., including Paul E. McBride, Anthony C.
Naughtin and Christopher D. Wheeler, 80,000 shares issuable upon exercise of
options exercisable within 60 days of February 29, 2000 and 9,500 shares
issuable upon exercise of warrants exercisable within 60 days of
February 29, 2000. Also includes an aggregate of 1,051,276 shares
Mr. Lunday sold to two original Class A members of InterNAP Network Services
LLC in January 2000.
(5) Includes 166,667 shares that are subject to repurchase by InterNAP under
terms set forth in a notice of grant of stock option, and 80,000 shares
issuable upon exercise of options exercisable within 60 days of
February 29, 2000.
(6) Includes 500,000 shares held by the McBride Trust, 221,712 shares held by
Mr. McBride as trustee of the McBride Grandchildren's Trust No. 1, 221,712
shares held by Mr. McBride as trustee of the McBride Grandchildren's Trust
No. 2, 221,712 shares held by Mr. McBride's wife in her own name, and
2,750,856 shares that may be purchased from Mr. Robert J. Lunday, Jr. upon
exercise of an outstanding option under a Shareholder Agreement, dated
October 1, 1997. Mr. Lunday is Mr. McBride's father-in-law.
(7) Includes 1,800,000 shares held by Crossroads Associates, LLC, 6,000 shares
held by Mr. Naughtin as Trustee of the Eric Weaver Gift Protection Trust,
6,000 shares held by Mr. Naughtin as Trustee of the Hugh Naughtin Gift
Protection Trust, 6,000 shares held by Mr. Naughtin as Trustee of the Rose
Naughtin Gift Protection Trust and 2,750,856 shares that may be purchased
from Mr. Robert J. Lunday, Jr. upon exercise of an outstanding option under
a Shareholder Agreement, dated October 1, 1997. Mr. Naughtin disclaims
beneficial ownership with respect the 18,000 shares held in trust for the
benefit of his niece and nephews.
(8) Includes 2,750,856 shares that may be purchased from Mr. Robert J. Lunday,
Jr. upon exercise of an outstanding option under a Shareholder Agreement,
dated October 1, 1997 and 183,390 shares held by the CDW Limited
Partnership.
(9) Includes 650,700 shares issuable upon exercise of warrants exercisable
within 60 days of February 29, 2000 and 80,000 shares issuable upon exercise
of options exercisable within 60 days of February, 2000.
6
<PAGE>
(10) 105,000 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
(11) Includes 905,000 shares subject to options and 660,200 shares subject to
warrants which are exercisable within 60 days of February 29, 2000, but does
not give effect to the exercise of options by Messrs. Naughtin, McBride and
Wheeler held on 8,252,568 shares held by Robert J. Lunday, Jr.
EXECUTIVE OFFICERS
The executive officers and certain other officers of the Company and their
ages as of February 29, 2000 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION SINCE
- ---- -------- --------------------------------------- --------
<S> <C> <C> <C>
Anthony C. Naughtin*................... 44 President and Chief Executive Officer 1996
Paul E. McBride*....................... 37 Vice President of Finance & 1996
Administration and Chief Financial
Officer
Christopher D. Wheeler*................ 33 Vice President and Chief Technology 1996
Officer
Charles M. Ortega*..................... 44 Vice President of Sales & Marketing 1998
Mike N. Joseph......................... 52 Vice President of Operations and Field 1998
Engineering
Richard Perez.......................... 47 Vice President of Deployment 1998
Richard K. Cotton...................... 39 Vice President of Carrier Relations 1999
Alan D. Norman......................... 41 Vice President of Corporate Development 1999
</TABLE>
- ------------------------
* Executive officers.
For Mr. Naughtin's biographical summary, see "Election of Directors."
Mr. McBride is Chief Financial Officer and Vice President of Finance and
Administration and a member of the "Office of the President." Prior to joining
InterNAP in 1996, he was Vice President of Finance and Operations at
ConnectSoft Inc. from February 1995 to March 1996. From December 1992 to
January 1995, he served as Chief Financial Officer and Vice President of Finance
at PenUltimate, Inc., a software developer. Mr. McBride holds a Bachelor of Arts
in Economics and a Bachelor of Science in Finance from the University of
Colorado and holds a Master of Business Administration from the University of
Southern California.
Christopher D. Wheeler is Chief Technology Officer and Vice President. Prior
to joining InterNAP, Mr. Wheeler was co-founder, President and Chief Executive
Officer of interGlobe Networks, Inc., a TCP/IP consulting firm from 1994 to
1996. Mr. Wheeler also worked in advanced network/Internet technology areas at
NorthwestNet, which is now Verio Northwest, and was responsible for backbone
engineering, routing technology design, network management tools development,
network operations and systems engineering at the University of Washington from
1989 to 1994. Mr. Wheeler holds a Bachelor of Science in Computer Science from
the University of Washington.
Charles M. Ortega is Vice President of Sales and Marketing. Prior to joining
InterNAP, Mr. Ortega was Director of Sales for Global and Corporate National
Accounts at MCI Communications Corporation from 1989 to April 1998. Prior to
MCI, he held senior sales management positions with Wang Laboratories and
Hewlett Packard. Mr. Ortega holds a Bachelor of Science degree in Kinesiology
from UCLA, and a Master of Business Administration from the John Anderson School
of Business at UCLA.
7
<PAGE>
Mike N. Joseph is Vice President of Operations and Field Engineering. He has
served as our Vice President of Operations since June 1999 and as our Director
of Corporate Engineering Operations from September 1998 to June 1999. Prior to
joining InterNAP, Mr. Joseph served as Director, and later Vice President of
Technical Services of Cellular Technical Services, a manufacturer of clone
detection products, from July 1996 to June 1998. Prior to that, Mr. Joseph was
Director of Operational System Support for AT&T Wireless, a wireless services
provider, from August 1995 to May 1996. From July 1994 to August 1995,
Mr. Joseph was Manager of Global Engineering at Cable & Wireless, a global voice
and Internet connectivity company. Mr. Joseph attended the University of
Houston.
Richard Perez is Vice President of Deployment, and previously served as our
Vice President of Deployment, Field Engineering and Provisioning from
December 1998 to August 1999. Prior to joining InterNAP, Mr. Perez worked for
17 years at MCI Communications Corporation, serving in various managerial and
technical positions. Mr. Perez attended the University of Maryland and is a past
Advisory Board member of the University of Washington's Data Communications
Extension.
Richard K. Cotton is Vice President of Carrier Relations, and previously
served as Vice President and General Counsel, then as Senior Vice President in
charge of site acquisition and network planning at WinStar Communications, a
national telecommunications company from September 1996 to September 1999.
Mr. Cotton served as Senior Attorney and subsequently Director of Law and Public
Policy at MCI Telecommunications Corporation from April 1993 to September 1996.
Mr. Cotton holds a Bachelor of Science from New York University and is a
graduate of the Brooklyn Law School.
Alan D. Norman is Vice President of Corporate Development, and previously
served as Vice President, General Manager of New Business Development at Etak, a
unit of Sony Corporation from May 1996 to August 1999. Mr. Norman served as Vice
President, General Manager of the Automotive Business Unit for Etak, then owned
by News Corporation from September 1992 through April 1996. Mr. Norman holds a
Master of Science in Business from Stanford University and a Bachelor of Science
from Stanford University.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Our directors currently do not receive any cash compensation for their
services on the Board of Directors or any committees of the Board. They are
reimbursed for certain expenses in connection with attendance at Board and
committee meetings. From time to time, certain non-employee directors have
received grants of options to purchase shares of our Common Stock. In
March 1998, Messrs. Eidenberg and Ober each were granted an option to purchase
400,000 shares of our Common Stock at an exercise price of $.03 per share. Upon
the closing of our initial public offering on October 4, 1999, non-employee
directors received an initial option to purchase 80,000 shares of Common Stock
and are expected to receive and an annual option to purchase 20,000 shares of
Common Stock under our 1999 non-employee directors' stock option plan.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The table below sets forth summary information concerning compensation paid
by us during the fiscal years ended December 31, 1999, 1998 and 1997,
respectively, to (a) our Chief Executive Officer and President and (b) four of
our other executive officers other than the Chief Executive Officer whose salary
and bonus for fiscal year 1999 exceeded $100,000 and who served as an executive
officer during fiscal year 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ ----------------------------------------
ALL OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)
- ------------------ -------- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Anthony C. Naughtin.................... 1999 $171,239 $58,500 -- 600,000 --
Chief Executive Officer 1998 123,750 -- -- -- --
and President 1997 125,000 -- -- -- --
Paul E. McBride........................ 1999 137,996 54,000 -- 400,000 --
Chief Financial Officer 1998 113,750 -- -- -- --
and Vice President 1997 115,000 -- -- -- --
Christopher D. Wheeler................. 1999 137,500 54,000 -- 400,000 --
Chief Technical Officer 1998 113,750 -- -- -- --
and Vice President 1997 115,000 -- -- -- --
Charles M. Ortega(2)................... 1999 137,996 30,000 $82,500 110,000 $12,000(1)
Vice President of Sales 1998 81,658 20,000 30,000 720,000 --
and Marketing
Richard Perez(2)....................... 1999 125,701 48,500 -- 40,000 --
Vice President of 1998 39,583 -- -- 300,000 --
Deployment
</TABLE>
- ------------------------
(1) Consists of living expenses.
(2) Messrs. Ortega and Perez joined us in 1998.
9
<PAGE>
STOCK OPTION GRANTS AND EXERCISES IN LAST FISCAL YEAR
The following table sets forth information regarding options granted to the
Named Executive Officers during the fiscal year ended December 31, 1999:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM($)
------------------------------------------------------ -----------------------
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED (#) FISCAL YEAR (%) SHARE ($) DATE 5% 10%
- ---- ----------- --------------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Anthony C. Naughtin............... 600,000 5.65% $2.00 6/18/09 $754,674 $1,912,491
Paul E. McBride................... 400,000 3.76 2.00 6/18/09 503,116 1,274,994
Christopher D. Wheeler............ 400,000 3.76 2.00 6/18/09 503,116 1,274,994
Charles M. Ortega................. 110,000 1.03 2.00 6/18/09 138,357 350,623
Richard Perez..................... 40,000 * 2.00 6/18/09 50,312 127,499
</TABLE>
The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the SEC. There can be no assurance provided to any
executive officer or any other holder of our securities that the actual stock
price appreciation over the option term will be at the assumed 5% and 10% levels
or at any other defined level.
Twenty-five percent of these options vest on the first anniversary of the
date of hire and the remainder vest in equal installments each month over the
three-year period following the first anniversary of the date of hire. Options
were granted at an exercise price equal to the fair market value of our Common
Stock, as determined by the Board of Directors on the date of grant.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information as of December 31, 1999 regarding
options held by the Named Executive Officers. There were no stock appreciation
rights outstanding at December 31, 1999:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ON VALUE YEAR-END AT FISCAL YEAR-END (%)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) (#) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Anthony C. Naughtin................. -- -- -- 600,000 -- $50,700,000
Paul E. McBride..................... -- -- -- 400,000 -- 33,800,000
Christopher D. Wheeler.............. -- -- -- 400,000 -- 33,800,000
Charles M. Ortega................... 255,000 -- 45,000 530,000 $3,891,150 45,612,400
Richard Perez....................... -- -- 91,667 248,333 7,922,320 21,385,179
</TABLE>
In the table above, the value of the unexercised in-the-money options is
based on the fair market value of our Common Stock, based upon the last reported
sales price of our Common Stock on December 31, 1999 of $86.50, minus the per
share exercise price multiplied by the number of shares.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
consists of Robert J. Lunday, Jr. (until April 26, 2000), Kevin L. Ober and
Robert D. Shurtleff, Jr., each of whom is a nonemployee director of the Company.
The Committee is responsible for establishing and administering compensation
policies and programs for executive officers of the Company. This report
reflects the Company's compensation philosophy as endorsed by the Committee.
The Company's executive compensation program has been designed to:
(i) ensure that compensation provided to executive officers is closely aligned
with the Company's business objectives and financial performance; (ii) enable
the Company to attract and retain those officers who contribute to the Company's
long-term success; and (iii) maximize shareholder value.
Executive compensation generally consists of three components: base salary;
annual cash bonus; and long-term incentive awards. The Committee establishes
each executive's compensation package by considering: (i) the salaries of
executive officers in similar positions in companies in the same industry as the
Company and in related industries; (ii) the experience and contribution levels
of the individual executive officer; and (iii) the Company's financial
performance. The Committee also relies on the recommendations of the Chief
Executive Officer in matters related to the individual performance of the other
executive officers, because the Committee believes that the Chief Executive
Officer is the most qualified to make this assessment.
EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer annually recommends executive officer
compensation programs to the Committee that are intended to compensate
executives competitively within the high-technology marketplace. The Committee
determines executive base salaries on a individual basis by evaluating each
executive's scope of responsibility, past performance, prior experience and data
on prevailing compensation levels in relevant markets for executive talent. In
connection with the Committee's judgment as to prevailing compensation levels,
certain companies included in the Goldman/Sachs Internet Index included in
Performance Measurement Comparison below are also in surveys reviewed by the
Committee in determining salary levels for the Chief Executive Officer. The
Committee annually reviews base salaries for its executives.
The Committee awards annual cash bonuses for executive officers (other than
those who receive commissions) on an annual basis. These awards are intended to
provide a direct link between management compensation and the achievement of
corporate and individual objectives. The level of bonus is based as a percentage
of the executive's base salary for the year. At the beginning of each year, the
Company sets certain corporate objectives (including financial performance
goals), and each individual manager sets his or her own personal objectives to
support the achievement of the corporate objectives. At the end of the year,
performance is assessed and the level of bonus payable, if any, is determined.
Achievement of corporate objectives is given more weight than achievement of
individual objectives for purposes of determining the annual bonus.
The Committee also grants stock options to executive officers to provide
long-term incentives that are aligned with the creation of increased shareholder
value over time. Options typically are granted at fair market value at the date
of grant, have a ten year term and generally vest 25% on the first anniversary
of vesting commencement date and in equal 36 monthly installments thereafter.
Most stock option grants to executive officers occur in conjunction with the
executive officer's acceptance of employment with the Company. The Committee,
however, reviews stock option levels for all executive officers at the beginning
of each fiscal year in light of long-term strategic and performance objectives
and each executive's current and anticipated contributions to the Company's
future performance and is able to adjust these levels. When determining the
number of stock options to be awarded to an executive officer, the Committee
11
<PAGE>
considers the executive's current contribution to the Company's performance, the
executive officer's anticipated contribution in meeting the Company's long-term
strategic performance goals and comparisons to formal and informal surveys of
executive stock option grants made by other Internet infrastructure companies.
In 1999, the Committee granted options to purchase an aggregate of 1,510,000
shares to executive officers at an exercise price equal to fair market value on
the date of grant.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee reviews Mr. Naughtin's compensation annually using the same
criteria and policies as are employed for other executive officers.
Mr. Naughtin's compensation was initially determined in part by the terms of an
employment agreement entered into upon his acceptance of employment with the
Company. The Committee, however, is able to increase Mr. Naughtin's compensation
to levels above those provided in the employment agreement. Mr. Naughtin's total
annual cash bonus for 1999 represented approximately 34% of his base salary for
fiscal 1999, or $58,500, in recognition of his significant contributions in
leading the Company to successful completion of its initial public offering and
implementation of its business plan during the prior fiscal year.
Compensation payments in excess of $1 million to the Chief Executive Officer
or the other five most highly compensated executive officers are subject to a
limitation on deductibility for the Company under Section 162(m) of the Internal
Revenue Code of 1986, as amended. Certain performance-based compensation is not
subject to the limitation on deductibility. The Committee does not expect cash
compensation in 2000 to its Chief Executive Officer or any other executive
officer to be in excess of $1 million. The Company intends to maintain
qualification of its 1998 Stock Option/Stock Issuance Plan and 1999 Equity
Incentive Plan for the performance-based exception to the $1 million limitation
on deductibility of compensation payments.
The Committee believes its executive compensation philosophy serves the
interests of InterNAP and InterNAP's shareholders.
COMPENSATION COMMITTEE MEMBERS
Robert J. Lunday, Jr. (through April 26, 2000), Kevin L. Ober and Robert D.
Shurtleff, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our executive officers serves as a member of the Board of Directors
or compensation committee of any entity that has one or more executive officers
serving as a member of our Board of Directors or compensation committee.
CHANGE OF CONTROL ARRANGEMENTS IN EQUITY INCENTIVE PLANS
Under our 1998 Stock Option/Stock Issuance Plan, if specific corporate
transactions occur, including the sale of substantially all of our assets or a
merger with or into another corporation, the plan administrator may, in its sole
discretion:
- accelerate the vesting of outstanding options under the 1998 Plan;
- arrange for outstanding options to be assumed or substituted for similar
options by a successor corporation;
- arrange for outstanding options to be replaced by a comparable cash
incentive program of the successor corporation; or
- take no action with respect to outstanding options, in which case the
options will terminate upon the completion of the corporate transaction.
12
<PAGE>
Under our Amended 1999 Equity Incentive Plan, if a change in control occurs,
including the sale of substantially all of our assets or a merger with or into
another corporation, any outstanding options held by persons then performing
services for us as an employee, director or consultant may:
- either be assumed or continued;
- an equivalent award may be substituted by the surviving entity; or
- if the options are not assumed, continued or substituted, the options will
become fully exercisable, including shares as to which they would not
otherwise be exercisable, and restricted stock will become fully vested.
Options also become fully exercisable upon the occurrence of a securities
acquisition representing 50% or more of the combined voting power of our
securities, or if a participant's service is terminated by a surviving
corporation for any reason other than "for cause" within 13 months following a
change in control.
13
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The graph set forth below compares cumulative total return to holders of the
Company's Common Stock with the cumulative total return of the Nasdaq US Stock
Market and the Goldman/Sachs Internet Index, resulting from an initial assumed
investment of $100 in each and assuming the reinvestment of any dividends, for
the period beginning September 29, 1999, the first day of trading of the Common
Stock, and ending December 31, 1999, the end of the Company's last fiscal year.
InterNAP management cautions that the stock price performance shown in the graph
below should not be considered indicative of potential future stock performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
INTERNAP NETWORK SERVICES CORPORATION, NASDAQ US STOCK MARKET
AND GOLDMAN/SACHS INTERNET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNAP NASDAQ GOLDMAN/SACHS
<S> <C> <C> <C>
Network Services Composite Index Internet Index (a)
9/29/1999 $100 $100 $100
12/31/1999 $865 $149 $155
</TABLE>
<TABLE>
<CAPTION>
9/29/99 12/31/99
-------- --------
<S> <C> <C>
InterNAP Network Services................................... $100 $865
Nasdaq Composite Index...................................... 100 149
Goldman/Sachs Composite Index............................... 100 155
</TABLE>
14
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Big Sandy Telecommunications, Inc., a company owned by Robert J. Lunday,
Jr., and Anthony C. Naughtin and Paul E. McBride executed a lease guarantee in
1996 covering one of the Company's office leases. Big Sandy was the primary
guarantor, and Messrs. Naughtin and McBride were secondary guarantors as
corporate officers of InterNAP. The secondary guarantees terminated in 1999, and
the primary guarantee terminated in 2000.
Pursuant to a shareholder agreement, dated October 1, 1997, among InterNAP,
Robert J. Lunday, Jr., and some of our founders, including Anthony C. Naughtin,
Paul E. McBride and Christopher D. Wheeler, Mr. Lunday granted to each founder
an option to purchase, under conditions set out in the shareholder agreement,
his or her pro rata share (as that term is defined in the shareholder agreement)
of 10,000,000 of the 13,333,334 shares of Series A preferred stock, or Common
Stock upon conversion, owned by Mr. Lunday at the date of the shareholder
agreement at a price of $0.63 per share. In January 2000, Mr. Lunday sold an
aggregate of 1,051,276 shares of Common Stock to two founders pursuant to the
shareholders agreement. This option remains outstanding with respect to
8,948,724 shares. Mr. Lunday, one of our directors, is father-in-law of
Mr. McBride, our Chief Financial Officer and Vice President of Finance and
Administration.
On January 11, 1999, Lunday Communications, Inc. loaned $500,000 to us,
represented by a promissory note that bore interest at the rate of prime plus 2%
and had a maturity date of February 15, 1999. We repaid the outstanding
principal and accrued interest on the loan in February 1999 from the proceeds of
our Series C financing. The Series C preferred stock converted into shares of
Common Stock on a one-for-one basis upon the closing of our initial public
offering.
On January 13, 1999, Robert D. Shurtleff, Jr., one of our directors, loaned
$600,000 to us, represented by a promissory note that bore interest at the rate
of prime plus 2% and had a maturity date of February 15, 1999. We repaid the
outstanding principal and accrued interest on the loan in February 1999 from the
proceeds of our Series C financing. The Series C preferred stock converted into
shares of Common Stock on a one-for-one basis upon the closing of our initial
public offering.
On January 28, 1999 and February 26, 1999, we sold an aggregate of
59,259,260 shares of Series C preferred stock to 44 investors, including Robert
D. Shurtleff, Jr., one of our directors, and H&Q InterNAP Investors, L.P.,
Morgan Stanley Dean Witter Venture Partners, Oak Investment Partners VIII, L.P.,
TI Ventures, LP and Vulcan Ventures Incorporated, five of our principal
shareholders, at an aggregate purchase price of $32,000,000, or $0.54 per share.
The Series C preferred stock converted into shares of Common Stock on a
one-for-one basis upon the closing of our initial public offering.
We have entered into employment letter agreements with several of our key
employees, including Anthony C. Naughtin, Paul E. McBride, Charles M. Ortega and
Christopher D. Wheeler. Each letter agreement sets forth the officer's
compensation level. Under each letter agreement the officer serves at-will and
employment may be terminated by us or by the officer at any time, with or
without cause and with or without notice. Each employment agreement contains a
noncompetition covenant one year in duration.
We have entered into indemnification agreements with our directors and
executive officers for the indemnification of and advancement of expenses to
such persons to the fullest extent permitted by law. We also intend to enter
into these agreements with our future directors and executive officers.
On September 7, 1999, we entered into a letter agreement with Richard K.
Cotton under which 100,000 shares of Common Stock underlying his option grant
fully vest and he will receive severance pay equal to six months of his
compensation, including employee benefits, in the event of his termination for
reasons other than his voluntary resignation, death or for cause.
15
<PAGE>
On September 23, 1999, we signed a standby loan facility agreement with
seven shareholders, which matured upon the closing of our initial public
offering. This facility allowed us to draw up to $10 million prior to the
earlier of maturity or December 31, 1999, but we did not draw any amounts on
this facility prior to maturity. In connection with this facility, we issued
warrants to purchase 200,000 shares of Common Stock with exercise prices of
$10.00 per share. The estimated fair value ascribed to the warrants was $536,000
based upon the Black Scholes option pricing model, and we recorded this amount
as interest expense for the year ended December 31, 1999.
On October 4, 1999, we sold an aggregate of 2,150,537 shares of Common Stock
in a private placement to Inktomi Corp, at an aggregate purchase price of
$20,000,000, or $9.30 per share, resulting in proceeds of $19.0 million, net of
a private placement fee of $1.0 million. We also issued to Inktomi a warrant to
purchase 1,075,268 additional shares of our Common Stock at an exercise price of
$13.95 per share. The warrant has a two year term and includes demand and
piggyback registration rights. The agreement also prohibits Inktomi from
acquiring additional shares of our stock for a period of two years. On
November 24, 1999, Inktomi exercised its warrant in part through a cashless
exercise, and received 397,250 shares of our Common Stock.
Pursuant to a letter agreement dated March 10, 2000 among Morgan Stanley
Venture Investors III, L.P., Morgan Stanley Venture Partners III, L.P., The
Morgan Stanley Venture Partners Entrepreneur Fund, L.P., collectively the Morgan
Stanley Venture Partners, and InterNAP, the Morgan Stanley Venture Partners have
irrevocably agreed to vote all shares of Common Stock they beneficially own in
excess of 9.9% of outstanding Common Stock in proportion to votes cast by all
other shareholders, as determined by the Company and excluding all shares of
Common Stock beneficially owned by the Morgan Stanley Venture Partners.
We believe that the foregoing transactions were in our best interest and
were made on terms no less favorable to us than could have been obtained from
unaffiliated third parties. All future transactions between us and any of our
officers, directors or principal shareholders will be approved by a majority of
the independent and disinterested members of our Board of Directors, will be on
terms no less favorable to us than could be obtained from unaffiliated third
parties and will be in connection with our bona fide business purposes.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
16
<PAGE>
OTHER BUSINESS
The Board of Directors does not intend to present any business at the Annual
Meeting other than as set forth in the accompanying Notice of Annual Meeting of
Shareholders, and has no present knowledge that any others intend to present
business at the meeting. If, however, other matters requiring the vote of the
shareholders properly come before the Annual Meeting or any adjournment or
postponement thereof, the persons named in the accompanying form of Proxy intend
to exercise their discretionary authority to vote the proxies held by them in
accordance with their judgment as to such matters.
By Order of the Board of Directors
/s/ Paul E. McBride
Paul E. McBride
Vice President of Finance and Administration,
Chief Financial Officer and Secretary
March 20, 2000
17
<PAGE>
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
INTERNAP NETWORK SERVICES CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2000
The undersigned hereby appoints ANTHONY C. NAUGHTIN and PAUL E. MCBRIDE,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of InterNAP Network Services
Corporation that the undersigned may be entitled to vote at the Annual Meeting
of Shareholders of InterNAP Network Services Corporation to be held at Sheraton
Seattle Hotel, 1400 Sixth Avenue, Seattle, Washington 98101 on Wednesday, April
26, 2000 at 9:00 a.m. (local time), and at any and all postponements,
continuations and adjournments thereof, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
matters and in accordance with the following instructions, with discretionary
authority as to any and all other matters that may properly come before the
meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEE LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.
(CONTINUED, AND TO BE DATED AND SIGNED ON OTHER SIDE)
<PAGE>
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
/X/ PLEASE MARK YOUR
VOTES AS INDICATED
IN THIS EXAMPLE
- -------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE "FOR" THE NOMINEE FOR
DIRECTOR AND "FOR" PROPOSAL 2 LISTED BELOW.
WITHHOLD
FOR AUTHORITY
1. PROPOSAL 1: To elect 1 director to hold office / / / /
until the 2003 Annual Meeting of Shareholders.
NOMINEE:
Robert D. Shurtleff, Jr.
FOR AGAINST ABSTAIN
2. PROPOSAL 2: To ratify selection of / / / / / /
PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year
ending December 31, 2000.
I plan to attend the Annual Meeting. / /
I do not plan to attend the Annual Meeting. / /
_________________________ __________________________ Dated ____________, 2000
Signature (title, if any) Signature, if held jointly
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
