ex10-2.htm


    
      

    

    
      Exhibit
10.2

      
 

      
        1999
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

        


        ADOPTED
BY THE BOARD OF DIRECTORS JULY 22, 1999

        APPROVED
BY STOCKHOLDERS AUGUST 23, 1999

        EFFECTIVE
DATE: JULY 22, 1999

        TERMINATION
DATE: JULY 21, 2009

        


        1. PURPOSES.

        


        (a) Eligible Option Recipients. The
persons eligible to receive Options are the Non-Employee Directors of the
Company.

        


        (b) Available Options. The purpose of
the Plan is to provide a means by which Non-Employee Directors may be given an
opportunity to benefit from increases in value of the Common Stock through the
granting of Nonstatutory Stock Options.

        


        (c) General Purpose. The Company, by
means of the Plan, seeks to retain the services of its Non-Employee Directors,
to secure and retain the services of new Non-Employee Directors and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.

        


        2. DEFINITIONS.

        


        (a) "Affiliate" means any parent
corporation or subsidiary corporation of the Company, whether now or hereafter
existing, as those terms are defined in Sections 424(e) and (f), respectively,
of the Code.

        


        (b) "Annual Grant" means an Option
granted annually to all Non-Employee Directors who meet the specified criteria
pursuant to Subsection 6(b) of the Plan.

        


        (c) "Annual Meeting" means the annual
meeting of the stockholders of the Company.

        


        (d) "Board" means the Board of
Directors of the Company.

        


        (e) "Code" means the Internal Revenue
Code of 1986, as amended.

        


        (f) "Common Stock" means the common
stock of the Company.

        


        (g) "Company" means Internap Network
Services Corporation, a Washington corporation.

        


        (h) "Consultant" means any person,
including an advisor, (i) engaged by the Company or an Affiliate to render
consulting or advisory services and who is compensated for such services or (ii)
who is a member of the Board of Directors of an Affiliate. However, the term
"Consultant" shall not include either Directors of the Company who are not
compensated by the Company for their services as Directors or Directors of the
Company who are merely paid a director's fee by the Company for their services
as Directors.

        


        (i) "Continuous Service" means that
the Optionholder's service with the Company or an Affiliate, whether as an
Employee, Director or Consultant, is not interrupted or terminated. The
Optionholder's Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Optionholder renders service to
the Company or an Affiliate as an Employee, Consultant or Director or a change
in the entity for which the Optionholder renders such service, provided that
there is no interruption or termination of the Optionholder's Continuous
Service. For example, a change in status from a Non-Employee Director of the
Company to a Consultant of an Affiliate or an Employee of the Company will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

        


        
          
             

          

          
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        (j) "Director" means a member of the
Board of Directors of the Company.

        


        (k) "Disability" means the inability
of a person, in the opinion of a qualified physician acceptable to the Company,
to perform the major duties of that person's position with the Company or an
Affiliate of the Company because of the sickness or injury of the
person.

        


        (l) "Employee" means any person
employed by the Company or an Affiliate. Mere service as a Director or payment
of a director's fee by the Company or an Affiliate shall not be sufficient to
constitute "employment" by the Company or an Affiliate.

        


        (m) "Exchange Act" means the
Securities Exchange Act of 1934, as amended.

        


        (n) "Fair Market Value" means, as of
any date, the value of the Common Stock determined as follows:

        


        (i) If the Common Stock is listed on
any established stock exchange or traded on the NASDAQ National Market or the
NASDAQ SmallCap Market, the Fair Market Value of a share of Common Stock shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable.

        


        (ii) In the absence of such markets
for the Common Stock, the Fair Market Value shall be determined in good faith by
the Board.

        


        (o) "Initial Grant" means an Option
granted to a Non-Employee Director pursuant to Subsection 6(a) of the
Plan.

        


        (p) "IPO Date" means the effective
date of the initial public offering of the Common Stock.

        


        (q) "Non-Employee Director" means a
Director who is not employed by the Company or an Affiliate.

        


        (r) "Nonstatutory Stock Option" means
an Option not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated
thereunder.

        


        (s) "Officer" means a person who is
an officer of the Company within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder.

        


        (t) "Option" means a Nonstatutory
Stock Option granted pursuant to the Plan.

        


        (u) "Option Agreement" means a
written agreement between the Company and an Optionholder evidencing the terms
and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.

        


        (v) "Optionholder" means a person to
whom an Option is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Option.

        


        (w) "Plan" means this Internap
Network Services Corporation 1999 Non-Employee Directors' Stock Option
Plan.

        


        
          
             

          

          
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        (x) "Rule 16b-3" means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect
from time to time.

        


        (y) "Securities Act" means the
Securities Act of 1933, as amended.

        


        3. ADMINISTRATION.

        


        (a) Administration by Board. The
Board shall administer the Plan. The Board may not delegate administration of
the Plan to a committee.

        


        (b) Powers of Board. The Board shall
have the power, subject to, and within the limitations of, the express
provisions of the Plan:

        


        (i) To determine the provisions of
each Option to the extent not specified in the Plan.

        


        (ii) To construe and interpret the
Plan and Options granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.

        


        (iii) To amend the Plan or an Option
as provided in Section 12.

        


        (iv) To terminate or suspend the Plan
as provided in Section 13.

        


        (v) Generally, to exercise such
powers and to perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company which are not in conflict with the
provisions of the Plan.

        


        4. SHARES SUBJECT TO THE
PLAN.

        


        (a) Share Reserve. Subject to the
provisions of Section 11 relating to adjustments upon changes in stock, the
stock that may be issued pursuant to Options shall not exceed in the aggregate
five hundred thousand (500,000) shares of Common Stock.

        


        (b) Reversion of Shares to the Share
Reserve. If any Option shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full, the stock not acquired
under such Option shall revert to and again become available for issuance under
the Plan.

        


        (c) Source of Shares. The stock
subject to the Plan may be unissued shares or reacquired shares, bought on the
market or otherwise.

        


        5. ELIGIBILITY.

        


        Nondiscretionary Options as set forth
in Section 6 shall be granted under the Plan to all Non-Employee
Directors.

        


        6. NON-DISCRETIONARY
GRANTS.

        


        (a) Initial Grants. On the IPO Date,
each person who is then a Non-Employee Director shall automatically be granted
an Initial Grant to purchase forty thousand (40,000) shares of Common Stock on
the terms and conditions set forth herein. After the IPO Date, each person who
is elected or appointed for the first time to be a Non-Employee Director shall
automatically, upon the date of his or her initial election or appointment to be
a Non-Employee Director by the Board or stockholders of the Company, be granted
an Initial Grant to purchase forty thousand (40,000) shares of Common Stock on
the terms and conditions set forth herein.

        


        
          
             

          

          
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        (b) Annual Grants. On the day
following each Annual Meeting commencing with the Annual Meeting in 2000, each
person who is then a Non-Employee Director and has been a Non-Employee Director
for at least six (6) months automatically shall be granted an Annual Grant to
purchase ten thousand (10,000) shares of Common Stock on the terms and
conditions set forth herein.

        


        7. OPTION PROVISIONS.

        


        Each Option shall be in such form and
shall contain such terms and conditions as required by the Plan. Each Option
shall contain such additional terms and conditions, not inconsistent with the
Plan, as the Board shall deem appropriate. Each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

        


        (a) Term. No Option shall be
exercisable after the expiration of ten (10) years from the date it was
granted.

        


        (b) Exercise Price. The exercise
price of each Option shall be one hundred percent (100%) of the Fair Market
Value of the stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

         

        
          (c) Consideration. The purchase price
of stock acquired pursuant to an Option may be paid in cash or by check at the
time the Option is exercised or, to the extent permitted by the Option Agreement
and applicable statutes and regulations, (i) by delivery to the Company of other
Common Stock, (ii) according to a deferred payment or other arrangement or (iii)
by any other form of legal consideration that may be acceptable to the Board and
provided in the Option Agreement.



        In the case of any deferred payment
arrangement (i) interest shall be compounded at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement and (ii) at
any time the Company is incorporated in Delaware, payment of the Common Stock's
par value shall not be made by deferred payment.

        


        (d) Transferability. An Option shall
not be transferable except by will or by the laws of descent and distribution
and shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

        


        (e) Vesting. Options shall be fully
vested and exercisable upon receipt.

        


        (f) Termination of Continuous
Service. In the event an Optionholder's Continuous Service terminates (other
than upon the Optionholder's death or Disability), the Optionholder may exercise
his or her Option but only within such period of time ending on the earlier of
(i) the date three (3) months following the termination of the Optionholder's
Continuous Service, or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate.

        


        (g) Extension of Termination Date. If
the exercise of the Option following the termination of the Optionholder's
Continuous Service (other than upon the Optionholder's death or Disability)
would be prohibited at any time solely because the issuance of shares would
violate the registration requirements under the Securities Act, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option
set forth in Subsection 7(a) or (ii) the expiration of a period of three (3)
months after the termination of the Optionholder's Continuous Service during
which the exercise of the Option would not be in violation of such registration
requirements.

        


        
          
             

          

          
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        (h) Disability of Optionholder. In
the event an Optionholder's Continuous Service terminates as a result of the
Optionholder's Disability, the Optionholder may exercise his or her Option (to
the extent that the Optionholder was entitled to exercise it as of the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the
time specified herein, the Option shall terminate.

        


        (i) Death of Optionholder. In the
event (i) an Optionholder's Continuous Service terminates as a result of the
Optionholder's death or (ii) the Optionholder dies within the three-month period
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised by the Optionholder's estate,
by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the Option upon the
Optionholder's death, but only within the period ending on the earlier of (1)
the date eighteen (18) months following the date of death or (2) the expiration
of the term of such Option as set forth in the Option Agreement. If, after
death, the Option is not exercised within the time specified herein, the Option
shall terminate.

        


        8. COVENANTS OF THE
COMPANY.

        


        (a) Availability of Shares. During
the terms of the Options, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such Options.

        


        (b) Securities Law Compliance. The
Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Options
and to issue and sell shares of Common Stock upon exercise of the Options;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act the Plan, any Option or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.

        


        9. USE OF PROCEEDS FROM
STOCK.

        


        Proceeds from the sale of stock
pursuant to Options shall constitute general funds of the Company.

        


        10. MISCELLANEOUS.

        


        (a) Stockholder Rights. No
Optionholder shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares subject to such Option unless and until
such Optionholder has satisfied all requirements for exercise of the Option
pursuant to its terms.

        


        (b) No Service Rights. Nothing in the
Plan or any instrument executed or Option granted pursuant thereto shall confer
upon any Optionholder any right to continue to serve the Company as a
Non-Employee Director or shall affect the right of the Company or an Affiliate
to terminate (i) the employment of an Employee with or without notice and with
or without cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

        


        (c) Investment Assurances. The
Company may require an Optionholder, as a condition of exercising or acquiring
stock under any Option, (i) to give written assurances satisfactory to the
Company as to the Optionholder's knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the Option; and (ii) to give written assurances satisfactory to the Company
stating that the Optionholder is acquiring the stock subject to the Option for
the Optionholder's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (A) the issuance of
the shares upon the exercise or acquisition of stock under the Option has been
registered under a then currently effective registration statement under the
Securities Act or (B) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.

        


        
          
             

          

          
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        (d) Withholding Obligations. The
Optionholder may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of stock under an Option by any of the
following means (in addition to the Company's right to withhold from any
compensation paid to the Optionholder by the Company) or by a combination of
such means: (i) tendering a cash payment; (ii) authorizing the Company to
withhold shares from the shares of the Common Stock otherwise issuable to the
Optionholder as a result of the exercise or acquisition of stock under the
Option; or (iii) delivering to the Company owned and unencumbered shares of the
Common Stock. Notwithstanding the foregoing, the Company shall not be authorized
to withhold shares of Common Stock at rates in excess of the minimum statutory
withholding rates for federal and state tax purposes, including payroll
taxes.

        


        11. ADJUSTMENTS UPON CHANGES IN
STOCK.

        


        (a) Capitalization Adjustments. If
any change is made in the stock

        subject
to the Plan, or subject to any Option, without the receipt of consideration by
the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject both to the Plan pursuant to
Subsection 4(a) and to the nondiscretionary Options specified in Section 5, and
the outstanding Options will be appropriately adjusted in the class(es) and
number of securities and price per share of stock subject to such outstanding
Options. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a transaction "without receipt of
consideration" by the Company.)

        


        (b) Dissolution or Liquidation. In
the event of a dissolution or liquidation of the Company, then all outstanding
Options shall terminate immediately prior to such event.

        


        (c) Change in Control. In the event
of (i) a sale of all or substantially all of the assets of the Company, (ii) a
merger or consolidation in which the Company is not the surviving corporation or
(iii) a reverse merger in which the Company is the surviving corporation but the
shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, then any surviving corporation or acquiring
corporation may assume any Options outstanding under the Plan or may substitute
similar Options (including an option to acquire the same consideration paid to
the stockholders in the transaction described in this Subsection 11(c)) for
those outstanding under the Plan.

        


        12. AMENDMENT OF THE PLAN AND
OPTIONS.

        


        (a) Amendment of Plan. The Board at
any time, and from time to time, may amend the Plan. However, except as provided
in Section 11 relating to adjustments upon changes in stock, no amendment shall
be effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy the requirements of Rule 16b-3 or
any NASDAQ or securities exchange listing requirements.

        


        (b) Stockholder Approval. The Board
may, in its sole discretion, submit any other amendment to the Plan for
stockholder approval.

        


        (c) No Impairment of Rights. Rights
under any Option granted before amendment of the Plan shall not be impaired by
any amendment of the Plan unless (i) the Company requests the consent of the
Optionholder and (ii) the Optionholder consents in writing.

        


        
          
             

          

          
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        (d) Amendment of Options. The Board
at any time, and from time to time, may amend the terms of any one or more
Options; provided, however, that the rights under any Option shall not be
impaired by any such amendment unless (i) the Company requests the consent of
the Optionholder and (ii) the Optionholder consents in writing.

        


        13. TERMINATION OR SUSPENSION OF THE
PLAN.

        


        (a) Plan Term. The Board may suspend
or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate on the day before the tenth (10th) anniversary of the date the Plan is
adopted by the Board or approved by the stockholders of the Company, whichever
is earlier. No Options may be granted under the Plan while the Plan is suspended
or after it is terminated.

        


        (b) No Impairment of Rights.
Suspension or termination of the Plan shall not impair rights and obligations
under any Option granted while the Plan is in effect except with the written
consent of the Optionholder.

        


        14. EFFECTIVE DATE OF
PLAN.

        


        The Plan shall become effective on
the IPO Date, but no Option shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the
Board.

        


        15. CHOICE OF LAW.

        


        All questions concerning the
construction, validity and interpretation of this Plan shall be governed by the
law of the State of Washington, without regard to such state's conflict of laws
rules.

        
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