10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission File Number: 001-31989

INTERNAP CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	91-2145721
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

 12120 Sunset Hills Road, Suite 330

Reston, VA 20190

(Address of Principal Executive Offices, Including Zip Code)

(404) 302-9700

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨	Smaller reporting company	ý
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $0.001 par value	INAP	Nasdaq Global Market

As of August 5, 2019, 26,750,106 shares of the registrant’s outstanding common stock, $0.001 par value per share, were outstanding.

INTERNAP CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)
	Condensed Consolidated Statements of Operations and Comprehensive Loss	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Stockholders' (Deficit) Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.	CONTROLS AND PROCEDURES	33
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	35
ITEM 1A.	RISK FACTORS	35
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
ITEM 6.	EXHIBITS	36
SIGNATURES

ITEM 1. FINANCIAL STATEMENTS

INTERNAP CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net revenues	$	73,134		$	81,962		$	146,698		$	156,163
Operating costs and expenses:
Costs of sales and services, exclusive of depreciation and amortization	25,949			27,331			51,682			51,938
Costs of customer support	8,726			8,841			17,516			16,228
Sales, general and administrative	15,683			19,602			33,204			39,456
Depreciation and amortization	21,955			22,712			44,133			43,870
Exit activities, restructuring and impairments	231			826			1,647			793
Total operating costs and expenses	72,544			79,312			148,182			152,285
Income (loss) from operations	590			2,650			(1,484		)	3,878
Interest expense	19,218			16,739			36,665			32,343
Loss (gain) on foreign currency, net	118			26			322			(189		)
Total non-operating expenses	19,336			16,765			36,987			32,154
Loss before income taxes and equity in earnings of equity-method investment	(18,746		)	(14,115		)	(38,471		)	(28,276		)
(Benefit) provision for income taxes	(211		)	141			(314		)	241
Net loss	(18,535		)	(14,256		)	(38,157		)	(28,517		)
Less net income attributable to non-controlling interests	20			23			42			50
Net loss attributable to INAP shareholders	(18,555		)	(14,279		)	(38,199		)	(28,567		)
Other comprehensive (loss) income:
Foreign currency translation adjustment	(27		)	61			170			122
Total other comprehensive (loss) income	(27		)	61			170			122
Comprehensive loss	$	(18,582	)	$	(14,218	)	$	(38,029	)	$	(28,445	)
Basic and diluted net loss per share	$	(0.78	)	$	(0.71	)	$	(1.61	)	$	(1.43	)
Weighted average shares outstanding used in computing basic and diluted net loss per share	23,667			20,053			23,716			19,985

See Notes to Condensed Consolidated Financial Statements.

INTERNAP CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)

	June 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	10,468		$	17,823
Accounts receivable, net of allowance for doubtful accounts of $1,091 and $1,547, respectively	18,563			20,054
Contract assets	9,130			8,844
Term loan, less discount and prepaid costs of $4,971	614			—
Prepaid expenses and other assets	7,807			7,377
Total current assets	46,582			54,098
Property and equipment, net	223,497			478,061
Operating lease right-of-use assets	35,488			—
Finance lease right-of-use assets	229,228			—
Intangible assets, net	67,446			73,042
Goodwill	116,217			116,217
Contract assets	15,217			16,104
Deposits and other assets	7,121			7,409
Total assets	$	740,796		$	744,931
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	25,826		$	23,435
Accrued liabilities	11,287			15,540
Deferred revenues	7,917			8,022
Capital lease obligations	—			9,080
Revolving credit facility	6,000			—
Term loan, less discount and prepaid costs of $4,036	—			321
Exit activities and restructuring liability	466			2,526
Short-term operating lease liabilities	6,584			—
Short-term finance lease liabilities	5,930			—
Other current liabilities	70			1,063
Total current liabilities	64,080			59,987
Deferred revenues	312			511
Operating lease liabilities	32,253			—
Finance lease liabilities	262,476			—
Capital lease obligations	—			262,382
Term loan, less discount and prepaid costs of $9,007 and $9,508, respectively	413,958			415,278
Deferred tax liability	1,617			2,211
Other long-term liabilities	3,633			4,505
Total liabilities	778,329			744,874
Commitments and contingencies (Refer to Note 10)
Stockholders’ (deficit) equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding	—			—
Common stock, $0.001 par value; 50,000 shares authorized; 26,770 and 25,455 shares outstanding, respectively	27			25
Additional paid-in capital	1,370,835			1,368,968
Treasury stock, at cost, 387 and 330, respectively	(7,956		)	(7,646		)
Accumulated deficit	(1,401,270		)	(1,363,019		)
Accumulated items of other comprehensive loss	(895		)	(1,065		)
Total INAP stockholders’ deficit	(39,259		)	(2,737		)
Non-controlling interests	1,726			2,794
Total stockholders’ (deficit) equity	(37,533		)	57
Total liabilities and stockholders’ (deficit) equity	$	740,796		$	744,931

See Notes to Condensed Consolidated Financial Statements.

INTERNAP CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

(In thousands)

(Unaudited)

	Common Stock
	Shares		Par Value		Additional Paid-In Capital		Treasury Stock			Accumulated Deficit			Accumulated Items of Other Comprehensive Loss			Non-Controlling Interest			Total Stockholders' (Deficit) Equity
Three and Six Months Ended June 30, 2018
Balance, December 31, 2017	20,804		$	21	$	1,327,084	$	(7,159	)	$	(1,323,723	)	$	(1,324	)	$	4,069		$	(1,032	)
Adoption of ASC 606	—		—		—		—			24,185			—			—			24,185
Net loss	—		—		—		—			(14,261		)	—			—			(14,261		)
Net income attributable to non-controlling interest	—		—		—		—			(27		)	—			27			—
Foreign currency translation	—		—		—		—			—			61			—			61
INAP Japan	—		—		—		—			—			—			(990		)	(990		)
Common stock issuance	343		—		—		—			—			—			—			—
Employee taxes paid on withholding shares	(20	)	—		—		(270		)	—			—			—			(270		)
Stock-based compensation	—		—		869		—			—			—			—			869
Proceeds from exercise of stock options, net	4		—		32		—			—			—			—			32
Balance, March 31, 2018	21,131		21		1,327,985		(7,429		)	(1,313,826		)	(1,263		)	3,106			8,594
Adoption of ASC 606	—		—		—		—			(981		)	—			—			(981		)
Net loss	—		—		—		—			(14,256		)	—			—			(14,256		)
Net income attributable to non-controlling interest	—		—		—		—			(23		)	—			23			—
Foreign currency translation	—		—		—		—			—			61			—			61
INAP Japan	—		—		—		—			—			—			(205		)	(205		)
Common stock issuance	104		—		—		—			—			—			—			—
Employee taxes paid on withholding shares	(16	)	—		—		(201		)	—			—			—			(201		)
Stock-based compensation	—		—		1,382		—			—			—			—			1,382
Proceeds from exercise of stock options, net	—		—		1		—			—			—			—			1
Balance, June 30, 2018	21,219		$	21	$	1,329,368	$	(7,630	)	$	(1,329,086	)	$	(1,202	)	$	2,924		$	(5,605	)
See Notes to Condensed Consolidated Financial Statements.

INTERNAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY (CONTINUED)
(In thousands)
(Unaudited)
	Common Stock
	Shares		Par Value		Additional Paid-In Capital			Treasury Stock			Accumulated Deficit			Accumulated Items of Other Comprehensive Loss			Non-Controlling Interest			Total Stockholders' (Deficit) Equity
Three and Six Months Ended June 30, 2019
Balance, December 31, 2018	25,455		$	25	$	1,368,968		$	(7,646	)	$	(1,363,019	)	$	(1,065	)	$	2,794		$	57
Adoption of ASC 842	—		—		—			—			(52		)	—			—			(52		)
Net loss	—		—		—			—			(19,622		)	—			—			(19,622		)
Net income attributable to non-controlling interest	—		—		—			—			(22		)	—			22			—
Foreign currency translation	—		—		—			—			—			197			—			197
INAP Japan	—		—		—			—			—			—			(1,133		)	(1,133		)
Common stock issuance	1,339		2		(43		)	—			—			—			—			(41		)
Employee taxes paid on withholding shares	(48	)	—		—			(268		)	—			—			—			(268		)
Stock-based compensation	—		—		890			—			—			—			—			890
Balance, March 31, 2019	26,746		27		1,369,815			(7,914		)	(1,382,715		)	(868		)	1,683			(19,972		)
Adoption of ASC 842	—		—		—			—			—			—			—			—
Net loss	—		—		—			—			(18,535		)	—			—			(18,535		)
Net income attributable to non-controlling interest	—		—		—			—			(20		)	—			20			—
Foreign currency translation	—		—		—			—			—			(27		)	—			(27		)
INAP Japan	—		—		—			—			—			—			23			23
Common stock issuance	33		—		—			—			—			—			—			—
Employee taxes paid on withholding shares	(9	)	—		—			(42		)	—			—			—			(42		)
Stock-based compensation	—		—		1,020			—			—			—			—			1,020
Balance, June 30, 2019	26,770		$	27	$	1,370,835		$	(7,956	)	$	(1,401,270	)	$	(895	)	$	1,726		$	(37,533	)

See Notes to Condensed Consolidated Financial Statements.

INTERNAP CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2019			2018
Cash Flows from Operating Activities:
Net loss	$	(38,157	)	$	(28,517	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	44,133			43,870
Loss (gain) on disposal of fixed asset	481			(29		)
Amortization of debt discount and issuance costs	2,546			1,712
Stock-based compensation expense, net of capitalized amount	1,901			2,232
Provision for doubtful accounts	380			604
Non-cash change in finance lease liabilities	3,520			(371		)
Non-cash change in exit activities and restructuring liability	1,405			1,112
Non-cash change in deferred rent	—			(559		)
Deferred taxes	(612		)	60
Accreted interest	357			—
Other, net	(81		)	3
Changes in operating assets and liabilities:
Accounts receivable	1,210			(2,165		)
Prepaid expenses, deposits and other assets	298			(4,073		)
Operating lease right-of-use assets	2,151			—
Accounts payable	3,375			6,939
Accrued and other liabilities	(3,146		)	(585		)
Deferred revenues	(323		)	1,249
Exit activities and restructuring liability	(3,540		)	(2,676		)
Short and long-term operating lease liabilities	(1,964		)	—
Asset retirement obligation	147			(188		)
Other liabilities	—			(85		)
Net cash provided by operating activities	14,081			18,533
Cash Flows from Investing Activities:
Purchases of property and equipment	(15,642		)	(16,102		)
Proceeds from disposal of property and equipment	100			541
Business acquisition, net of cash acquired	—			(131,748		)
Additions to acquired and developed technology	(817		)	(1,340		)
Net cash used in investing activities	(16,359		)	(148,649		)
Cash Flows from Financing Activities:
Proceeds from credit agreements	6,000			146,000
Principal payments on credit agreements	(2,178		)	(2,178		)
Debt issuance costs	(2,815		)	(7,696		)
Payments on finance lease liabilities	(4,696		)	(4,424		)
Acquisition of non-controlling interests	(973		)	(1,130		)
Proceeds from exercise of stock options	—			(108		)
Acquisition of common stock for income tax withholdings	(310		)	(471		)
Other, net	50			264
Net cash (used in) provided by in financing activities	(4,922		)	130,257
Effect of exchange rates on cash and cash equivalents	(155		)	(5		)
Net (decrease) increase in cash and cash equivalents	(7,355		)	136
Cash and cash equivalents at beginning of period	17,823			14,603
Cash and cash equivalents at end of period	$	10,468		$	14,739
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	29,859		$	29,965
Additions to property and equipment included in accounts payable	1,268			4,023

See Notes to Condensed Consolidated Financial Statements.

INTERNAP CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Internap Corporation (“we,” “us,” “our,” “INAP,” or “the Company”) is a leading-edge provider of high-performance data center and cloud solutions with over 100 network Points of Presence (“POP”) worldwide. INAP's full-spectrum portfolio of high-density colocation, managed cloud hosting and network solutions supports evolving IT infrastructure requirements for customers ranging from the Fortune 500 to emerging start-ups. INAP operates 21 metropolitan markets, primarily in North America, with data centers connected by a low-latency, high-capacity fiber network. INAP has over one million gross square feet in its portfolio, with approximately 600,000 square feet of sellable data center space. 

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated all intercompany transactions and balances in the accompanying financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature with the exception of those related to the adoption of new accounting standards as discussed in Note 2, "Recent Accounting Pronouncements" and Note 4, "Leases."

We have condensed or omitted certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP. The accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, necessary for a fair statement of our financial position as of June 30, 2019 and our operating results and cash flows for the interim periods presented. The balance sheet at December 31, 2018 was derived from our audited financial statements, but does not include all disclosures required by GAAP. You should read the accompanying financial statements and the related notes in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”).

The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the 2019 fiscal year or any future periods.

Out of Period Adjustment

In connection with the preparation, review and audit of the Company's consolidated financial statements required to be included in the Annual Report on Form 10-K for the year ended December 31, 2018, management identified certain errors in the Company's historical financial statements, resulting in a conclusion that certain corrections need to be made to the Company's unaudited quarters during 2018. The Company has revised its prior period consolidated financial statements accordingly and included such revisions herein. Based on an analysis of quantitative and qualitative factors, the Company concluded that these errors were not material to the consolidated financial position, results of operations or cash flows as presented in the Company’s quarterly financial statements that have been previously filed in the Company’s Quarterly Reports on Form 10-Q. As a result, amendment of such reports was not required. The revisions to correct errors relate to the correction of accounting for an amendment to a capital lease executed in February 2018.

The adjustments to the Company’s previously issued quarterly financial statements for the three and six months ended June 30, 2018 are as follows (in thousands):

	Three and Six Months Ended June 30, 2018
	As reported			Adjustments			As adjusted
Costs of sales and services, exclusive of depreciation and amortization - QTD	$	27,976		$	(645	)	$	27,331
Costs of sales and services, exclusive of depreciation and amortization - YTD	53,013			(1,075		)	51,938
Depreciation and amortization - QTD	22,590			122			22,712
Depreciation and amortization - YTD	43,667			203			43,870
Interest expense - QTD	15,860			879			16,739
Interest expense - YTD	30,887			1,456			32,343
Net loss attributable to INAP shareholders - QTD	(13,923		)	(356		)	(14,279		)
Net loss attributable to INAP shareholders - YTD	(27,983		)	(584		)	(28,567		)
Property and equipment, net	452,958			10,315			463,273
Total assets	724,707			10,315			735,022
Capital lease obligations - non-current	220,721			10,855			231,576
Total liabilities	729,728			10,855			740,583
Accumulated deficit	(1,328,502		)	(584		)	(1,329,086		)
Total stockholders' (deficit) equity	$	(5,021	)	$	(584	)	$	(5,605	)

2.    RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which states that a lessee should recognize the assets and liabilities that arise from leases. The standard has since been modified with several ASUs (collectively, the "new lease standard"). The new lease standard is effective for annual and interim periods beginning after December 15, 2018. Earlier adoption is permitted. The Company adopted the new lease standard on January 1, 2019, the beginning of fiscal 2019. Prior periods presented in our condensed consolidated financial statements continue to be presented in accordance with the former lease standard, Topic 840, Leases.

The new lease standard provides entities two options for applying the modified retrospective approach (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative-effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption (January 1, 2019) through a cumulative-effect adjustment recognized then. The Company adopted the new lease standard by recognizing and measuring leases at the adoption date with a cumulative effect of initially applying the guidance recognized at the date of initial application. The most significant impact relates to the recognition on the Company's balance sheet of right-of-use ("ROU") assets and lease liabilities for all operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily depends on its classification. For income statement purposes, operating leases will result in a straight-line expense while finance leases will result in a front-loaded expense pattern.

The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company did not separately record lease components from non-lease components, and accounts for them together as a single lease component. INAP made an accounting policy election to not record leases with an initial term of 12 months or less on the balance sheet. The Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term in the consolidated statements of operations and comprehensive loss. The Company has elected to not record a ROU asset or ROU liability for leases with an asset or liability balance that would be less than one thousand dollars ($1,000) on the adoption date on the basis of materiality. This threshold continues to be consistent with the Company’s Property and Equipment capitalization threshold.

As a result of our adoption of the new lease standard, we have implemented a new lease accounting system, accounting policies and processes which changed the Company's internal controls over financial reporting for lease accounting.

The Company primarily has capital leases which have been recorded on the consolidated balance sheets and as of the January 1, 2019 transition date, the capital leases became finance leases establishing the ROU asset and liability. The ROU assets and liabilities for operating leases were $28.5 million and $31.0 million of total Company assets and liabilities, respectively, as of January 1, 2019.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets including trade receivables, loans and held-to-maturity debt securities held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This will result in the earlier recognition of credit losses. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. If expected cash flows improve, an entity will reduce the allowance and reverse the expense through income. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Entities will have to make more disclosures, including disclosures by year of origination for certain financing receivables. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220). This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) (“AOCI”) to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017. This standard was effective for interim and annual reporting periods beginning after December 15, 2018. We did not exercise the option to make this reclassification.

In June 2018, the FASB issued ASU 2018-07, Improvements to Non-employee Share-Based Payment Accounting broadens the scope of FASB ASC Topic 718, Compensation — Stock Compensation, which currently covers only share-based payments to employees. The change substantially aligns the accounting for share-based payments for both employees and non-employees. The ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Non-Employees. The measurement of equity-classified non-employee awards will be fixed at the grant date, and entities will measure the cost of awards subject to a performance condition using the outcome that is probable at the balance sheet date. Entities may use the expected term to measure non-employee options or elect to use the contractual term as the expected term, on an award-by-award basis. Entities will recognize a cumulative-effect adjustment to retained earnings for equity classified non-employee awards for which a measurement date has not been established and liability-classified non-employee awards that have not been settled. The guidance is effective for calendar-year public business entities in annual periods beginning after December 15, 2018, and interim periods within those years. The Company adopted this pronouncement in the first quarter of 2019 and it did not have a material impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), relating to a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by a vendor (i.e., a service contract). Under the new guidance, a customer will apply the same criteria for capitalizing implementation costs as it would for an arrangement that has a software license. The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted.  The Company can choose to adopt the new guidance (1) prospectively to eligible costs incurred on or after the date this guidance is first applied, or (2) retrospectively. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which removes, adds and modifies certain disclosure requirements for fair value measurements in Topic 820. The Company will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the valuation processes of Level 3 fair value measurements. However, the Company will be required to additionally disclose the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, and the range and weighted average of assumptions used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  The amendments relating to additional disclosure requirements will be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments will be applied retrospectively to all periods presented upon their effective date. The Company is permitted to early

adopt either the entire ASU or only the provisions that eliminate or modify the requirements. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

3.    REVENUES

We generate revenues primarily from the sale of data center services, including colocation, hosting and cloud, and IP services. Our revenues typically consist of monthly recurring revenues from contracts with terms of one year or more and we typically recognize the monthly minimum as revenue each month as our performance obligations are fulfilled. We recorded installation fees as deferred revenue and recognized the revenue ratably over the estimated customer life.

For our data center service revenues, we determine colocation revenues by occupied square feet and both allocated and variable-based usage, which includes both physical space for hosting customers' network and other equipment plus associated services such as power and network connectivity, environmental controls and security. We determine hosting revenues by the number of servers utilized (physical or virtual) and cloud revenues by the amount of processing and storage consumed. We recognize IP services revenues on fixed-commitment or usage-based pricing. IP service contracts usually have fixed minimum commitments based on a certain level of bandwidth usage with additional charges for any usage over a specified limit. If a customer's usage of our services exceeds the monthly minimum, we recognize revenue for such excess in the period of the usage. We use contracts and sales or purchase orders as evidence of an arrangement. We test for availability or connectivity to verify delivery of our services.

We assess whether:

a. the parties to the contract have an approved contract;

b. the Company can identify each party's rights regarding the goods and services to be transferred;

c. the Company can identify the payment terms for the goods or services to be transferred;

d. the contract has commercial substance; and

e. it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the goods and services that will be transferred to the customer.

The transaction price reflects INAP’s expectations about the consideration it will be entitled to receive from the customer. The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. After contract inception, the transaction price can change for various reasons, including the resolution of uncertain events or other changes in circumstances that change the amount of consideration to which INAP expects to be entitled in exchange for the promised goods or services. Once the separate performance obligations are identified and the transaction price has been determined, the Company allocates the transaction price to the performance obligations in proportion to their standalone selling price ("SSP"). When allocating on a relative SSP basis, any discount within the contract generally is allocated proportionately to all of the performance obligations in the contract.

To allocate the transaction price on a relative SSP basis, the Company first determines the SSP of the distinct good or service underlying each performance obligation. It is the price at which the Company would sell a good or service on a standalone (or separate) basis at contract inception. The observable price of a good or service sold separately provides the best evidence of SSP. If a SSP is not directly observable, the Company would estimate the SSP. The Company will be able to consider its facts and circumstances in order to determine how frequently it will need to update the estimates. If the information used to estimate the SSP for similar transactions has not changed, the Company can determine that it is reasonable to use the previously determined SSP.

Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

The Company's contracts with customers often include performance obligations to transfer multiple products and services to a customer. Common performance obligations of the Company include delivery of services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment by the Company.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Total transaction price is estimated for impact of variable consideration, such as INAP's service level arrangements, additional usage and late fees, discounts and promotions, and customer care credits. The majority of contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract's transaction price to each performance obligation based on its relative SSP.

The SSP is determined based on observable price. In instances where the SSP is not directly observable, such as when the Company does not sell the product or service separately, INAP determines the SSP using information that may include market conditions and other observable inputs. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP.

The most significant impact of the adoption of the new standard was the requirement for incremental costs to obtain a customer, such as commissions, which previously were expensed as incurred, to be deferred and amortized over the period of contract performance or a longer period if renewals are expected and the renewal commission does not equal with the initial commission.

In addition, installation revenues are recognized over the initial contract life rather than over the estimated customer life, as they are not significant to the total contract and therefore do not represent a material right.

Most performance obligations, with the exception of certain sales of equipment or hardware, are satisfied over time as the customer consumes the benefits as we perform. For equipment and hardware sales, the performance obligation is satisfied when control transfers to the customer.

In evaluating the treatment of certain contracts, the Company exercised heightened judgment in deferring installation revenue as well as expense fulfillment and commission costs over the appropriate life. With the exception of the revenues noted above, revenue recognition remains materially consistent with historical practice.

The Company routinely reviews the collectability of its accounts receivable and payment status of customers. If INAP determines that collection of revenue is uncertain, it does not recognize revenue until collection is reasonably assured. Additionally, the Company maintains an allowance for doubtful accounts resulting from the inability of the Company's customers to make required payments on accounts receivable. The allowance for doubtful accounts is based on historical write-offs as a percentage of revenues. INAP assesses the payment status of customers by reference to the terms under which it provides services or goods, with any payments not made on or before their due date considered past-due. Once all collection efforts have been exhausted, the uncollectible balance is written off against the allowance for doubtful accounts. The Company routinely performs credit checks for new and existing customers and requires deposits or prepayments for customers that are perceived as being a credit risk. In addition, INAP records a reserve amount for potential credits to be issued under service level agreements and other sales adjustments.

Management expects that commission fees paid to sales representatives as a result of obtaining service contracts and contract renewals are recoverable and therefore the Company capitalized them as contract costs in the amount of $24.3 million and $24.9 million at June 30, 2019 and December 31, 2018, respectively. Capitalized commission fees are amortized on a straight-line basis over the determined life, which vary based on the customer segment. For the three months ended June 30, 2019 and June 30, 2018, amortization recognized was $2.4 million for both years. For the six months ended June 30, 2019 and June 30, 2018, amortization recognized was $4.8 million and $4.7 million, respectively. There was no impairment loss recorded on capitalized contract costs for the three and six months ended June 30, 2019 and June 30, 2018.

Applying the practical expedient pertaining to contract costs, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in "Sales, general and administrative" expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

The Company includes only those incremental costs that would not have been incurred if the contracts had not been entered into as follows (in thousands):

	Current			Non-current
Balance at December 31, 2018	$	8,844		$	16,104
Deferred customer acquisition costs incurred in the period	862			3,353
Amounts recognized as expense in the period	(4,816		)	—
Reclassification between short-term and long-term	4,240			(4,240		)
Balance at June 30, 2019	$	9,130		$	15,217

The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, the Company recognizes a receivable for revenues related to its time and materials and transaction or volume-based contracts. The Company presents such receivables in "Accounts receivable, net" it its condensed consolidated balance sheets at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.

Amounts collected in advance of services being provided are accounted for as contract liabilities, which are presented as "Deferred revenues" on the accompanying condensed consolidated balance sheets and are realized with the associated revenue recognized under the contract. Nearly all of the Company's contract liabilities balance is related to service revenue.

Significant changes in the deferred revenues balance (current and noncurrent) during the period are as follows (in thousands):

Balance - December 31, 2018	$	8,533
Revenue recognized that was included in the deferred revenue balance at December 31, 2018	(5,300		)
Increases due to cash received, excluding amounts recognized as revenue during the period	4,996
Balance - June 30, 2019	$	8,229

Revenues recognized during the three and six months ended June 30, 2019 for performance obligations satisfied or partially satisfied in previous periods were immaterial.

In accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"), the Company disaggregates revenue from contracts with customers based on the timing of revenue recognition. The Company determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. As discussed in this note and Note 11, “Operating Segments,” the Company business consists of INAP US and INAP INTL colocation, cloud and network services. The following table presents disaggregated revenues by category as follows (in thousands):

	Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
Colocation	$	27,557	$	1,457	$	30,866	$	1,459
Network services	11,414		2,678		13,563		2,792
Cloud	18,490		11,538		19,638		13,644
	$	57,461	$	15,673	$	64,067	$	17,895

	Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
Colocation	$	54,911	$	2,892	$	61,802	$	2,977
Network services	23,156		5,452		27,382		5,763
Cloud	36,914		23,373		31,958		26,281
	$	114,981	$	31,717	$	121,142	$	35,021

Revenue by geography is as follows (in thousands):

	Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
United States	$	58,461	$	—	$	65,168	$	—
Canada	—		8,084		—		9,549
Other countries	—		6,589		—		7,245
	$	58,461	$	14,673	$	65,168	$	16,794

	Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
United States	$	117,025	$	—	$	123,319	$	—
Canada	—		16,027		—		18,659
Other countries	—		13,646		—		14,185
	$	117,025	$	29,673	$	123,319	$	32,844

4.    LEASES

We have commitments under leases arrangements for data centers, office space, partner sites and equipment. Our leases have initial lease terms ranging from 2 years to 34 years, most of which includes options to extend or renew the leases for 5 to 15 years, and some of which may include options to terminate the leases within 4 to 120 months.

At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time). Operating leases are accounted for on the condensed consolidated balance sheets with ROU assets being recognized in "Operating lease right-of-use assets" and lease liabilities recognized in "Short-term operating lease liabilities" and "Operating lease liabilities." Finance leases are accounted for on the condensed consolidated balance sheets with ROU assets being recognized in "Finance lease right-of-use assets" and lease liabilities recognized in "Short-term finance lease liabilities" and "Finance lease liabilities."

All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for initial direct costs, prepaid rent, and lease incentives received. The operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for initial direct costs, prepaid or accrued lease payments and lease incentives. The finance lease ROU assets are subsequently amortized using the straight-line method.

Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability.

We have elected to combine lease and non-lease components for all lease contracts where we are the lessee. Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets and lease liabilities and lease payments are

recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.

Lease related costs for the three and six months ended June 30, 2019 are as follows (in thousands):

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Finance lease cost
Amortization of right-of-use assets		$	4,131	$	8,523
Interest on lease liabilities		7,325		14,575
Finance lease cost		$	11,456	$	23,098
Operating lease cost		$	1,932	$	3,697
Short-term lease cost		879		2,369
Total lease cost		$	14,267	$	29,164

Other information related to leases as of June 30, 2019 is as follows (in thousands, except lease term and rate):

	Operating Leases			Finance Leases
Right-of-use assets	$	35,488		$	229,228
Lease liabilities	38,837			268,406
Weighted-average remaining lease term (years)	5.46			19.26
Weighted-average discount rate	7.24		%	13.79		%

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the six months ended June 30, 2019 (in thousands):

Operating Leases
Operating cash paid to settle operating lease liabilities	$	3,660
Right-of-use assets obtained in exchange for lease liabilities	921
Finance Leases
Operating cash paid for interest	$	11,171
Right-of-use assets obtained in exchange for lease liabilities	18

Future minimum lease payments under non-cancellable leases as of June 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)		$	4,527		$	16,416
2020		9,089			33,106
2021		9,114			34,933
2022		8,534			33,676
2023		7,549			32,916
Thereafter		8,737			631,020
Total undiscounted lease payments		$	47,550		$	782,067
Less: Imputed interest		8,713			513,661
Total lease liabilities		$	38,837		$	268,406

As of June 30, 2019, we did not have additional operating and finance leases that have not yet commenced.

5. ACQUISITION

On February 28, 2018, the Company acquired SingleHop LLC ("SingleHop"), a provider of high-performance data center services including colocation, managed hosting, cloud and network services for $132.0 million net of working capital adjustments of approximately $0.4 million, liabilities assumed, and net of cash acquired. The transaction was funded with an incremental term loan and cash from the balance sheet. As part of the financing, INAP obtained an amendment to its credit agreement to allow for

the incremental term loan and to provide further operational flexibility under the credit agreement covenants. The amendments to the credit agreement are described in more detail in Note 8, "Debt."

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date and includes purchase accounting adjustments subsequent to the acquisition date (in thousands):

	Final Valuation as of December 31, 2018
Cash	$	2,823
Prepaid expenses and other assets	2,227
Property, plant and equipment	14,253
Other long term assets	576
Intangible assets:
Noncompete agreements	4,000
Trade names	1,700
Technology	15,100
Customer relationships	34,100
Goodwill	66,008
Total assets acquired	140,787
Accounts payable and accrued liabilities	2,819
Deferred revenue	2,434
Long term liabilities	534
Net assets acquired	$	135,000

The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. The intangible assets are being amortized over periods which reflect the pattern in which economic benefits of the assets are expected to be realized. The customer relationships are being amortized on an accelerated basis over an estimated useful life of ten years and the noncompete agreements, trade names, and technology are being amortized on a straight-line basis over four, eight, and seven years, respectively.

Goodwill represents the excess of the consideration transferred over the aggregate fair values of assets acquired and liabilities assumed. The goodwill recorded in connection with this acquisition was based on operating synergies and other benefits expected to result from the combined operations and the assembled workforce acquired. The goodwill acquired is deductible for tax purposes.

Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations of INAP and SingleHop as if the acquisition had occurred on January 1, 2017. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the INAP and SingleHop acquisition been completed as of January 1, 2017, and should not be taken as indicative of our future consolidated results of operations. The pro forma results are as follows (in thousands, except for per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
		2018				2018
Revenues		$	81,962			$	164,288
Net loss		(14,256		)		$	(29,718	)
Basic and diluted net loss per share		(0.71		)		$	(1.48	)
Weighted average shares outstanding used in computing basic and diluted net loss per share		20,053				19,985

6.    FAIR VALUE MEASUREMENTS

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

• Level 1: Quoted prices in active markets for identical assets or liabilities;

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):

	Level 1		Level 2		Level 3		Total
June 30, 2019
Available-for-sale securities	$	—	$	2,381	$	—	$	2,381
Asset retirement obligations(1)	—		—		2,237		2,237
December 31, 2018
Available-for-sale securities	$	—	$	2,309	$	—	$	2,309
Asset retirement obligations(1)	—		—		2,090		2,090

⁽¹⁾  We calculated the fair value of asset retirement obligations by discounting the estimated amount using the current Treasury bill rate adjusted for our credit risk. At June 30, 2019 and December 31, 2018, the balances are included in “Other long-term liabilities,” in the accompanying condensed consolidated balance sheets.

The following table provides a summary of changes in our Level 3 asset retirement obligations for the three months ended June 30, 2019 (in thousands): 

	2019
Balance, January 1, 2019	$	2,090
Accretion	147
Payments	—
Balance, June 30, 2019	$	2,237

As of June 30, 2019, the Company held $2.4 million of available-for-sale debt securities which are reported at fair value on the Company's condensed consolidated balance sheets in "Deposits and other assets." Unrealized holding gains and losses are reported within accumulated other comprehensive loss in the condensed consolidated statements of operations and comprehensive loss. A decline in the fair value of a marketable security below the Company's cost basis is determined to be other than temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and maturity management.

The fair values of our Level 2 available-for-sale debt securities, based upon quoted prices for similar items in active markets, are as follows (in thousands):

	June 30, 2019
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Japanese Corporate Bonds	$	2,221	$	127	$	(57	)	$	2,291
Japanese Government Bonds	88		4		(2		)	90
Total Bonds	$	2,309	$	131	$	(59	)	$	2,381
	December 31, 2018
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Japanese Corporate Bonds	$	2,184	$	144	$	(107	)	$	2,221
Japanese Government Bonds	87		5		(4		)	88
Total Bonds	$	2,271	$	149	$	(111	)	$	2,309

The fair values of our Level 2 debt liabilities, based upon quoted prices for similar items in active markets, are as follows (in thousands):

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term loan	$	427,322	$	376,043	$	429,143	$	428,071
Revolving credit facility	6,000		5,280		—		—

7.    GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company tests goodwill and intangible assets with indefinite lives for impairment annually in the third quarter as of August 1. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit or indefinite lived intangible asset below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

The Company tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass this qualitative assessment for some or all of its reporting units and perform a quantitative test.

Goodwill is considered impaired if the carrying amount of the net assets exceeds the fair value of the reporting unit. Impairment, if any, would be recorded in operating income / (loss) and this could result in a material impact to net income / (loss) and income / (loss) per share.

Interim Testing

During the second quarter of 2019, the Company identified a significant decrease in its share price which was considered an impairment indicator. As a result, the Company performed a goodwill impairment test as of June 1, 2019. The Company determined after performing the fair value analysis, which was based on the discounted cash flow method, that all reporting units' fair values were in excess of its carrying value and therefore no impairment of goodwill exists. While management believes the assumptions used are reasonable and commensurate with the views of a market participant, changes in key assumptions for these reporting units, including increasing the discount rate, lowering revenue forecasts, lowering the operating margin or lowering long-term growth rate, could result in a future impairment.

8.    DEBT

Credit Agreement

On April 6, 2017, we entered into a new Credit Agreement (the “2017 Credit Agreement”), which provides for a $300.0 million term loan facility ("2017 term loan") and a $25.0 million Revolving Credit Facility (the "2017 Revolving Credit Facility"). The proceeds of the 2017 term loan were used to refinance the Company’s existing credit facility and to pay costs and expenses associated with the 2017 Credit Agreement.

Certain portions of refinancing transaction were considered an extinguishment of debt and certain portions were considered a modification. A total of $5.7 million was paid for debt issuance costs related to the 2017 Credit Agreement. Of the $5.7 million in costs paid, $1.9 million related to the exchange of debt and was expensed, $3.3 million related to 2017 term loan third party costs and will be amortized over the 2017 term loan and $0.4 million prepaid debt issuance costs related to the 2017 Revolving Credit Facility and will be amortized over the term of the 2017 Revolving Credit Facility. In addition, $4.8 million of debt discount and debt issuance costs related to the previous credit facility were expensed due to the extinguishment of that credit facility. The maturity date of the 2017 term loan is April 6, 2022 and the maturity date of the 2017 Revolving Credit Facility is October 6, 2021. As of June 30, 2019, the outstanding balance of the 2017 term loan and the 2017 Revolving Credit Facility was $413.3 million and $6.0 million, respectively. The interest rate on the 2017 term loan and the 2017 Revolving Credit Facility as of June 30, 2019 was 9.40% and 11.50%, respectively.

Borrowings under the 2017 Credit Agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, a base rate or an adjusted LIBOR rate. The applicable margin for loans under the 2017 Revolving Credit Facility is 6.00% for loans bearing interest calculated using the base rate (“Base Rate Loans”) and 7.00% for loans bearing interest calculated using the adjusted LIBOR rate. The applicable margin for loans under the 2017 term loan is 4.75% for Base Rate Loans and 5.75% for adjusted LIBOR rate loans. The base rate is equal to the highest of (a) the adjusted U.S. Prime Lending Rate as published in the Wall Street Journal, (b) with respect to term loans issued on the closing date, 2.00%, (c) the federal funds effective rate from time to time, plus 0.50%, and (d) the adjusted LIBOR rate, as defined below, for a one-month interest period, plus 1.00%. The adjusted LIBOR rate is equal to the rate per annum (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered in the interbank Eurodollar market for the applicable interest period (one, two, three or six months), as quoted on Reuters screen LIBOR (or any successor page or service). The financing commitments of the lenders extending the 2017 Revolving Credit Facility are subject to various conditions, as set forth in the 2017 Credit Agreement. As of June 30, 2019, the Company has been in compliance with all covenants.  

First Amendment

On June 28, 2017, the Company entered into an amendment to the 2017 Credit Agreement ("First Amendment"), by and among the Company, each of the lenders party thereto, and Jefferies Finance LLC, as Administrative Agent. The First Amendment clarified that for all purposes the Company's liabilities pursuant to any lease that was treated as rental and lease expense, and not as a capital lease obligation or indebtedness on the closing date of the 2017 Credit Agreement, would continue to be treated as a rental and lease expense, and not as a capital lease obligations or indebtedness, for all purposes of the 2017 Credit Agreement, notwithstanding any amendment of the lease that results in the treatment of such lease as a capital lease obligation or indebtedness for financial reporting purposes.

Second Amendment

On February 6, 2018, the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent, entered into a Second Amendment to Credit Agreement (the "Second Amendment") that amended the 2017 Credit Agreement.

The Second Amendment, among other things, amends the 2017 Credit Agreement to (i) permit the Company to incur incremental term loans under the 2017 Credit Agreement of up to $135.0 million to finance the Company's acquisition of SingleHop and to pay related fees, costs and expenses, and (ii) revise the maximum total net leverage ratio and minimum consolidated interest coverage ratio covenants.  The financial covenant amendments became effective upon the consummation of the SingleHop acquisition, while the other provisions of the Second Amendment became effective upon the execution and delivery of the Second Amendment. This transaction was considered a modification.

A total of $1.0 million was paid for debt issuance costs related to the Second Amendment. Of the $1.0 million in costs paid, $0.2 million related to the payment of legal and professional fees which were expensed, $0.8 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Third Amendment

On February 28, 2018, INAP entered into the Incremental and Third Amendment to the Credit Agreement among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the "Third Amendment"). The Third Amendment provides for a funding of the new incremental term loan facility under the 2017 Credit Agreement of $135.0 million (the "Incremental Term Loan"). The Incremental Term Loan has terms and conditions identical to the existing loans under the 2017 Credit Agreement, as amended.  Proceeds of the Incremental Term Loan were used to complete the acquisition of SingleHop and to pay fees, costs and expenses related to the acquisition, the Third Amendment and the Incremental Term Loan. This transaction was considered a modification. 

A total of $5.0 million was paid for debt issuance costs related to the Third Amendment. Of the $5.0 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $4.9 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Fourth Amendment

On April 9, 2018, the Company entered into the Fourth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the "Fourth Amendment"). The Fourth Amendment amends the 2017 Credit Agreement to lower the interest rate margins applicable to the outstanding term loans under the 2017 Credit Agreement by 1.25%. This transaction was considered a modification.

A total of $1.7 million was paid for debt issuance costs related to the Fourth Amendment. Of the $1.7 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $1.6 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Fifth Amendment

On August 28, 2018, the Company entered into the Fifth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the “Fifth Amendment”).  The Fifth Amendment amended the 2017 Credit Agreement by increasing the aggregate revolving commitment capacity by $10.0 million to $35.0 million.

Sixth Amendment

On May 8, 2019, the Company entered into the Sixth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the “Sixth Amendment”). The Sixth Amendment (i) adjusted the applicable interest rates under the 2017 Credit Agreement, (ii) modified the maximum Total Net Leverage Ratio requirements and the minimum Consolidated Interest Coverage Ratio requirements and (iii) modified certain other covenants.

Pursuant to the Sixth Amendment, the applicable margin for adjusted base rate term loans was increased from 4.75% per annum to 5.25% per annum and for Eurodollar term loans was increased from 5.75% per annum to 6.25% per annum, with such interest payable in cash, and in addition such term loans bear interest payable in kind at the rate of 0.75% per annum.

The Sixth Amendment also made the following modifications:

• An additional basket of $500,000 for finance lease obligations.

• The maximum amount of permitted asset dispositions was decreased from $150,000,000 to $50,000,000.

• The amount of net cash proceeds from asset sales that may be reinvested is limited to $2,500,000 in any fiscal year of the Company, with net cash proceeds that are not so reinvested used to prepay loans under the Credit Agreement.

• The restricted payment basket was decreased from $5,000,000 to $1,000,000.

The maximum total leverage ratio increases to 6.80 to 1 as of June 30, 2019, 6.90 to 1 as of September 30, 2019 - December 31, 2019, decreases to 6.75 to 1 as of March 31, 2020, 6.25 to 1 as of June 30, 2020, 6.00 to 1 as of September 30, 2020, 5.75 to 1

as of December 31, 2020, 5.50 to 1 as of March 2021, 5.00 to 1 as of June 30, 2021 and 4.50 to 1 as of September 30, 2021 and thereafter.

The minimum consolidated interest coverage ratio decreases to 1.75 to 1 as of June 30, 2019, 1.70 to 1 as of September 30, 2019 - March 31, 2020, increases to 1.80 to 1 as of June 30, 2020, 1.85 to 1 as of September 2020 and 2.00 to 1 as of December 31, 2020 and thereafter. This transaction was considered a modification.

A total of $2.9 million was paid for debt issuance costs related to the Sixth Amendment. Of the $2.9 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $2.8 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

9.    EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES

During 2019 and 2018, we recorded exit activity charges due to ceasing use of office space. We include initial charges and plan adjustments in “Exit activities, restructuring and impairments” in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2019 and 2018.

The following table displays the transactions and balances for exit activities and restructuring charges during the six months ended June 30, 2019 and 2018 (in thousands). Our real estate and severance obligations are substantially related to our INAP US segment.

	Balance										Balance
	December 31, 2018		Initial Charges		Plan Adjustments			Cash Payments			June 30, 2019
Activity for 2019 restructuring charge:
Real estate obligations	$	—	$	1,252	$	(133	)	$	(973	)	$	146
Activity for 2018 restructuring charge:
Real estate obligations	1,922		$	96	$	83		$	(2,011	)	90
Activity for 2017 restructuring charge:
Real estate obligations	100		—		—			(91		)	9
Activity for 2016 restructuring charge:
Real estate obligations	125		—		21			(80		)	66
Activity for 2015 restructuring charge:
Real estate obligation	27		—		13			(26		)	14
Service contracts	221		—		19			(99		)	141
Activity for 2014 restructuring charge:
Real estate obligation	206		—		54			(260		)	—
	$	2,601	$	1,348	$	57		$	(3,540	)	$	466

	Balance									Balance
	December 31, 2017		Initial Charges		Plan Adjustments		Cash Payments			June 30, 2018
Activity for 2018 restructuring charge:
Real estate obligations	$	—	$	741	$	45	$	(163	)	$	623
Activity for 2017 restructuring charge:
Real estate obligations	3,380		—		143		(1,896		)	1,627
Activity for 2016 restructuring charge:
Severance	46		—		34		(34		)	46
Real estate obligations	247		—		14		(77		)	184
Activity for 2015 restructuring charge:
Real estate obligation	64		—		9		(28		)	45
Service contracts	388		—		14		(99		)	303
Activity for 2014 restructuring charge:
Real estate obligation	691		—		112		(379		)	424
	$	4,816	$	741	$	371	$	(2,676	)	$	3,252

10.     COMMITMENTS, CONTINGENCIES AND LITIGATION

We are subject to legal proceedings, claims and litigation arising in the ordinary course of business. Although the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse impact on our financial condition, results of operations or cash flows.

11. OPERATING SEGMENTS

The Company has two reportable segments: INAP US and INAP INTL. These segments are comprised of strategic businesses that are defined by the location of the service offerings. Our INAP US segment consists of US Colocation, US Cloud, and US Network services based in the United States. Our INAP INTL segment consists of these same services based in countries other than the United States, and Ubersmith.

Each segment is managed as an operation with well-established strategic directions and performance requirements. Each segment is led by a separate General Manager who reports directly to the Company’s CODM. Effective January 1, 2019, both segments are led by the Chief Operating Officer, who reports directly to the Company's CODM. The CODM evaluates segment performance using business unit contribution which is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing, exclusive of depreciation and amortization.

Our services, which are included within both our reportable segments, are described as follows:

Colocation

Colocation involves providing conditioned power with back-up capacity and physical space within data centers along with associated services such as interconnection, remote hands, environmental controls, monitoring and security while allowing our customers to deploy and manage their servers, storage and other equipment in our secure data centers. We design the data center infrastructure, procure the capital equipment, deploy the infrastructure and are responsible for the operation and maintenance of the facility.

Cloud

Cloud services involve providing compute resources and storage services on demand via an integrated platform that includes our automated bare metal solutions. We offer our next generation cloud platforms in our high density colocation facilities and utilize the INAP performance IP for low latency connectivity. 

Network

Network services includes our patented Performance IP™ service, content delivery network services, IP routing hardware and software platform. By intelligently routing traffic with redundant, high-speed connections over multiple, major Internet backbones, our IP connectivity provides high-performance and highly-reliable delivery of content, applications and communications to end users globally. We deliver our IP connectivity through more than 100 network POPs around the world.

The following table provides segment results (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenues:
INAP US	$	57,461		$	64,067		$	114,981		$	121,142
INAP INTL	15,673			17,895			31,717			35,021
Net revenues	73,134			81,962			146,698			156,163
Cost of sales and services, customer support and sales and marketing:
INAP US	31,976			34,228			64,860			64,335
INAP INTL	10,049			11,872			19,744			23,005
Total costs of sales and services, customer support and sales and marketing	42,025			46,100			84,604			87,340
										.
Segment profit:
INAP US	25,485			29,839			50,121			56,808
INAP INTL	5,624			6,023			11,973			12,015
Total segment profit	31,109			35,862			62,094			68,823
Exit activities, restructuring and impairments	231			826			1,647			793
Other operating expenses, including sales, general and administrative and depreciation and amortization expenses	30,288			32,386			61,931			64,152
Income (loss) from operations	590			2,650			(1,484		)	3,878
Non-operating expenses	19,336			16,765			36,987			32,154
Loss before income taxes and equity in earnings of equity-method investment	$	(18,746	)	$	(14,115	)	$	(38,471	)	$	(28,276	)

The CODM does not manage the operating segments based on asset allocations. Therefore, assets by operating segment have not been provided.

12. NET LOSS PER SHARE

We compute basic net loss per share by dividing net loss attributable to our common stockholders by the weighted average number of shares of common stock outstanding during the period. We exclude all outstanding options and unvested restricted stock as such securities are anti-dilutive for all periods presented.

Basic and diluted net loss per share is calculated as follows (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net loss	$	(18,535	)	$	(14,256	)	$	(38,157	)	$	(28,517	)
Less net income attributable to non-controlling interests	20			23			42			50
Net loss attributable to common stock	$	(18,555	)	$	(14,279	)	$	(38,199	)	$	(28,567	)
Weighted average shares outstanding, basic and diluted	23,667			20,053			23,716			19,985
Net loss per share, basic and diluted	$	(0.78	)	$	(0.71	)	$	(1.61	)	$	(1.43	)
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans	2,244			1,345			2,244			1,345

13. INVESTMENT IN AFFLIATES AND OTHER ENTITIES

In the normal course of business, INAP enters into various types of investment arrangements, each having unique terms and conditions.

In previous years, INAP invested $4.1 million in Internap Japan Co., Ltd., our joint venture with NTT-ME Corporation ("NTT-ME") and Nippon Telegraph and Telephone Corporation. Through August 15, 2017, we qualified and accounted for this investment using the equity method. We recorded our proportional share of the income and losses of INAP Japan one month in arrears on the accompanying consolidated balance sheets as a long-term investment and our share of INAP Japan's income and losses, net of taxes, as a separate caption in our accompanying consolidated statements of operations and comprehensive loss.

On August 15, 2017, INAP exercised certain rights to obtain a controlling interest in Internap Japan Co., Ltd. Upon obtaining control of the venture, we recognized INAP Japan's assets and liabilities at fair value resulting in a gain of $1.1 million. Once INAP obtained control of the Internap Japan Co., Ltd. venture, the investment was consolidated with INAP using the voting model.

On January 15, 2019, NTT-ME exercised its first put option that resulted in NTT-ME having an ownership of 15% and INAP of 85%. The put option was exercised at $1.0 million which represents the fair market value of the shares purchased.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS

As used herein, except as otherwise indicated by context, references to “we,” “us,” “our,” “INAP.” or “the Company” refers to Internap Corporation and our subsidiaries.

Forward-Looking Statements

Certain statements in this Form 10-Q contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding industry trends, our future financial position and performance, business strategy, revenues and expenses in future periods, projected levels of growth, availability of capital resources and liquidity and other matters that do not relate strictly to historical facts. These statements are often identified by words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects,""projects," "forecasts," "plans," "intends," "continue," "could" or "should," that an "opportunity" exists, that we are "positioned" for a particular result, statements regarding our vision or similar expressions or variations. These statements are based on the beliefs and expectations of our management team based on information available at the time such statements are made. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements.

Therefore, actual future results and trends may differ materially from what is forecast in such forward-looking statements due to a variety of factors, including, without limitation: our ability to drive growth while reducing costs; our ability to maintain current customers and obtain new ones, whether in a cost-effective manner or at all; the robustness of the IT infrastructure services market; our ability to achieve or sustain profitability; our ability to expand margins and drive higher returns on investment; our ability to

sell into new and existing data center space; the actual performance of our IT infrastructure services and our ability to improve operations; our ability to correctly forecast capital needs, demand and space utilization; our ability to respond successfully to technological change and the resulting competition; the geographic concentration of our data centers in certain markets and any adverse developments in local economic conditions or the demand for data center space in these markets; the uncertainty as to whether any strategic alternative will be pursued or, if pursued, closed; uncertainty as to the terms, value and timing of any such strategic alternative; the impact of the announcement of the evaluation of strategic alternatives on INAP’s common stock, its businesses, and its operating results; our ability to realize anticipated revenue, growth, synergies and cost savings from the acquisition of SingleHop LLC ("SingleHop"); the availability of services from Internet network service providers or network service providers providing network access loops and local loops on favorable terms, or at all; the failure of third party suppliers to deliver their products and services on favorable terms, or at all; failures in our network operations centers, data centers, network access points or computer systems; our ability to provide or improve Internet infrastructure services to our customers; our ability to protect our intellectual property; our substantial amount of indebtedness, our ability to raise additional capital when needed, on attractive terms, or at all, and our ability to service existing debt or maintain compliance with financial and other covenants contained in our credit agreement; our compliance with and changes in complex laws and regulations in the U.S. and internationally; our ability to attract and retain qualified management and other personnel; and volatility in the trading price of INAP common stock.

These risks and other important factors discussed under the caption "Risk Factors" in our most recent Annual Report on Form 10-K filed with the SEC and our other reports filed with the SEC could cause actual results to differ materially from those expressed or implied by forward-looking statements made in this Form 10-Q.

Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements attributable to INAP or persons acting on our behalf are expressly qualified in their entirety by the foregoing forward-looking statements. All such statements speak only as of the date made, and INAP undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

INAP is a leading-edge provider of high-performance data center and cloud solutions with over 100 network Points of Presence ("POP") worldwide. INAP's full-spectrum portfolio of high-density colocation, managed cloud hosting and network solutions supports evolving IT infrastructure requirements for customers ranging from the Fortune 500 to emerging startups. INAP operates in 21 metropolitan markets, primarily in North America, with data centers connected by a low-latency, high-capacity fiber network. INAP has over one million gross square feet in its portfolio, with approximately 600,000 square feet of sellable data center space.  

Recent Accounting Pronouncements

Recent accounting pronouncements are summarized in Note 2, "Recent Accounting Pronouncements," in the accompanying condensed consolidated financial statements.

Results of Operations

Three Months Ended June 30, 2019 and 2018

The following table sets forth selected consolidated statements of operations and comprehensive loss data during the periods presented, including comparative information between the periods (dollars in thousands):

	Three Months Ended June 30,				Increase (Decrease) from 2018 to 2019
	2019		2018		Amount			Percent
Net revenues	$	73,134	$	81,962	$	(8,828	)	(11	)%
Operating costs and expenses:
Costs of sales and services, exclusive of depreciation and amortization	25,949		27,331		(1,382		)	(5	)%
Costs of customer support	8,726		8,841		(115		)	(1	)%
Sales, general and administrative	15,683		19,602		(3,919		)	(20	)%
Depreciation and amortization	21,955		22,712		(757		)	(3	)%
Exit activities, restructuring and impairments	231		826		(595		)	(72	)%
Total operating costs and expenses	72,544		79,312		(6,768		)	(9	)%
Income (loss) from operations	$	590	$	2,650	$	(2,060	)	(78	)%
Interest expense	$	19,218	$	16,739	$	2,479		15	%

Supplemental Schedule

	Three Months Ended June 30,				Decrease from 2018 to 2019
	2019		2018		Amount			Percent
Revenues:
INAP US	57,461		64,067		$	(6,606	)	(10	)%
INAP INTL	15,673		17,895		(2,222		)	(12	)%
Net revenues	73,134		81,962		(8,828		)	(11	)%
Cost of sales and services:
INAP US	19,439		20,191		(752		)	(4	)%
INAP INTL	6,510		7,140		(630		)	(9	)%
Total costs of sales and services, exclusive of depreciation and amortization	$	25,949	$	27,331	$	(1,382	)	(5	)%

INAP US

Revenues for our INAP US segment decreased approximately 10% to $57.5 million for the three months ended June 30, 2019, compared to $64.1 million for the same period in 2018. The decrease was primarily due to planned data center exits and churn from several large customers in 2018 offset by a global transfer pricing adjustment between segments.

Direct costs of our INAP US segment, exclusive of depreciation and amortization, decreased 4%, to $19.4 million for the three months ended June 30, 2019, compared to $20.2 million for the same period in 2018. The decrease was primarily due to cost savings initiatives beginning in the first quarter of 2019.

INAP INTL

Revenues for our INAP INTL segment decreased 12% to $15.7 million for the three months ended June 30, 2019, compared to $17.9 million for the same period in 2018. The decrease was primarily due to churn from iWeb legacy products.

Direct costs of our INAP INTL segment, exclusive of depreciation and amortization, decreased 9%, to $6.5 million for the three months ended June 30, 2019, compared to $7.1 million for the same period in 2018. The change was primarily due to cost savings initiatives.

Other Operating Costs and Expenses

Compensation. Total compensation and benefits, including stock-based compensation, was $16.2 million for the three months ended June 30, 2019, compared to $18.0 million for the same period in 2018. The decrease was due to cost savings initiatives.

Stock-based compensation, net of amount capitalized, decreased $0.4 million to $1.0 million during the three months ended June 30, 2019 compared to $1.4 million during the same period in 2018 primarily due to fewer employees receiving equity grants in the current quarter and cost savings initiatives.

Costs of Customer Support. Costs of customer support decreased slightly to $8.7 million for the three months ended June 30, 2019 compared to $8.8 million during the same period in 2018.

Sales, General and Administrative. Sales, general and administrative costs decreased to $15.7 million during the three months ended June 30, 2019 compared to $19.6 million during the same period in 2018. The decrease was primarily due to reduction in commission expense and wages due to cost savings initiatives.

Depreciation and Amortization. Depreciation and amortization decreased to $22.0 million during the three months ended June 30, 2019 compared to $22.7 million during the same period in 2018. The decrease is primarily due to lower capital expenditures and continued use of depreciated assets.

Exit activities and Restructuring. Exit activities and restructuring decreased to $0.2 million during the three months ended June 30, 2019 compared to $0.8 million during the same period in 2018. The decrease is primarily due to no additional planned data center exits in the current quarter.

Interest Expense. Interest expense increased to $19.2 million during the three months ended June 30, 2019 from $16.7 million during the same period in 2018. The increase is primarily due to higher interest on the 2017 term loan due to increased interest rates and additional interest expense related to finance leases.

Six Months Ended June 30, 2019 and 2018

The following table sets forth selected consolidated statements of operations and comprehensive loss data during the periods presented, including comparative information between the periods (dollars in thousands):

	Six Months Ended June 30,					Increase (Decrease) from 2018 to 2019
	2019			2018		Amount			Percent
Net revenues	$	146,698		$	156,163	$	(9,465	)	(6	)%
Operating costs and expenses:
Costs of sales and services, exclusive of depreciation and amortization	51,682			51,938		(256		)	—	%
Costs of customer support	17,516			16,228		1,288			8	%
Sales, general and administrative	33,204			39,456		(6,252		)	(16	)%
Depreciation and amortization	44,133			43,870		263			1	%
Exit activities, restructuring and impairments	1,647			793		854			108	%
Total operating costs and expenses	148,182			152,285		(4,103		)	(3	)%
(Loss) income from operations	$	(1,484	)	$	3,878	$	(5,362	)	(138	)%
Interest expense	$	36,665		$	32,343	$	4,322		13	%

Supplemental Schedule

	Six Months Ended June 30,				Increase (Decrease) from 2018 to 2019
	2019		2018		Amount			Percent
Revenues:
INAP US	$	114,981	$	121,142	$	(6,161	)	(5	)%
INAP INTL	31,717		35,021		(3,304		)	(9	)%
Net revenues	146,698		156,163		(9,465		)	(6	)%
Cost of sales and services:
INAP US	38,997		38,196		801			2	%
INAP INTL	12,685		13,742		(1,057		)	(8	)%
Total costs of sales and services, exclusive of depreciation and amortization	$	51,682	$	51,938	$	(256	)	—	%

INAP US

Revenues for our INAP US segment decreased 5% to $115.0 million for the six months ended June 30, 2019, compared to $121.1 million for the same period in 2018. The decrease in revenue is primarily due to planned data center exits and churn from several larger customers in 2018, offset by the addition of SingleHop.

Direct costs of our INAP US segment, exclusive of depreciation and amortization, increased 2%, to $39.0 million for the six months ended June 30, 2019, compared to $38.2 million for the same period in 2018. The increase was primarily due to SingleHop costs, partially offset by lower space and power costs from planned data center exits and cost savings initiatives beginning in the first quarter of 2019.

INAP INTL

Revenues for our INAP INTL segment decreased 9% to $31.7 million for the six months ended June 30, 2019, compared to $35.0 million for the same period in 2018. The decrease was primarily due to churn from iWeb legacy products, offset by the addition of SingleHop.

Direct costs of our INAP INTL segment, exclusive of depreciation and amortization, decreased 8%, to $12.7 million for the six months ended June 30, 2019, compared to $13.7 million for the same period in 2018. The decrease was primarily due to cost savings initiatives.

Other Operating Costs and Expenses

Compensation. Total compensation and benefits, including stock-based compensation, was $33.6 million for the six months ended June 30, 2019, compared to $34.6 million for the same period in 2018. The change was primarily due to cost savings initiatives.

Stock-based compensation, net of amount capitalized, decreased to $1.9 million during the six months ended June 30, 2019, from $2.3 million during the same period in 2018. The decrease is due to fewer employees receiving equity grants this year and cost savings initiatives.

Costs of Customer Support. Costs of customer support increased to $17.5 million during the six months ended June 30, 2019 compared to $16.2 million during the same period in 2018. The increase was primarily due to the SingleHop acquisition.

Sales, General and Administrative. Sales, general and administrative costs decreased to $33.2 million during the six months ended June 30, 2019 compared to $39.5 million during the same period in 2018. The decrease was primarily due to cost savings initiatives, and SingleHop acquisition costs of $2.9 million and $0.8 million of a non-income tax settlement that did not occur in the current year.

Depreciation and Amortization. Depreciation and amortization increased to $44.1 million during the six months ended June 30, 2019 compared to $43.9 million during the same period in 2018. The increase is primarily due to depreciation on the capital leased assets INAP obtained during the last half of 2018.

Exit activities, Restructuring and Impairments. Exit activities, restructuring and impairments increased to $1.6 million during the six months ended June 30, 2019 compared to $0.8 million of expense during the same period in 2018. The increase is primarily due to planned data center exits in the first quarter of 2019.

Interest Expense. Interest expense increased to $36.7 million during the six months ended June 30, 2019 from $32.3 million during the same period in 2018. The increase is primarily due to increased borrowings and additional interest expense related to finance leases.

Non-GAAP Financial Measure

We report our consolidated financial statements in accordance with GAAP. In addition, we present Adjusted EBITDA, an additional financial measure that is not prepared in accordance with GAAP (“non-GAAP”). A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure can be found below.

We define Adjusted EBITDA as GAAP net loss attributable to INAP shareholders plus depreciation and amortization, interest expense, (benefit) provision for income taxes, other expense (income), (gain) loss on disposal of property and equipment, exit activities, restructuring and impairments, stock-based compensation, non-income tax contingency, strategic alternatives and related costs, organizational realignment costs and acquisition costs.

Adjusted EBITDA is not a measure of financial performance calculated in accordance with GAAP, and should be viewed as a supplement to - not a substitute for - our results of operations presented on the basis of GAAP. Adjusted EBITDA does not purport to represent cash flow provided by operating activities as defined by GAAP. Our statements of cash flows present our cash flow activity in accordance with GAAP. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies.

We believe Adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

• EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, income taxes, depreciation and amortization, which can vary substantially from company-to-company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and

• investors commonly adjust EBITDA information to eliminate the effect of disposals of property and equipment, impairments, restructuring and stock-based compensation which vary widely from company-to-company and impair comparability.

Our management uses Adjusted EBITDA:

• as a measure of operating performance to assist in comparing performance from period-to-period on a consistent basis;

• as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and

• in communications with the board of directors, analysts and investors concerning our financial performance.

Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is presented as we understand certain investors use it as one measure of our historical ability to service debt. Also, Adjusted EBITDA is used in our debt covenants.

Although we believe, for the foregoing reasons, that our presentation of the non-GAAP financial measure provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measure should only be considered in addition to, and not as a substitute for, or superior to, any measure of financial performance prepared in accordance with GAAP.

The following table reconciles net loss attributable to INAP shareholders as presented in our condensed consolidated statements of operations and comprehensive loss to Adjusted EBITDA (non-GAAP) (in thousands): 

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net revenues	$	73,134		$	81,962		$	146,698		$	156,163
Net loss attributable to INAP shareholders	$	(18,555	)	$	(14,279	)	$	(38,199	)	$	(28,567	)
Depreciation and amortization	21,955			22,712			44,133			43,870
Interest expense	19,218			16,739			36,665			32,343
(Benefit) provision for income taxes	(211		)	141			(314		)	241
Other expense (income)	118			31			322			(184		)
(Gain) loss on disposal of property and equipment, net	—			(75		)	528			(29		)
Exit activities, restructuring and impairments	231			826			1,647			793
Stock-based compensation	1,011			1,374			1,901			2,232
Acquisition costs(1)	163			306			304			2,864
Strategic alternatives and related costs(2)	20			23			42			50
Organizational realignment costs(3)	470			431			856			671
Non-income tax contingency	—			800			150			800
Adjusted EBITDA	$	24,420		$	29,029		$	48,035		$	55,084

⁽¹⁾ On February 28, 2018, we acquired SingleHop LLC which resulted in higher acquisition costs for the three and six months

ended June 30, 2018.

⁽²⁾  Primarily legal and other professional fees incurred in connection with the evaluation by our board of directors of strategic alternatives and related shareholder communications. We include these costs in sales, general and administrative ("SG&A") in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2019 and 2018.

⁽³⁾  Primarily professional fees, employee retention bonus and severance and executive search costs incurred related to our

organization realignment. We include these costs in SG&A in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2019 and 2018.

Liquidity and Capital Resources

Liquidity

On an ongoing basis, we require capital to fund our current operations, make acquisitions, expand our IT infrastructure services, upgrade existing facilities or establish new facilities, products, services or capabilities and to fund customer support initiatives, as well as various advertising and marketing programs to facilitate sales. As of June 30, 2019, we had $25.2 million of borrowing capacity under our 2017 Revolving Credit Facility. Together with our cash and cash equivalents, the Company’s liquidity as of June 30, 2019 was $35.7 million.

As of June 30, 2019, we had a deficit of $17.5 million in working capital, which represented an excess of current liabilities over current assets. We believe that cash flows from operations, together with our cash and cash equivalents and borrowing capacity under our 2017 Revolving Credit Facility (as defined below), will be sufficient to meet our cash requirements for the next 12 months and for the foreseeable future. If our cash requirements vary materially from our expectations or if we fail to generate sufficient cash flows from our operations or if we fail to implement our cost reduction strategies, we may require additional financing sooner than anticipated. We can offer no assurance that we will be able to obtain additional financing on commercially favorable terms, or at all, and provisions in our 2017 Credit Agreement limit our ability to incur additional indebtedness. Our anticipated uses of cash include capital expenditures in the range of $25.0 to $30.0 million in 2019, working capital needs and required payments on our 2017 Credit Agreement and other commitments. We continue to optimize our cost structure through implementing cost reductions through such strategies as reorganizing our business units, right-sizing headcounts and streamlining other operational aspects of our business. However, there can be no guarantee that we will achieve any of our cost reduction goals. 

We have a history of quarterly and annual period net losses. During the three and six months ended June 30, 2019, we had a net loss attributable to INAP stockholders of $18.6 million and $38.2 million, respectively. As of June 30, 2019, our accumulated deficit was $1.4 billion. We may not be able to achieve profitability on a quarterly basis, and our failure to do so may adversely affect our business, including our ability to raise additional funds.

Our sources of capital include, but are not limited to, funds derived from selling our services and results of our operations, sales of assets, borrowings under our credit arrangement, the issuance of debt or equity securities or other possible recapitalization transactions. Our short term and long term liquidity depend primarily upon the funds derived from selling our services, working capital management (cash, accounts receivable, accounts payable and other liabilities), bank borrowings, reducing costs and bookings net of churn. In an effort to increase liquidity and generate cash, we may pursue sales of non-strategic assets, reduce our expenses, amend our credit facility, pursue sales of debt or equity securities or other recapitalization transactions, or seek other external sources of funds. 

Capital Resources

Credit Agreement

On April 6, 2017, we entered into a new Credit Agreement (the "2017 Credit Agreement"), which provides for a $300.0 million term loan facility ("2017 term loan") and a $25.0 million Revolving Credit Facility (the "2017 Revolving Credit Facility"). The proceeds of the 2017 term loan were used to refinance the Company's existing credit facility and to pay costs and expenses associated with the 2017 Credit Agreement.

Certain portions of the refinancing transaction were considered an extinguishment of debt and certain portions were considered a modification. A total of $5.7 million was paid for debt issuance costs related to the 2017 Credit Agreement. Of the $5.7 million in costs paid, $1.9 million related to the exchange of debt and was expensed, $3.3 million related to 2017 term loan third party costs and will be amortized over the 2017 term loan and $0.4 million prepaid debt issuance costs related to the 2017 Revolving Credit Facility and will be amortized over the term of the 2017 Revolving Credit Facility. In addition, $4.8 million of debt discount and debt issuance costs related to the previous credit facility were expensed due to the extinguishment of that credit facility. The maturity date of the 2017 term loan is April 6, 2022 and the maturity date of the 2017 Revolving Credit Facility is October 6, 2021.

As of June 30, 2019, the outstanding balance of the 2017 term loan and the 2017 Revolving Credit Facility was $413.3 million and $6.0 million, respectively. The interest rate on the 2017 term loan and the 2017 Revolving Credit Facility as of June 30, 2019 was 9.40% and 11.50%, respectively.

Borrowings under the 2017 Credit Agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, a base rate or an adjusted LIBOR rate. The applicable margin for loans under the 2017 revolving credit facility is 6.0% for loans bearing interest calculated using the base rate ("Base Rate Loans") and 7.0% for loans bearing interest calculated using the adjusted LIBOR rate. The applicable margin for loans under the 2017 term loan is 4.75% for Base Rate Loans and 5.75% for adjusted

LIBOR rate loans. The base rate is equal to the highest of (a) the adjusted U.S. Prime Lending Rate as published in the Wall Street Journal, (b) with respect to term loans issued on the closing date, 2.00%, (c) the federal funds effective rate from time to time, plus 0.50%, and (d) the adjusted LIBOR rate, as defined below, for a one-month interest period, plus 1.00%. The adjusted LIBOR rate is equal to the rate per annum (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered in the interbank Eurodollar market for the applicable interest period (one, two, three or six months), as quoted on Reuters screen LIBOR (or any successor page or service). The financing commitments of the lenders extending the 2017 Revolving Credit Facility are subject to various conditions, as set forth in the 2017 Credit Agreement. As of June 30, 2019, the Company has been in compliance with all covenants.  

First Amendment

On June 28, 2017, the Company entered into an amendment to the 2017 Credit Agreement ("First Amendment"), by and among the Company, each of the lenders party thereto, and Jefferies Finance LLC, as Administrative Agent. The First Amendment clarified that for all purposes the Company's liabilities pursuant to any lease that was treated as rental and lease expense, and not as a capital lease obligation or indebtedness on the closing date of the 2017 Credit Agreement, would continue to be treated as a rental and lease expense, and not as a capital lease obligations or indebtedness, for all purposes of the 2017 Credit Agreement, notwithstanding any amendment of the lease that results in the treatment of such lease as a capital lease obligation or indebtedness for financial reporting purposes.

Second Amendment

On February 6, 2018, the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent, entered into a Second Amendment to Credit Agreement (the "Second Amendment") that amended the 2017 Credit Agreement.

The Second Amendment, among other things, amends the 2017 Credit Agreement to (i) permit the Company to incur incremental term loans under the 2017 Credit Agreement of up to $135.0 million to finance the Company's acquisition of SingleHop and to pay related fees, costs and expenses, and (ii) revise the maximum total net leverage ratio and minimum consolidated interest coverage ratio covenants.  The financial covenant amendments became effective upon the consummation of the SingleHop acquisition, while the other provisions of the Second Amendment became effective upon the execution and delivery of the Second Amendment. This transaction was considered a modification.

A total of $1.0 million was paid for debt issuance costs related to the Second Amendment. Of the $1.0 million in costs paid, $0.2 million related to the payment of legal and professional fees which were expensed, $0.8 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Third Amendment

On February 28, 2018, INAP entered into the Incremental and Third Amendment to the Credit Agreement among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the "Third Amendment"). The Third Amendment provides for a funding of the new incremental term loan facility under the 2017 Credit Agreement of $135.0 million (the "Incremental Term Loan"). The Incremental Term Loan has terms and conditions identical to the existing loans under the 2017 Credit Agreement, as amended. Proceeds of the Incremental Term Loan were used to complete the acquisition of SingleHop and to pay fees, costs and expenses related to the acquisition, the Third Amendment and the Incremental Term Loan. This transaction was considered a modification. 

A total of $5.0 million was paid for debt issuance costs related to the Third Amendment. Of the $5.0 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $4.9 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Fourth Amendment

On April 9, 2018, the Company entered into the Fourth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the "Fourth Amendment"). The Fourth Amendment amends the 2017 Credit Agreement to lower the interest rate margins applicable to the outstanding term loans under the 2017 Credit Agreement by 1.25%. This transaction was considered a modification.

A total of $1.7 million was paid for debt issuance costs related to the Fourth Amendment. Of the $1.7 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $1.6 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Fifth Amendment

On August 28, 2018, the Company entered into the Fifth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the "Fifth Amendment"). The Fifth Amendment amended the 2017 Credit Agreement by increasing the aggregate revolving commitment capacity by $10.0 million to $35.0 million.

Sixth Amendment

On May 8, 2019, the Company entered into the Sixth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the “Sixth Amendment”). The Sixth Amendment (i) adjusted the applicable interest rates under the 2017 Credit Agreement, (ii) modified the maximum Total Net Leverage Ratio requirements and the minimum Consolidated Interest Coverage Ratio requirements and (iii) modified certain other covenants.

Pursuant to the Sixth Amendment, the applicable margin for adjusted base rate term loans was increased from 4.75% per annum to 5.25% per annum and for Eurodollar term loans was increased from 5.75% per annum to 6.25% per annum, with such interest payable in cash, and in addition such term loans bear interest payable in kind at the rate of 0.75% per annum.

The Sixth Amendment also made the following modifications:

• An additional basket of $500,000 for finance lease obligations.

• The maximum amount of permitted asset dispositions was decreased from $150,000,000 to $50,000,000.

• The amount of net cash proceeds from asset sales that may be reinvested is limited to $2,500,000 in any fiscal year of the Company, with net cash proceeds that are not so reinvested used to prepay loans under the Credit Agreement.

• The restricted payment basket was decreased from $5,000,000 to $1,000,000.

The maximum total leverage ratio increases to 6.80 to 1 as of June 30, 2019, 6.90 to 1 as of September 30, 2019 - December 31, 2019, decreases to 6.75 to 1 as of March 31, 2020, 6.25 to 1 as of June 30, 2020, 6.00 to 1 as of September 30, 2020, 5.75 to 1 as of December 31, 2020, 5.50 to 1 as of March 2021, 5.00 to 1 as of June 30, 2021 and 4.50 to 1 as of September 30, 2021 and thereafter.

The minimum consolidated interest coverage ratio decreases to 1.75 to 1 as of June 30, 2019, 1.70 to 1 as of September 30, 2019 - March 31, 2020, increases to 1.80 to 1 as of June 30, 2020, 1.85 to 1 as of September 2020 and 2.00 to 1 as of December 31, 2020 and thereafter. This transaction was considered a modification.

A total of $2.9 million was paid for debt issuance costs related to the Sixth Amendment. Of the $2.9 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $2.8 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Cash Flows

Operating Activities

During the six months ended June 30, 2019, net cash provided by operating activities decreased $4.5 million to $14.1 million primarily due to the changes in operating assets and liabilities. Net loss adjusted for non-cash items was $15.9 million and $20.1 million for the six months ended June 30, 2019 and 2018, respectively. We expect to use cash flows from operating activities together with our 2017 Revolving Credit Facility to fund our capital expenditures and other requirements and to meet our other commitments and obligations, including outstanding debt.

Investing Activities

During the six months ended June 30, 2019, net cash used in investing activities was $16.4 million, primarily due to capital expenditures related to the continued expansion and upgrade of our data centers and network infrastructure.

Financing Activities

During the six months ended June 30, 2019, net cash used in financing activities was $4.9 million, primarily due to principal payments of $6.9 million on the credit facilities and finance lease obligations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our objective in managing interest rate risk is to maintain favorable long-term fixed rate or a balance of fixed and variable rate debt within reasonable risk parameters. As of June 30, 2019, the outstanding balance of our long-term debt was $413.3 million on the 2017 term loan and $6.0 million on the 2017 Revolving Credit Facility.

At June 30, 2019, the interest rate on the 2017 term loan and 2017 Revolving Credit Facility was 9.40% and 11.50%, respectively. We summarize the 2017 Credit Agreement in “Liquidity and Capital Resources—Capital Resources—Credit Agreement.” We are required to pay a commitment fee at a rate of 0.50% per annum on the average daily unused portion of the 2017 Revolving Credit Facility, payable quarterly in arrears. In addition, we are required to pay certain participation fees and fronting fees in connection with standby letters of credit issued under the 2017 Revolving Credit Facility. 

We estimate that a change in the interest rate of 100 basis points would change our interest expense and payments by approximately $4.3 million per year, assuming we do not increase our borrowings.

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee, or ARRC, has proposed that the Secured Overnight Financing Rate, or SOFR, is the rate that represents best practice as the alternative to LIBOR for use in derivatives and other financial contracts that are currently indexed to LIBOR. The ARRC has proposed a paced market transition plan to SOFR from LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. At June 30, 2019, the Company does have contracts that are indexed to LIBOR, including the Credit Agreement, and continues to monitor this activity and evaluate the related risks.

Foreign Currency Risk

As of June 30, 2019, the majority of our revenue was in U.S. dollars. However, our results of operations and cash flows are subject to fluctuations in foreign currency exchange rates. We also have exposure to foreign currency transaction gains and losses as the result of certain receivables due from our foreign subsidiaries. During the three and six months ended June 30, 2019, we realized a foreign currency loss of $0.1 million and $0.3 million, respectively, which we included in “Loss (gain) on foreign currency, net,” and we recorded an unrealized foreign currency translation loss of less than $0.1 million and a gain of $0.2 million, respectively, which we included in “Foreign currency translation adjustment,” both in the accompanying condensed consolidated statements of operations and comprehensive loss. As we grow our international operations, our exposure to foreign currency risk will become more significant.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"). Disclosure controls are designed to provide reasonable assurance that we are able to record, process, summarize and report the information required to be disclosed in our reports under the Exchange Act within the time periods specified in SEC rules and forms. Based on their evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

Effective January 1, 2019, we adopted the new lease standard as discussed in Note 2, "Recent Accounting Pronouncements" and Note 4, "Leases" to the notes to condensed consolidated financial statements. As a result of our adoption of the new lease standard,

we have implemented a new lease accounting system, accounting policies and processes which changed the Company's internal controls over financial reporting for lease accounting.

There were no other changes in our internal control over financial reporting during the quarter ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to legal proceedings, claims and litigation arising in the ordinary course of business. Although the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse impact on our financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

We believe that there have been no material changes from the Risk Factors we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 18, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information regarding our repurchases of securities for each calendar month in the three months ended June 30, 2019:

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
April 1 to 30, 2019	7,918	$	4.61	—	—
May 1 to 31, 2019	295	3.27		—	—
June 1 to 30, 2019	1,266	2.76		—	—
Total	9,479			—	—

⁽¹⁾  These shares were surrendered to us to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock and restricted stock units previously issued to employees.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report:

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed June 6, 2019).
3.2	Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed June 6, 2019).
10.1+	Cash Award Agreement, dated as of April 8, 2019, by and between Peter D. Aquino and the Company (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed April 9, 2019).
10.2	Sixth Amendment to Credit Agreement, dated as of May 8, 2019, among Internap Corporation, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed May 9, 2019).
10.3+#	Release Agreement, dated May 31, 2019, by and between the Company and Joanna Lanni
10.4+	Amendment No. 3 to Employment Agreement, dated June 18, 2019, by and between Peter D. Aquino and Internap Corporation (incorporated by reference to Exhibit 10.1 to the Company's Current Report, filed on June 18, 2019)
10.5+#	Amended and Restated Internap Corporation 2017 Stock Incentive Plan
10.6+#	Amended and Restated Internap Corporation 2014 Stock Incentive Plan
10.7+#	Form of Stock Grant Certificate for Restricted Stock Granted to U.S. Employees (under the Amended and Restated 2017 Stock Incentive Plan)
10.8+#	Form of Stock Grant Certificate for Restricted Stock Granted to Canadian Employees (under the Amended and Restated 2017 Stock Incentive Plan)
10.9+#	Form of Stock Grant Certificate for Restricted Stock Granted to Directors (under the Amended and Restated 2017 Stock Incentive Plan
31.1	Rule 13a-14(a)/15d-14(a) Certification, executed by Peter D. Aquino, President and Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification, executed by James C. Keeley, Chief Financial Officer.
32.1*	Section 1350 Certification, executed by Peter D. Aquino, President and Chief Executive Officer.
32.2*	Section 1350 Certification, executed by James C. Keeley, Chief Financial Officer.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

*      This exhibit is furnished and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of

1934, as amended (15 U.S.C. 78r) ("Exchange Act"), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

#    Filed herewith.

+      Management contract and compensatory plan and arrangement.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INTERNAP CORPORATION
By:	/s/ James C. Keeley
	James C. Keeley
	(Executive Vice President, Chief Financial Officer)
	Date: August 8, 2019

EX-10.3+#

Release Agreement

This Release Agreement (the “Agreement”), by and between Internap Corporation (the “Company”) and Joanna Lanni (“You” or “Your”) (the Company and You collectively referred to as the “Parties”) is entered into and effective as of May 31, 2019 (the “Effective Date”).

1.Separation Date. The Parties acknowledge and agree that Your employment with the Company terminated effective as of May 31, 2019 (the “Separation Date”).

2.Separation Payment. Provided that You satisfy the conditions of this Agreement, including the return of all Company property, and do not revoke this Agreement, the Company shall pay You a separation payment equal to Fifty Thousand Dollars ($50,000.00), minus all applicable withholdings, including taxes and Social Security (the “Separation Payment”). The Separation Payment shall be paid on the first payroll date that is at least eight (8) days after You return an executed version of this Agreement to the Company’s Chief Administrative Officer in the Human Resources Department, at 250 Williams Street, Suite E-100, Atlanta, Georgia, 30303. Because You are no longer employed, Your rights to any particular employee benefit shall be governed by applicable law and the terms and provisions of the Company’s various employee benefit plans and arrangements. You acknowledge that the Separation Date shall be the date used in determining benefits under all Company employee benefit plans. The Company’s obligation to provide You with the payments set forth above shall terminate immediately upon any breach by You of this Agreement or any post-termination obligations to which You are subject.

Notwithstanding anything to the contrary set forth above, if You breach this Agreement, You acknowledge and agree that: (a) You shall return to the Company ninety-five percent (95%) of the Separation Payment within ten (10) calendar days after receiving notice from the Company of Your breach, as such amount is not deemed earned absent Your full compliance with this Agreement; and (b) the remaining five percent (5%) of the Separation Payment shall constitute full and complete consideration sufficient to support enforcement of this Agreement against You, including, but not limited to, enforcement of Your release of claims set forth below.

3.Release. In exchange for the consideration set forth above, You release and discharge the Company from any and all claims or liability, whether known or unknown, arising out of any event, act or omission occurring on or before the day You sign this Agreement, including, but not limited to, claims to damages for pain and suffering and emotional harm arising out of any promise, agreement, contract, or common law, claims arising out of Your employment or the cessation of Your employment, claims arising out of the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, claims for breach of contract, express or implied, or breach of the covenant of good faith and fair dealing, express or implied, tort, defamation, misrepresentation, fraud, negligent or intentional infliction of emotional distress, or negligence, negligent hiring, negligent retention, negligent supervision, negligent training, employment discrimination, retaliation, or harassment, as well as any other statutory or common law claims, at law or in equity, recognized under any federal, state, or local law, including, but not limited to, federal and state wage and hour laws, federal and state whistleblower laws, New Jersey Civil Rights Act, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Employment Retirement Income Security Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act, OSHA, the New Jersey Law Against Discrimination, New Jersey Family Leave Act, the New Jersey Paid Family Leave Act, New Jersey Worker Freedom from Employer Intimidation Act, The Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ Warn”), and the Conscientious Employee Protection Act, as each may be amended from time to time. You also release any claims for unpaid back pay, sick pay, vacation pay, expenses, bonuses, claims arising out of or relating to equity or other ownership interest in the Company, claims to commissions, attorneys’ fees or any other compensation. You agree that You are not entitled to any additional payment or benefits from the Company, except as set forth in this Agreement. You further agree that You have suffered no harassment, retaliation, employment discrimination, or work-related injury or illness and that you do not believe that this Agreement is a subterfuge to avoid disclosure of sexual harassment or gender discrimination allegations or to waive such claims. You further acknowledge and represent that You (i) have been fully paid (including, but not limited to, any overtime to which You are entitled, if any) for hours You worked for the Company, and (ii) do not claim that the Company violated or denied Your rights under the Fair Labor Standards Act. Notwithstanding the foregoing, the release of claims set forth in this Section does not waive Your right to receive benefits under the Company’s 401(k) or pension plans, if any, that either (a) have accrued or vested prior to the Separation Date, or (b) are intended, under the terms of such plans, to survive Your separation from the Company.

4.ADEA/OWBPA Waiver. By agreeing to this provision, You release and waive any right or claim against the Company¹ arising out of Your employment or the termination of Your employment with the Company under the Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq. (“ADEA”), and the Older Workers Benefit Protection Act, 29 U.S.C. § 621 et seq. (“OWBPA”) (such release and waiver referred to as the “Waiver”). You understand and agree that, (i) this Agreement is written in a manner that You understand; (ii) You do not release or waive rights or claims that may arise after You sign this Agreement; (iii) You waive rights and claims You may have had under the OWBPA and the ADEA, but only in exchange for payments and/or benefits in addition to anything of value to which You are already entitled; (iv) You are advised to consult with an attorney before signing this Agreement; (v) You have twenty-one (21) calendar days from receipt of this Agreement to consider whether to sign it (the “Offer Period”). The Parties agree that the Company may revoke this offer at any time. However, if You sign before the end of the Offer Period, You acknowledge that Your decision to do so was knowing, voluntary, and not induced by fraud, misrepresentation, or a threat to withdraw, alter, or provide different terms prior to the expiration of the Offer Period. You agree that changes or revisions to this Agreement, whether material or immaterial, do not restart the running of the Offer Period; (vi) You have seven (7) calendar days after signing this Agreement to revoke this Agreement (the “Revocation Period”). If You revoke, the Agreement shall not be effective or enforceable and You shall not be entitled to the consideration set forth in this Agreement. To be effective, the revocation must be in writing and received by the Company’s Chief Administrative Officer in the Human Resources Department, at 250 Williams Street, Suite E-100, Atlanta, Georgia, 30303, prior to expiration of the Revocation Period; and (vii) this Waiver shall not become effective or enforceable until the Revocation Period has expired.

5.No Admission of Liability. This Agreement is not an admission of liability by the Company.¹ The Company denies any liability whatsoever. The Company enters into this Agreement to reach a mutual agreement concerning Your separation from the Company.

6.Non-Disparagement/Future Employment. You shall not make any disparaging or defamatory statements, whether written or oral, regarding the Company.¹ You agree that the Company has no obligation to consider You for employment should You apply in the future.

7.Restrictive Covenants. You acknowledge and agree that: (a) Your position was a position of trust and responsibility with access to Confidential Information, Trade Secrets, and information concerning employees, customers, and prospective customers of the Company; (b) the Trade Secrets and Confidential Information, and the relationship between the Company and its Employees, customers, and prospective customers, are valuable assets of the Company which may not be used for any purpose other than the Company’s Business; (c) the names of customers and prospective customers are considered Confidential Information which constitutes valuable, special, and unique property of the Company; (d) customer and prospective customer lists, and customer and prospective customer information, which have been compiled by the Company represent a material investment of the Company’s time and money; and (e) the restrictions contained in this Agreement, including, but not limited to, the restrictive covenants set forth in this Section, are reasonable and necessary to protect the legitimate business interests of the Company, and they will not impair or infringe upon Your right to work or earn a living.

(a)Trade Secrets and Confidential Information. You shall not: (i) use, disclose, reverse engineer, divulge, sell, exchange, furnish, give away, or transfer in any way the Trade Secrets or the Confidential Information for any purpose other than the Company’s Business, except as authorized in writing by the Company; (ii) retain any Trade Secrets or Confidential Information, including any copies existing in any form (including electronic form) that are in Your possession or control, or (iii) destroy, delete, or alter the Trade Secrets or Confidential Information without the Company’s prior written consent. The obligations under this Agreement shall: (i) with regard to the Trade Secrets, remain in effect as long as the information constitutes a trade secret under applicable law; and (ii) with regard to the Confidential Information, remain in effect for so long as such information constitutes Confidential Information as defined in this Agreement. The confidentiality, property, and proprietary rights protections available in this Agreement are in addition to, and not exclusive of, any and all other rights to which the Company is entitled under federal and state law, including, but not limited to, rights provided under copyright laws, trade secret and confidential information laws, and laws concerning fiduciary duties. Notwithstanding anything to the contrary set forth in this Agreement, pursuant to the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)(1)), no individual shall be held criminally or civilly liable under federal or state law for the disclosure of a trade secret that: (1) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

(b)Non-Recruit of Employees. During the Restricted Period, You shall not, directly or indirectly, solicit, recruit, or induce any Employee to (i) terminate his or her employment relationship with the Company, or (ii) work for any other person or entity engaged in the Business. For the avoidance of doubt, the foregoing restriction shall also include prohibiting You from disclosing to any third party the names, background information, or qualifications of any Employee, or otherwise identifying any Employee as a potential candidate for employment. The restrictions set forth in this Section shall apply only to Employees (a) with whom You had Material Interaction, or (b) You, directly or indirectly, supervised.

(c)Non-Solicitation of Customers. During the Restricted Period, You shall not, directly or indirectly, solicit any Customer of the Company for the purpose of selling or providing any products or services competitive with the Business. The restrictions set forth in this Section apply only to Customers (1) with whom or which You dealt on behalf of the Company; (2) whose dealings with the Company were coordinated or supervised by You; (3) about whom You obtained Confidential Information in the ordinary course of business as a result of Your association with the Company; or (4) who receives products or services authorized by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for You within eighteen (18) months prior to the date of Your termination.

(d)Non-Solicitation of Prospective Customers. During the Restricted Period, You shall not, directly or indirectly, solicit any Prospective Customer of the Company for the purpose of selling or providing any products or services competitive with the Business. The restrictions set forth in this Section apply only to Prospective Customers (1) with whom or which You dealt on behalf of the Company; (2) whose dealings with the Company were coordinated or supervised by You; or (3) about whom You obtained Confidential Information in the ordinary course of business as a result of Your association with the Company.

(e)Definitions. For purposes of this Section 7 only, capitalized terms shall be defined as follows:

(i)“Business” means the business of providing information technology (IT) infrastructure services that enable businesses to securely store, host, access and deliver their online applications and media content through the Internet. Such services include, but are not limited to: (A) Internet connectivity, (B) colocation services, (C) hosting services, (D) CDN services, and (E) “Cloud” computing services.

(ii)“Confidential Information” means (1) information of the Company, to the extent not considered a Trade Secret under applicable law, that (a) relates to the business of the Company, (b) was disclosed to You or of which You became aware of as a consequence of Your relationship with the Company, (c) possesses an element of value to the Company, and (d) is not generally known to the Company’s competitors, and (2) information of any third party provided to the Company which the Company is obligated to treat as confidential, including, but not limited to, information provided to the Company by its licensors, suppliers, or customers. Confidential Information includes, but is not limited to, (i) methods of operation, (ii) price lists, (iii) financial information and projections, (iv) personnel data, (v) future business plans, (vi) the composition, description, schematic or design of products, future products or equipment of the Company or any third party, (vii) work product, (viii) advertising or marketing plans, and (ix) information regarding independent contractors, employees, clients, licensors, suppliers, Customers, Prospective Customers, or any third party, including, but not limited to, the names of Customers and Prospective Customers, Customer and Prospective Customer lists compiled by the Company, and Customer and Prospective Customer information compiled by the Company. Confidential Information shall not include any information that (x) is or becomes generally available to the public other than as a result of an unauthorized disclosure, (y) has been independently developed and disclosed by others without violating this Agreement or the legal rights of any party, or (z) otherwise enters the public domain through lawful means.

(iii)“Customer” means any person or entity to which the Company has sold its products or services.

(iv)“Employee” means any person who (i) is employed by the Company at the time Your employment with the Company ends, or (ii) was employed by the Company during the last year of Your employment with the Company (or during Your employment if employed less than a year).

(v)“Material Interaction” means any interaction with an Employee which related, directly or indirectly, to the performance of Your duties or the Employee’s duties for the Company.

(vi)“Prospective Customer” means any person or entity to which the Company has solicited to purchase the Company’s products or services within the last twelve (12) months.

(vii)“Restricted Period” means six (6) months after the Separation Date.

(viii)“Trade Secrets” means information of the Company, and its licensors, suppliers, clients, and customers, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, a list of actual customers, clients, licensors, or suppliers, or a list of potential customers, clients, licensors, or suppliers which is not commonly known by or available to the public and which information (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

(f)Injunctive Relief. If You breach or threaten to breach any portion of this Section, You agree that: (a) the Company would suffer irreparable harm; (b) it would be difficult to determine damages, and money damages alone would be an inadequate remedy for the injuries suffered by the Company; and (c) if the Company seeks injunctive relief to enforce this Agreement, You shall waive and shall not (i) assert any defense that the Company has an adequate remedy at law with respect to the breach, (ii) require that the Company submit proof of the economic value of any Trade Secret or Confidential Information, or (iii) require the Company to post a bond or any other security. Nothing contained in this Agreement shall limit the Company’s right to any other remedies at law or in equity.

(g)Independent Enforcement. Each of the covenants set forth in this Section 7 of this Agreement shall be construed as an agreement independent of (i) each of the other covenants set forth in Section 7, (ii) any other agreements, or (iii) any other provision in this Agreement, and the existence of any claim or cause of action by You against the Company, whether predicated on this Agreement or otherwise, regardless of who was at fault and regardless of any claims that either You or the Company may have against the other, shall not constitute a defense to the enforcement by the Company of any of the covenants set forth in Section 7 above. The Company shall not be barred from enforcing any of the covenants set forth in Section 7 above by reason of any breach of (y) any other part of this Agreement, or (z) any other agreement with You.

8.Confidentiality. You acknowledge and agree that neither You nor anyone acting on Your behalf has made or will make any disclosures concerning the existence or terms of this Agreement to any person or entity, including, but not limited to, any representative of the media, Internet web page, social networking site, “blog” or “chat room,” judicial or administrative agency or body, business entity or association, except: (a) Your spouse; (b) Your attorneys, accountants or financial advisors; or (c) any court or government agency pursuant to an official request by such government agency, court order or legally enforceable subpoena. If You are contacted, served or learn that You will be served with a subpoena to compel Your testimony or the production of documents concerning this Agreement or Your employment with the Company, You agree to immediately notify the Company’s Chief Administrative Officer in the Human Resources Department, by telephone and as soon as possible thereafter in writing. If You disclose the existence or terms of this Agreement pursuant to sub-clauses (a) or (b) of this paragraph, You shall inform such person or entity (i) of this confidentiality provision, and (ii) to maintain the same level of confidentiality required by this provision. Any breach of this provision by such person or entity shall be considered a breach by You. You may not use this Agreement as evidence, except in a proceeding in which a breach of this Agreement is alleged.

9.Return of Company Property. You shall immediately return to the Company all of the Company’s property, including, but not limited to, computers, computer equipment, office equipment, mobile phone, keys, passcards, credit cards, confidential or proprietary lists (including, but not limited to, customer, supplier, licensor, and client lists), tapes, laptop computer, electronic storage device, software, computer files, marketing and sales materials, and any other property, record, document, or piece of equipment belonging to the Company. You shall not (a) retain any copies of the Company’s property, including any copies existing in electronic form, which are in Your possession, custody, or control, or (b) destroy, delete, or alter any Company property, including, but not limited to, any files stored electronically, without the Company’s prior written consent. The obligations contained in this Section shall also apply to any property which belongs to a third party, including, but not limited to, (i) any entity which is affiliated or related to the Company, or (ii) the Company’s customers, licensors, or suppliers.

10.Prohibited Post-Employment Activities. You acknowledge and agree that, effective as of the Separation Date: (a) You removed any reference to the Company as Your current employer from any source You control, either directly or indirectly, including, but not limited to, any Social Media such as LinkedIn, Facebook, Google+, Twitter, and/or Instagram, and (b) You are not permitted to represent Yourself as currently being employed by the Company to any person or entity, including, but not limited to, on any Social Media. For purposes of this Section, “Social Media” means any form of electronic communication (such as Web sites for social networking and micro blogging) through which users create online communities to share information, ideas, personal messages and other content, such as videos.

11.Attorneys’Fees. In the event of litigation relating to this Agreement other than a challenge to the Waiver, the Company shall, if it is the prevailing party, be entitled to recover attorneys’ fees and costs of litigation, in addition to all other remedies available at law or in equity.

12.Entire Agreement. This Agreement constitutes the entire agreement between the Parties. This Agreement supersedes any prior communications, agreements, or understandings, whether oral or written, between the Parties arising out of or relating to Your employment and the termination of that employment. The covenants set forth in Section 7 of this Agreement do not supersede any previous restrictive covenants entered into by the Parties. Any such prior restrictive covenants remain in full force and effect, and shall survive cessation of Your employment. Other than the terms of this Agreement, no other representation, promise, or agreement has been made with You to cause You to sign this Agreement.

13.Non-Interference. Notwithstanding anything to the contrary set forth in this Agreement or in any other agreement between You and the Company, nothing in this Agreement or in any other agreement shall limit Your ability, or otherwise interfere with Your rights, to (a) file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, or any other federal, state, or local governmental agency or commission (each a “Government Agency”), (b) communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company, (c) receive an award for information provided to any Government Agency, or (d) engage in activity specifically protected by Section 7 of the National Labor Relations Act, or any other federal or state statute or regulation.

14.Governing Law/Consent to Jurisdiction. The laws of the State of New Jersey, and the Defend Trade Secrets Act of 2016, where applicable, shall govern this Agreement. If New Jersey’s conflict of law rules would apply another state’s laws, the Parties agree that New Jersey law shall still govern. You agree that any and all claims arising out of or relating to this Agreement shall be brought solely and exclusively in a state or federal court of competent jurisdiction in New Jersey. You consent to the personal jurisdiction of the state and/or federal courts located in New Jersey. You waive (a) any objection to jurisdiction or venue, or (b) any defense claiming lack of jurisdiction or improper venue, in any action brought in such courts.

15.Voluntary Agreement. You acknowledge the validity of this Agreement and represent that You have the legal capacity to enter into this Agreement. You acknowledge and agree You have carefully read the Agreement, know and understand the terms and conditions, including its final and binding effect, and sign it voluntarily.

16.Execution. This Agreement may be executed in one or more counterparts, including, but not limited to, facsimiles and scanned images, and it shall not be necessary that the signatures of all Parties hereto be contained on any one counterpart. Each counterpart shall for all purposes be deemed to be an original, and each counterpart shall constitute this Agreement.

If the terms set forth in this Agreement are acceptable, please initial each page, sign below, and return the signed original to the Company on or before the 21^st day after You receive this Agreement. You understand that this Agreement can be revoked at any time prior to expiration of the Offer Period. If the Company does not revoke and does not receive a signed original on or before the 21^st day after You receive this Agreement, then this offer is automatically revoked and You shall not be entitled to the consideration set forth in this Agreement.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the Effective Date.

Internap Corporation By: /s/ John D. Filipowicz Its: SVP & Chief Administrative Officer Date: 6/3/2019 Joanna Lanni /s/ Joanna Lanni Date: 5/31/2019

1

JL

Employee’s Initials

EX-10.5+#

INTERNAP CORPORATION
AMENDED AND RESTATED
2017 STOCK INCENTIVE PLAN

Section 1
BACKGROUND AND PURPOSE

The purpose of this Plan is to promote the interest of the Company by authorizing the Committee to grant Restricted Stock and RSUs to Eligible Employees and Directors in order (1) to attract and retain Eligible Employees and Directors, (2) to provide an additional incentive to each Eligible Employee or Director to work to increase the value of Stock, (3) to provide each Eligible Employee or Director with a stake in the future of the Company which corresponds to the stake of each of the Company’s stockholders, and (4) to compensate Directors for their services to the Company. The Plan was originally effective June 21, 2017, was amended effective June 7, 2018, and is further amended and restated as of the Effective Date.

Section 2
DEFINITIONS

2.1   1933 Act — means the Securities Act of 1933, as amended.

2.2   1934 Act — means the Securities Exchange Act of 1934, as amended.

2.3   Affiliate  — means any organization (other than a Subsidiary) that would be treated as under common control with the Company under Section 414(C) of the Code if  “50 percent” were substituted for “80 percent” in the income tax regulations under Section 414(C) of the Code.

2.4   Board — means the Board of Directors of the Company.

2.5   Change Effective Date — means either the date which includes the “closing” of the transaction which makes a Change in Control effective if the Change in Control is made effective through a transaction which has a “closing” or the date a Change in Control is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change in Control is made effective other than through a transaction which has a “closing”.

2.6   Change in Control — means the happening of any of the following events:

(a) An acquisition, or a series of acquisitions within a 12 month period, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (an “Entity”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 30% or more of either (i) the then outstanding shares of Stock (the “Outstanding Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (d) of this Section;

(b) Any Entity becomes the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of more than 50% of either (i) the Outstanding Stock or (ii) the Outstanding Voting Securities; excluding, however, the following: (A) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (d) of this Section;

(c) A change in the composition of the Board such that the individuals who, as of the Effective Date of this Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the Effective Date of this Plan whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso), shall be considered as though such individual were a member of the Incumbent Board; and provided, further however, that any such individual whose initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be so considered as a member of the Incumbent Board;

(d) The consummation of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the assets of the Company (each, a “Corporate Transaction”); excluding however, such a Corporate Transaction pursuant to which (i) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a Parent) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Stock and Outstanding Voting Securities, as the case may be, (ii) no Entity (other than the Company, any employee benefit plan (or related trust) of the Company, such corporation resulting from such Corporate Transaction or, if reference was made to equity ownership of any Parent for purposes of determining whether clause (i) above is satisfied in connection with the applicable Corporate Transaction, such Parent) will beneficially own, directly or indirectly, 50% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to the Corporate Transaction, and (iii) individuals who were members of the Incumbent Board will immediately after the consummation of the Corporate Transaction constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction (or, if reference was made to equity ownership of any Parent for purposes of determining whether clause (i) above is satisfied in connection with the applicable Corporate Transaction, of the Parent); or

(e) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

2.7   Code — means the Internal Revenue Code of 1986, as amended.

2.8   Committee  — means the Compensation Committee of the Board which shall have at least 2 members, each of whom shall be appointed by and shall serve at the pleasure of the Board and shall come within the definition of a “non-employee director” under Rule 16b-3.

2.9   Company — means Internap Corporation and any successor to Internap Corporation.

2.10 Continuous Service — means that a Participant’s service with the Company or an Affiliate, whether as an employee, consultant or director, is not interrupted or terminated. A Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an employee, consultant or director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continued Service; provided, further, that that if any Stock Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. The Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence taken by a Participant.

2.11   [reserved]

2.12  Director  — means any member of the Board who is not an employee of the Company or a Parent or Subsidiary.

2.13   Effective Date — means the date that this Plan becomes effective in accordance with Section 4.

2.14   Eligible Employee — means an employee of the Company or any Subsidiary or Parent or Affiliate to whom one or more grants are made under this Plan.

2.15   Fair Market Value — means (a) the closing price of the Stock reported on Nasdaq on the date of grant, vesting or other determination date, as applicable, or if Nasdaq is closed on that date, the last preceding date on which Nasdaq was open for trading and on which shares of Stock were traded, (b) if the Stock is not listed on Nasdaq, the Fair Market Value shall be the closing price of the Stock on such other United States-based quotation system or stock exchange on which the Stock may be traded on the date of grant, vesting or other determination date, as applicable, or if such exchange is closed on that date, the last preceding date on which such exchange was open for trading and on which shares of Stock were actually traded, or (c) if no Fair Market Value of the Stock may be determined according to the preceding clauses (a) or (b), in the discretion of the Committee, any stock valuation method which complies with the requirements of Section 409A of the Code, based on the provisions of such statutory provision and any formal guidance issued by the Internal Revenue Service.

2.16   Parent  — means any corporation which is a parent corporation (within the meaning of Section 424(e) of the Code) of the Company.

2.17   Participant — means any Eligible Employee or Director.

2.18   Plan  — means this Internap Corporation 2017 Stock Incentive Plan as effective as of the date approved by the stockholders of the Company and as amended from time to time thereafter.

2.19   Preexisting Plans — means the Internap Network Services Corporation 2005 Incentive Stock Plan and the Internap Network Services Corporation 2014 Stock Incentive Plan.

2.20   Restricted Stock — means a grant of Stock under Section 7 while such Stock remains subject to forfeiture, restrictions on transfer, or other conditions pursuant to Section 7 or Section 8.

2.21   RSU  — means a grant under Section 7 of stock units designed to be satisfied or settled in either cash based on the Fair Market Value of the number of shares of Stock described in such grant or a number of shares of Stock equal to the number of stock units, which stock units, at the Committee’s discretion, may be subject to the risk of forfeiture, restrictions on transfer or other restrictions under Section 7 or Section 8.

2.22   Rule 16b-3 — means the exemption under Rule 16b-3 to Section 16(b) of the 1934 Act or any successor to such rule.

2.23   Stock — means the common stock of the Company.

2.24   Stock Award — means any Restricted Stock or RSU.

2.25   Stock Grant Certificate — means the certificate (whether in electronic or written form) which sets forth the terms and conditions of Restricted Stock or RSUs, which may be in one or more documents, including a notice of the award in addition to any certificate.

2.26   Subsidiary  — means a corporation which is a subsidiary corporation (within the meaning of Section 424(f) of the Code) of the Company.

Section 3
SHARES AND GRANT LIMITS

3.1   Shares Reserved. Subject to Section 11, there shall be reserved for issuance under this Plan 3,425,000 shares of Stock, such shares being comprised of the following:

(a)   Effective as of the Original Effective Date, 1,125,000 shares of Stock (originally 4,500,000, but reduced to 1,125,000 for the 4:1 reverse stock split effective November 21, 2017);

(b)   Effective June 7, 2018, an additional 1,000,000 shares of Stock; and

(c)   Effective upon the approval of the Company’s shareholders at the 2019 annual shareholders’ meeting, an additional 1,300,000 shares of Stock.

3.2   Source of Shares and Share Recycling.

(a)   Source. The shares of Stock described in Section 3.1 shall be reserved to the extent that the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company.

(b)   No Recycling of Shares. Except for shares related to cancelled or forfeited Stock Awards and Stock Awards payable, by their terms, only in cash, the Plan is intended to restrict the “recycling” of shares of Stock back into the Plan. The full number of shares of Stock underlying a Stock Award (other than Stock Awards payable, by their terms, only in cash) shall count against the numerical limits of the Plan. Shares of Stock exchanged or withheld to satisfy tax withholding obligations count against the numerical limits of the Plan.

3.3   Use of Proceeds. The proceeds which the Company receives from the sale of any shares of Stock under this Plan shall be used for general corporate purposes and shall be added to the general funds of the Company.

3.4   Grant Limits.

(a)   Individual Limit. No Participant in any calendar year shall be granted Stock Awards with respect to more than 350,000 shares of Stock (subject to Section 11).

(b)   Director Compensation Limits. The maximum number of shares of Stock subject to stock awards granted under the Plan or otherwise during any one fiscal year to any Director, taken together with any cash fees paid by the Company to such Director during such fiscal year for service as a Director, will not exceed $500,000 in total value (calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes), including for this purpose, the value of any Stock Awards that are received in lieu of all or a portion of any annual cash retainers or other similar cash based payments and excluding, for this purpose, the value of any dividend equivalent payments paid pursuant to any stock award granted in a previous fiscal year. Nothing in this section shall limit a Stock Award or other compensation in excess of the limit of this Section 3.4(b) to the extent such award or other compensation is approved by action of the Board whereby all affected Directors have recused themselves from such approval.

3.5   Preexisting Plans. No grants shall be made under the Preexisting Plans on or after the Original Effective Date, but the terms of any grant made under either Preexisting Plan prior to the Original Effective Date shall be interpreted under the terms of the Preexisting Plan under which such grant was made and not under this Plan.

3.6   Effect of Amendment and Restatement. Unless expressly provided for herein, any grant made under this Plan prior to the Effective Date shall be interpreted under the terms of the Plan in effect at the time of such grant.

Section 4
EFFECTIVE DATE

The Effective Date of this Plan shall be the date the stockholders of the Company (acting at a duly called meeting of such stockholders) approve this Plan. The Original Effective Date is June 21, 2017.

Section 5
COMMITTEE

This Plan shall be administered by the Committee. The Committee acting in its absolute discretion shall exercise such powers and take such action as expressly called for under this Plan and, further, the Committee shall have the power to interpret this Plan and any Stock Grant Certificate or other agreement or document ancillary to or in connection with this Plan and (subject to Section 12 and Section 13 and Rule 16b-3) to take such other action in the administration and operation of this Plan as the Committee deems equitable under the circumstances, which action shall be binding on the Company, on each affected Participant and on each other person directly or indirectly affected by such action. Furthermore, the Committee as a condition to making any grant under this Plan to any Participant shall have the right to require him or her to execute an agreement which makes the Participant subject to non-competition provisions and other restrictive covenants or conditions which run in favor of the Company. Such authority shall include, but not be limited to, selecting Stock Award recipients, establishing all Stock Award terms and conditions, including the terms and conditions set forth in Stock Grant Certificate, granting Stock Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of the Plan or any Stock Grant Certificate, and, subject to Article 18, adopting modifications and amendments to this Plan or any Stock Grant Certificate, including without limitation, any that are necessary to comply with or qualify for the laws of the countries and other jurisdictions in which the Company operates.

Section 6
ELIGIBILITY

All Participants shall be eligible for the grant of Restricted Stock and RSUs under this Plan.

Section 7
RESTRICTED STOCK AND RSUs

7.1   Committee Action. The Committee acting in its absolute discretion shall have the right to grant Restricted Stock and RSUs to Participants. The Committee may appoint a delegate and authorize such delegate to grant Restricted Stock and RSUs to Eligible Employees who are not “insiders” within the meaning of Rule 16b-3. Each grant of Restricted Stock or RSUs shall be evidenced by a Stock Grant Certificate, and each Stock Grant Certificate shall set forth the conditions, if any, under which Stock will be issued under the Restricted Stock grant or cash will be paid, or Stock will be issued, under the RSU grant and the conditions under which the Participant’s interest in any Stock or RSUs which have been issued will become non-forfeitable. Unless determined otherwise by the Committee, each unit awarded under an RSU grant will be equal to one share of Stock and shall entitle a Participant to either an equivalent number of shares of Stock or an amount of cash determined with reference to the Fair Market Value of an equivalent number of shares of Stock. To the extent determined by the Committee, RSUs may be satisfied or settled in cash, in shares of Stock or in a combination thereof. RSUs shall be settled no later than the 15^th day of the third month after the RSUs vest. Restricted Stock and RSUs granted pursuant to the Plan need not be identical but shall be consistent with the terms of the Plan.

7.2   Conditions.

(a)   Conditions to Issuance of Stock. The Committee acting in its absolute discretion may make the issuance of Stock under a Restricted Stock grant subject to the satisfaction of one, or more than one, condition which the Committee deems appropriate under the circumstances for Participants generally or for a Participant in particular, and the related Stock Grant Certificate shall set forth each such condition and the deadline for satisfying each such condition. Stock subject to a Restricted Stock grant shall be issued in the name of a Participant only after each such condition, if any, has been timely satisfied, and any Stock which is so issued shall be held by the Company pending the satisfaction of the forfeiture conditions, if any, under Section 7.2(b) for the related Restricted Stock grant.

(b)   Conditions on Forfeiture of Stock or Cash Payment. The Committee acting in its absolute discretion may make any cash payment due, or Stock to be issued, under an RSU grant or Stock issued in the name of a Participant under a Restricted Stock grant non-forfeitable subject to the satisfaction of one, or more than one, objective employment, performance or other conditions that the Committee acting in its absolute discretion deems appropriate under the circumstances for Participants generally or for a Participant in particular, and the related Stock Grant Certificate shall set forth each such condition, if any, and the deadline, if any, for satisfying each such condition. A Participant’s non-forfeitable interest in the shares of Stock underlying Restricted Stock or the cash payable, or Stock issuable, under an RSU grant shall depend on the extent to which he or she timely satisfies each such condition. If a share of Stock is issued under this Section 7.2(b) before a Participant’s interest in such share of Stock is non-forfeitable, (1) such share of Stock shall not be available for re-issuance under Section 3 until such time, if any, as such share of Stock thereafter is forfeited as a result of a failure to timely satisfy a forfeiture condition and (2) the Company shall have the right to condition any such issuance on the Participant first signing an irrevocable stock power in favor of the Company with respect to the forfeitable shares of Stock issued to such Participant in order for the Company to effect any forfeiture called for under the related Stock Grant Certificate. The Committee may provide in any performance-based Stock Award, at the time the performance goals are established, that any evaluation of performance shall exclude or otherwise objectively adjust for any specified circumstance or event that occurs during a performance period, including by way of example, but without limitation, the following: (a) asset write-downs or impairment charges; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) accruals for reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in then-current accounting principles; (f) extraordinary nonrecurring items as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report for the applicable year; (g) acquisitions or divestitures; and (h) foreign exchange gains and losses.

(c)   Minimum Vesting Period. The minimum vesting period over which Stock Awards shall vest is one (1) year from the date the award is granted; provided, that the Committee may grant Stock Awards for an aggregate number of shares of Stock not to exceed 5% of the total number of shares of Stock available for issuance under this Plan (determined as of the Original Effective Date, but for the avoidance of doubt, including any additional shares authorized by the shareholders) that have no vesting period or a vesting period which lapses in full prior to a Participant’s completion of less than one (1) year of service following the grant date; and provided further, that replacement awards pursuant to Sections 11 or 12 hereof shall not be subject to a minimum vesting period nor taken into account when determining the total shares available for issuance under the 5% exception described in the above. Notwithstanding the forgoing, (i) to the extent that a Director is leaving the Board after five (5) years of service as a Director and is age 62 or older, the Board, in its sole discretion, may elect to accelerate the vesting of any of such Director’s outstanding Stock Awards and such Stock Awards shall not be subject to a minimum vesting period nor taken into account when determining the total shares available for issuance under the 5% exception described in the above, and (ii) awards to Directors granted on or about the annual stockholders’ meeting may vest at the next annual stockholders’ meeting even if such period between the two meetings is less than one (1) year and shall be deemed to meet the one (1) year minimum vesting period provided for herein.

(d)   Termination of Status as Participant. Subject to Section 7.1 and this Section 7.2, a Stock Grant Certificate may provide for the vesting and settlement of Restricted Stock or RSUs after a Participant’s status as such has terminated for any reason whatsoever, including retirement, death or disability.

7.3   Dividends and Voting Rights.

(a)   Dividends, Voting, Liquidation and Other Rights. Except as otherwise provided in the Plan or in a Stock Grant Certificate, a participant shall have all voting, dividend, liquidation and other rights with respect to the shares of Stock issued to the Participant as a Restricted Stock award under this Section 7 upon the Participant becoming the holder of record of the Stock granted pursuant to such award. Dividends with respect to such award shall be reinvested into additional Restricted Stock, subject in all cases to deferral and payment on a contingent basis based on the Participant’s achievement of the performance objectives, time vesting, or other conditions with respect to such additional Restricted Stock.

(b)   Dividend Equivalents. The Committee may, at the date of the grant of a Stock Award, provide for the payment of dividend equivalents to a Participant either in cash or in shares of Stock, subject in all cases to deferral and payment on a contingent basis based on the Participant’s achievement of the performance objectives, time vesting or other conditions with respect to which such dividend equivalents are paid.

7.4   Satisfaction of Forfeiture Conditions. A share of Stock shall cease to be subject to a Restricted Stock grant at such time as a Participant’s interest in such Stock becomes non-forfeitable under this Plan, and the certificate or other evidence of ownership representing such share shall be transferred to the Participant as soon as practicable thereafter.

7.5   Code Section 162(m) Performance-Based Compensation. Any Stock Awards to covered employees that were in effect on or before November 2, 2017 that were intended to comply with the performance-based exception from the deductibility limitations as set forth in Code Section 162(m) shall be subject to the Code Section 162(m) provisions of the Plan that were in effect on the date such Stock Awards were granted.

Section 8
NON-TRANSFERABILITY

No Stock Award shall (absent the Committee’s consent) be transferable by a Participant other than by will or by the laws of descent and distribution. The person or persons to whom Restricted Stock or RSU are transferred by will or by the laws of descent and distribution (or with the Committee’s consent) thereafter shall be treated as the Participant.

Section 9
SECURITIES REGISTRATION

As a condition to the receipt of shares of Stock under this Plan, the Participant shall, if so requested by the Company, agree to hold such shares of Stock for investment and not with a view of resale or distribution to the public and, if so requested by the Company, shall deliver to the Company a written statement satisfactory to the Company to that effect. Furthermore, if so requested by the Company, the Participant shall make a written representation to the Company that he or she will not sell or offer for sale any of such Stock unless a registration statement shall be in effect with respect to such Stock under the 1933 Act and any applicable state securities law or he or she shall have furnished to the Company an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required. Certificates or other evidence of ownership representing the Stock transferred upon the lapse of the forfeiture conditions, if any, on any Restricted Stock may at the discretion of the Company bear a legend to the effect that such Stock has not been registered under the 1933 Act or any applicable state securities law and that such Stock cannot be sold or offered for sale in the absence of an effective registration statement as to such Stock under the 1933 Act and any applicable state securities law or an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required.

Section 10
LIFE OF PLAN

No Restricted Stock or RSU shall be granted under this Plan on or after the earlier of:

(a)   the tenth anniversary of the Original Effective Date, in which event this Plan otherwise thereafter shall continue in effect until all Stock issued under any Restricted Stock or RSU awards under this Plan have been forfeited or have become non-forfeitable, or

(b)   the date on which all of the Stock reserved under Section 3 has (as a result of the satisfaction of the forfeiture conditions, if any, on Restricted Stock or RSUs) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date.

Section 11
ADJUSTMENT

11.1   Capital Structure. The grant caps described in Section 3.4 and the number, kind or class (or any combination thereof) of shares of Stock subject to outstanding Stock Awards granted under this Plan shall be adjusted by the Committee in a reasonable and equitable manner to preserve immediately after

(a)   any equity restructuring or change in the capitalization of the Company, including, but not limited to, spin offs, stock dividends, large non-reoccurring dividends, rights offering, stock splits, or reverse stock splits, or

(b)   any other transaction described in Section 424(a) of the Code which does not constitute a Change in Control of the Company,

the aggregate intrinsic value of each such outstanding Stock Award immediately before such restructuring or recapitalization or other transaction.

11.2   Available Shares. If any adjustment is made with respect to any outstanding Stock Award under Section 11.1, then the Committee shall adjust the number, kind or class (or any combination thereof) of shares of Stock reserved under Section 3.1 for future Stock Awards and in order to ensure that there is a sufficient number, kind and class of shares of Stock available for issuance pursuant to each such Stock Award as adjusted under Section 11.1 without seeking the approval of the Company’s stockholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded. Furthermore, the Committee shall have the absolute discretion to further adjust such number, kind or class (or any combination thereof) of shares of Stock reserved under Section 3.1 in light of any of the events described in Section 11.1(a) and Section 11.1(b) to the extent the Committee acting in good faith determines that a further adjustment would be appropriate and proper under the circumstances and in keeping with the purposes of this Plan without seeking the approval of the Company’s stockholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded.

11.3   Transactions Described in Section 424 of the Code. If there is a corporate transaction described in Section 424(a) of the Code which does not constitute a Change in Control of the Company, the Committee as part of any such transaction shall have right to make Stock Awards (without regard to any limitations set forth under 3.4 of this Plan) to effect the assumption of, or the substitution for, outstanding restricted stock, restricted stock unit, option and stock appreciation right grants previously made by any other corporation to the extent that such corporate transaction calls for such substitution or assumption of such outstanding restricted stock, restricted stock unit, stock option and stock appreciation right grants previously made by such other corporation. Furthermore, if the Committee makes any such grants as part of any such transaction, the Committee shall have the right to increase the number of shares of Stock available for issuance under Section 3.1 by the number of shares of Stock subject to such grants without seeking the approval of the Company’s stockholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded.

11.4   Fractional Shares. If any adjustment under this Section 11 would create a fractional share of Stock or a right to acquire a fractional share of Stock under any Stock Award, such fractional share shall be disregarded and the number of shares of Stock reserved under this Plan and the number subject to any Stock Awards shall be the next lower number of shares of Stock, rounding all fractions downward. An adjustment made under this Section 11 by the Committee shall be conclusive and binding on all affected persons.

11.5   Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions of Stock Awards (including without limitation, any performance goals) in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 11.1 hereof) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits to be made available under the Plan.

Section 12
CHANGE IN CONTROL

Unless otherwise determined by the Committee, in the event of a Change in Control of the Company, effective as of the Change Effective Date, any surviving corporation or acquiring corporation shall assume all Stock Awards outstanding under the Plan or shall substitute similar stock awards (including an award to be settled in cash or to acquire the same consideration paid to the stockholders in the Change in Control for those Stock Awards outstanding under the Plan). In the event any surviving corporation or acquiring corporation does not assume such Stock Awards or substitute similar stock awards for those outstanding under the Plan as of the Change Effective Date, then with respect to Stock Awards held by any Participant whose employment or service with the Company has not terminated, the vesting of such Stock Awards shall be accelerated in full; provided, that (a) if any issuance or forfeiture condition described in a Stock Award relates to satisfying any performance goal and there is a target for such performance goal, such issuance or forfeiture condition shall be deemed satisfied under this Section 12 only to the extent of such target unless such target has been exceeded before the Change Effective Date, in which case such issuance or forfeiture condition shall be deemed satisfied to the extent that such target has been so exceeded, and (b) a Change in Control shall effect a Stock Award which is subject to Section 409A of the Code only if the Change in Control also constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code.

Section 13
AMENDMENT OR TERMINATION

This Plan may be amended by the Board or the Committee from time to time to the extent that the Board or Committee deems necessary or appropriate; provided, however, (a) no amendment shall be made absent the approval of the stockholders of the Company to the extent such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are listed and (b) no amendment shall be made to Section 12 on or after the date of any Change in Control which might adversely affect any rights which otherwise would vest on the related Change Effective Date. In addition, the Board and the Committee each may suspend granting or making any Stock Awards under this Plan at any time and may terminate this Plan at any time; provided, however, neither the Board nor the Committee shall have the right unilaterally to modify, amend or cancel any Stock Award granted before such suspension or termination unless (1) the Participant consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in Section 11.1 or Section 12.

Section 14
INDEMNIFICATION

Neither any member or former member of the Committee, nor any individual or group to whom authority or responsibility of the Committee is or has been delegated, shall be personally responsible or liable for any act or omission in connection with the performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the Plan. Each person who is or shall have been a member of the Committee and any other individual or group exercising delegated authority or responsibility with respect to the Plan shall be indemnified and held harmless by the Company from and against any cost, liability or expense imposed or incurred in connection with such person’s or the Committee’s taking or failing to take any action under the Plan or the exercise of discretion or judgment in the administration and implementation of the Plan. The indemnification obligation of the Company pursuant to this Section 14 shall not apply to the extent that it is adjudged that a person otherwise entitled to indemnification by the Company hereunder did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company. This Section 14 shall not be construed as limiting the Company’s or any subsidiary’s ability to terminate or otherwise alter the terms and conditions of the employment of an individual or group exercising delegated authority or responsibility with respect to the Plan, or to discipline any such person. Each such person shall be justified in relying on information furnished in connection with the Plan’s administration by any appropriate person or persons.

Section 15
MISCELLANEOUS

15.1   Stockholder Rights. No Participant shall have any rights as a stockholder of the Company as a result of the grant of a Stock Award pending the actual delivery of the Stock subject to such Stock Award to such Participant. A Participant’s rights as a stockholder in the shares of Stock which remain subject to forfeiture under Section 7.2(b) shall be set forth in the related Stock Grant Certificate. The Committee may specify in a Stock Grant Certificate that the Participant’s rights, payments and benefits with respect to such award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition to applicable vesting conditions of such award. Such events may include, without limitation: breach of non-competition, non-solicitation, confidentiality or other restrictive covenants that are contained in the Stock Grant Certificate or otherwise applicable to such Participant; a termination of a Participant’s Continuous Service for cause; or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.

15.2   Deferral of Stock Awards. The Committee may establish one or more programs under this Plan to permit selected Participants the opportunity to elect to defer consideration upon vesting of a Stock Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of shares of Stock or other consideration under a Stock Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payment of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral program.

15.3   Other Provisions. The Stock Grant Certificates authorized under this Plan may contain such other provisions not inconsistent with this Plan as the Committee may deem advisable.

15.4   Section 409A. This Plan is intended to comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, this Plan shall be interpreted and administered in compliance therewith. Any payments described in this Plan that are due within the “short-term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable laws require otherwise. Notwithstanding anything to the contrary in this Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six-month period immediately following a Participant’s termination of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of such Participant’s separation from service (or such person’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.

15.5   [reserved]

15.6   Rule 16b-3. The Committee shall have the right to amend any Stock Award to withhold or otherwise restrict the transfer of any Stock or cash under this Plan to a Participant as the Committee deems appropriate in order to satisfy any condition or requirement under Rule 16b-3.

15.7   Clawback Policies. Notwithstanding any other provisions in this Plan, except as otherwise determined by the Committee, all Stock Awards under this Plan shall be subject to such “clawback” or similar policies relating to the recovery of compensation as may be (a) adopted by the Company from time to time, (b) set forth in an Stock Grant Certificate or other grant agreement, or (c) required by any applicable law, rule, regulation or stock exchange listing requirement.

15.8   Withholding. The Company shall have the right and power to deduct from all amounts paid to a Participant in cash or shares of Stock or to require a Participant to remit in cash to the Company promptly upon notification of the amount due, an amount to satisfy the minimum federal, state or local or foreign taxes or other obligations required by law to be withheld with respect thereto with respect to any Stock Award under this Plan. In the case of any Stock Award satisfied in the form of shares of Stock, no shares of Stock shall be issued unless and until arrangements satisfactory to the Committee shall have been made to satisfy the statutory minimum withholding tax obligations applicable with respect to such Stock Award. The Company may defer payments of cash or issuance or delivery of Stock until such requirements are satisfied. Without limiting the generality of the foregoing, the Company shall have the right to retain, or the Committee may, subject to such terms and conditions as it may establish from time to time, permit Participants to elect to tender, shares of Stock (including shares of Stock pursuant to or issuable in respect of a Stock Award) to satisfy, in whole or in part, the amount required to be withheld ( provided that such amount, consistent with Accounting Standards Codification 718 as amended from time to time, shall not be in excess of the maximum statutory federal, state and local withholding requirements).

15.9   Beneficiary Designation. Each Participant who receives a Stock Award may from time to time name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in the case of such Participant’s death. Each designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s surviving spouse, if any, or otherwise to or by his or her estate.

15.10   Non-Uniform Treatment. The Committee’s determinations under this Plan need not be uniform and may be made by the Committee selectively among persons who are eligible to receive, or actually receive, Stock Awards under this Plan.

15.11   No Contract of Employment. The grant of a Stock Award to a Participant under this Plan shall not constitute a contract of employment or a right to continue to serve on the Board and shall not confer on a Participant any rights upon his or her termination of employment or service in addition to those rights, if any, expressly set forth in this Plan or the related Stock Grant Certificate.

15.12   Expenses. The costs of administering this Plan shall be paid by the Company.

15.13   Construction. All references to sections are to sections of this Plan unless otherwise indicated. This Plan shall be construed under the laws of the State of Delaware. Each term set forth in Section 2 shall, unless otherwise stated, have the meaning set forth opposite such term for purposes of this Plan and, for purposes of such definitions, the singular shall include the plural and the plural shall include the singular. Finally, if there is any conflict between the terms of this Plan and the terms of Stock Grant Certificate, the terms of this Plan shall control.

15.14   Other Conditions. Each Stock Grant Certificate may require that a Participant (as a condition to the issuance of Stock subject to a grant of Restricted Stock or RSUs) enter into an agreement or make representations prepared by the Company, including (without limitation) an agreement which restricts the transfer of Stock acquired pursuant to a Restricted Stock grant or RSU grant or provides for the repurchase of such Stock by the Company.

15.15   Coordination with Employment Agreements and Other Agreements. If the Company enters into an employment agreement or other agreement with a Participant which expressly provides for the acceleration in vesting of an outstanding Stock Award, any such acceleration or extension shall be deemed effected pursuant to, and in accordance with, the terms of such outstanding Stock Award and this Plan even if such employment agreement or other agreement is first effective after the date the outstanding Stock Award was granted or made, provided that, any such Stock Award shall not be subject to a minimum vesting period nor taken into account when determining the total shares available for issuance under the 5% exception described Section 7.2(c) herein.

15.16   No Repricing without Shareholder Approval. Except pursuant to Section 11 or 12 hereof, Stock Awards issued under this Plan may not be repriced, replaced, regranted through cancellation, modified, surrendered, substituted or exchanged (voluntary or involuntary) for cash or property without stockholder approval if the effect of such repricing, replacement, regrant or modification would be to reduce the exercise price or base price of such Stock Awards to the same Participants.

*******************************************

Plan History:

• The Board of Directors approved this Plan in February 2017.

o The Plan was approved by the shareholders at the Annual Meeting of Shareholders on June 21, 2017.

• The Board of Directors amended this Plan in February 2018.

o The amendment was approved by the shareholders at the Annual Meeting of Shareholders on June 7, 2018.

• The Board of Directors amended this Plan in March 2019.

o The Plan was approved by the shareholders at the Annual Meeting of Shareholders on June 6, 2019.

• The Compensation Committee amended this Plan effective June 6, 2019.

o No shareholder approval was required.

1

EX-10.6+#

INTERNAP CORPORATION

2014 STOCK INCENTIVE PLAN

(As amended through June 6, 2019)

TABLE OF CONTENTS

Page

§ 1 BACKGROUND AND PURPOSE1

§ 2 DEFINITIONS1

2.1Affiliate    1

2.2Board    1

2.3Change Effective Date    1

2.4 Change in Control — means the happening of any of the following events:    1

2.5Code    3

2.6Committee    3

2.7Company    3

2.8Continuous Service     3

2.9Director    3

2.10Eligible Employee    3

2.11Fair Market Value    3

2.12ISO    3

2.131933 Act    4

2.141934 Act    4

2.15Non-ISO    4

2.16Option    4

2.17Option Certificate    4

2.18Option Price    4

2.19Parent    4

2.20Participant     4

2.21Plan    4

2.22Preexisting Plan    4

2.23Restricted Stock    4

2.24RSU    4

2.25Rule 16b-3    4

2.26SAR Value     4

2.27Stock     4

2.28Stock Appreciation Right    4

2.29Stock Appreciation Right Certificate    4

2.30Stock Award     4

i

2.31Stock Grant Certificate     5

2.32Subsidiary    5

2.33Ten Percent Stockholder    5

§ 3 SHARES AND GRANT LIMITS5

3.1Shares Reserved.    5

3.2Source of Shares.    5

3.3Use of Proceeds.    5

3.4Grant Limits.    5

3.5Preexisting Plan.    5

§ 4 EFFECTIVE DATE5

§ 5 COMMITTEE6

§ 6 ELIGIBILITY6

§ 7 OPTIONS6

7.1Committee Action.    6

7.2$100,000 Limit.    6

7.3Option Price.    7

7.4Payment.    7

7.5Exercise.    7

§ 8 STOCK APPRECIATION RIGHTS7

8.1Committee Action.    7

8.2Terms and Conditions.    7

8.3Exercise.    8

§ 9 RESTRICTED STOCK AND RSUs9

9.1Committee Action.    9

9.2Conditions.    9

9.3Dividends and Voting Rights.    10

9.4Satisfaction of Forfeiture Conditions.    10

9.5Income Tax Deduction.    10

§ 10 NON-TRANSFERABILITY12

§ 11 SECURITIES REGISTRATION12

§ 12 LIFE OF PLAN12

§ 13 ADJUSTMENT13

13.1Capital Structure.    13

13.2Available Shares.    13

13.3Transactions Described in § 424 of the Code.    13

13.4Fractional Shares.    13

ii

§ 14 CHANGE IN CONTROL14

14.1Acceleration of Vesting.    14

14.2Cash Payment for Options and Stock Appreciation Rights.    14

§ 15 AMENDMENT OR TERMINATION15

§ 16 INDEMNIFICATION15

§ 17 MISCELLANEOUS15

17.1Stockholder Rights.    15

17.2Deferral of Stock Awards.    16

17.3Other Provisions.    16

17.4Section 409A.    16

17.5Section 162(m).    16

17.6Rule 16b-3.    17

17.7Clawback Policies.    17

17.8Withholding.    17

17.9Beneficiary Designation.    17

17.10Non-Uniform Treatment.    17

17.11No Repricing.    17

17.12No Contract of Employment.    17

17.13Expenses.    18

17.14Construction.    18

17.15Other Conditions.    18

17.16Coordination with Employment Agreements and Other Agreements.    18

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§ 1

BACKGROUND AND PURPOSE

The purpose of this Plan is to promote the interest of the Company by authorizing the Committee to grant Options, Stock Appreciation Rights, Restricted Stock and RSUs to Eligible Employees and Directors in order (1) to attract and retain Eligible Employees and Directors, (2) to provide an additional incentive to each Eligible Employee or Director to work to increase the value of Stock, (3) to provide each Eligible Employee or Director with a stake in the future of the Company which corresponds to the stake of each of the Company’s stockholders, and (4) to compensate Directors for their service to the Company.

§ 2

DEFINITIONS

2.1 Affiliate — means any organization (other than a Subsidiary) that would be treated as under common control with the Company under § 414(c) of the Code if “50 percent” were substituted for “80 percent” in the income tax regulations under § 414(c) of the Code.

2.2 Board— means the Board of Directors of the Company.

2.3 Change Effective Date — means either the date which includes the “closing” of the transaction which makes a Change in Control effective if the Change in Control is made effective through a transaction which has a “closing” or the date a Change in Control is reported in accordance with applicable law as effective to the Securities and Exchange Commission if the Change in Control is made effective other than through a transaction which has a “closing”.

2.4 Change in Control — means the happening of any of the following events:

(a) An acquisition, or a series of acquisitions within a 12 month period, by any individual, entity or group (within the meaning of § 13(d)(3) or 14(d)(2) of the 1934 Act) (an “Entity”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 30% or more of either (i) the then outstanding shares of Stock (the “Outstanding Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (d) of this Section;

(b) Any Entity becomes the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of more than 50% of either (i) the Outstanding Stock or (ii) the Outstanding Voting Securities; excluding, however, the following: (A) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or

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maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (d) of this Section;

(c) A change in the composition of the Board such that the individuals who, as of the Effective Date of this Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the Effective Date of this Plan whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso), shall be considered as though such individual were a member of the Incumbent Board; and provided, further however, that any such individual whose initial assumption of office occurs as a result of or in connection with either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be so considered as a member of the Incumbent Board;

(d) The consummation of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the assets of the Company (each, a “Corporate Transaction”) and, if consummation of such Corporate Transaction is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent either explicitly or implicitly by consummation; excluding however, such a Corporate Transaction pursuant to which (i) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Stock and Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a Parent) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Stock and Outstanding Voting Securities, as the case may be, (ii) no Entity (other than the Company, any employee benefit plan (or related trust) of the Company, such corporation resulting from such Corporate Transaction or, if reference was made to equity ownership of any Parent for purposes of determining whether clause (i) above is satisfied in connection with the applicable Corporate Transaction, such Parent) will beneficially own, directly or indirectly, 50% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to the Corporate Transaction, and (iii) individuals who were members of the Incumbent Board will immediately after the consummation of the Corporate Transaction constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction (or, if reference was made to equity ownership of any Parent for

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purposes of determining whether clause (i) above is satisfied in connection with the applicable Corporate Transaction, of the Parent); or

(e) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

2.5 Code — means the Internal Revenue Code of 1986, as amended.

2.6 Committee — means the Compensation Committee of the Board which shall have at least 2 members, each of whom shall be appointed by and shall serve at the pleasure of the Board and shall come within the definition of a “non-employee director” under Rule 16b-3 and an “outside director” under § 162(m) of the Code.

2.7 Company — means Internap Corporation and any successor to Internap Corporation.

2.8 Continuous Service — means that a Participant’s service with the Company or an Affiliate, whether as an employee, consultant or director, is not interrupted or terminated. A Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the company or an Affiliate as an employee, consultant or director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continued Service; provided, further, that that if any Stock Award is subject to § 409A of the Code, this sentence shall only be given effect to the extent consistent with § 409A of the Code. The Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence taken by a Participant.

2.9 Director — means any member of the Board who is not an employee of the Company or a Parent or Subsidiary or affiliate (as such term is defined in Rule 405 of the 1933 Act) of the Company.

2.10 Eligible Employee — means an employee of the Company or any Subsidiary or Parent or Affiliate to whom one or more grants are made under this Plan.

2.11 Fair Market Value — means (a) the closing price of the Stock reported on Nasdaq on the date of grant, exercise or vesting, as applicable, or if Nasdaq is closed on that date, the last preceding date on which Nasdaq was open for trading and on which shares of Stock were traded, (b) if the Stock is not listed on Nasdaq, the Fair Market Value shall be the closing price of the Stock on such other United States-based quotation system or stock exchange on which the Stock may be traded on the date of grant, exercise or vesting, as applicable, or if such exchange is closed on that date, the last preceding date on which such exchange was open for trading and on which shares of Stock were actually traded, or (c) if no fair market value of the Stock may be determined according to the preceding clauses (a) or (b), in the discretion of the Committee, any stock valuation method which complies with the requirements of § 409A or § 422 of the Code, as applicable, based on the provisions of such statutory provision and any formal guidance issued by the Internal Revenue Service.

2.12 ISO — means an option granted under this Plan to purchase Stock which is intended to satisfy the requirements of § 422 of the Code.

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2.13 1933 Act — means the Securities Act of 1933, as amended.

2.14 1934 Act — means the Securities Exchange Act of 1934, as amended.

2.15 Non-ISO — means an option granted under this Plan to purchase Stock which is intended to fail to satisfy the requirements of § 422 of the Code.

2.16 Option — means an ISO or a Non-ISO which is granted under § 7.

2.17 Option Certificate — means the certificate (whether in electronic or written form) which sets forth the terms and conditions of an Option granted under this Plan.

2.18 Option Price — means the price which shall be paid to purchase one share of Stock upon the exercise of an Option granted under this Plan.

2.19 Parent — means any corporation which is a parent corporation (within the meaning of § 424(e) of the Code) of the Company.

2.20 Participant — means any Eligible Employee or Director.

2.21 Plan — means this Internap Corporation 2014 Stock Incentive Plan as effective as of the date approved by the stockholders of the Company and as amended from time to time thereafter.

2.22 Preexisting Plan — means the Internap Network Services Corporation 2005 Incentive Stock Plan.

2.23 Restricted Stock — means a grant of Stock under § 9 while such Stock remains subject to forfeiture, restrictions on transfer, or other conditions pursuant to § 9 or § 10.

2.24 RSU — means a grant under § 9 of stock units with each unit equal to one share of Stock, which is designed to be satisfied or settled in either cash based on the Fair Market Value of the number of shares of Stock described in such grant or a number of shares of Stock equal to the number of stock units, which stock units, at the Committee’s discretion, may be subject to the risk of forfeiture, restrictions on transfer or other restrictions under § 9.

2.25 Rule 16b-3 — means the exemption under Rule 16b-3 to § 16(b) of the 1934 Act or any successor to such rule.

2.26 SAR Value — means the value assigned by the Committee to a share of Stock in connection with the grant of a Stock Appreciation Right under § 8.

2.27 Stock — means the common stock of the Company.

2.28 Stock Appreciation Right — means a right which is granted under § 8 to receive the appreciation in a share of Stock.

2.29 Stock Appreciation Right Certificate — means the certificate (whether in electronic or written form) which sets forth the terms and conditions of a Stock Appreciation Right which is not granted as part of an Option.

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2.30 Stock Award — means any Option, Stock Appreciation Right, Restricted Stock or RSU.

2.31    Stock Grant Certificate — means the certificate (whether in electronic or written form) which sets forth the terms and conditions of Restricted Stock or RSUs.

2.32 Subsidiary — means a corporation which is a subsidiary corporation (within the meaning of § 424(f) of the Code) of the Company.

2.33 Ten Percent Stockholder — means a person who owns (after taking into account the attribution rules of § 424(d) of the Code) more than ten percent of the total combined voting power of all classes of stock of either the Company, a Subsidiary or Parent.

                         § 3SHARES AND GRANT LIMITS

3.1 Shares Reserved. There shall (subject to § 13) be reserved for issuance under this Plan 4,600,000 shares of Stock, provided, however, (i) no more than the number of shares of Stock described in § 3.1 shall be issued in connection with the exercise of ISOs and (ii) the number of Restricted Stock and RSU grants made under § 9 of this Plan (after taking into account any forfeitures and cancellations) will not during the life of this Plan in the aggregate exceed 50% of the total number of shares reserved for issuance under this Plan.

3.2 Source of Shares. The shares of Stock described in § 3.1 shall be reserved to the extent that the Company deems appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company. Notwithstanding anything to the contrary contained herein, the following shall not increase the number of shares of Stock available for issuance under this Plan: (a) shares of Stock tendered in payment of an Option; (b) shares of Stock withheld by the Company to satisfy any tax withholding obligation; and (c) shares of Stock that are repurchased by the Company with Option proceeds. In addition, shares of Stock covered by a Stock Appreciation Right, to the extent that it is exercised and settled in shares of Stock, and whether or not shares of Stock are actually issued to the Participant upon exercise of the Stock Appreciation Right, shall be considered issued or transferred pursuant to this Plan.

3.3 Use of Proceeds. The proceeds which the Company receives from the sale of any shares of Stock under this Plan shall be used for general corporate purposes and shall be added to the general funds of the Company.

3.4 Grant Limits. No Participant in any calendar year shall be granted Stock Awards with respect to more than 1,400,000 shares of Stock (subject to § 13).

3.5 Preexisting Plan. No grants shall be made under the Preexisting Plan on or after the date this Plan becomes effective, but the terms of any grant made under the Preexisting Plan prior to the date this Plan becomes effective shall be interpreted under the terms of the Preexisting Plan under which such grant was made and not under this Plan.

§ 4

EFFECTIVE DATE

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The effective date of this Plan shall be the date the stockholders of the Company (acting at a duly called meeting of such stockholders) approve the adoption of this Plan.

§ 5

COMMITTEE

This Plan shall be administered by the Committee. The Committee acting in its absolute discretion shall exercise such powers and take such action as expressly called for under this Plan and, further, the Committee shall have the power to interpret this Plan and (subject to § 14 and § 15 and Rule 16b-3) to take such other action in the administration and operation of this Plan as the Committee deems equitable under the circumstances, which action shall be binding on the Company, on each affected Participant and on each other person directly or indirectly affected by such action. Furthermore, the Committee as a condition to making any grant under this Plan to any Participant shall have the right to require him or her to execute an agreement which makes the Participant subject to non-competition provisions and other restrictive covenants which run in favor of the Company.

§ 6

ELIGIBILITY

Only Eligible Employees who are employed by the Company or a Subsidiary or Parent shall be eligible for the grant of ISOs under this Plan. All Participants shall be eligible for the grant of Non-ISOs, Stock Appreciation Rights Restricted Stock and RSUs under this Plan.

§ 7

OPTIONS

7.1 Committee Action. The Committee acting in its absolute discretion shall have the right to grant Options to Participants under this Plan from time to time to purchase shares of Stock, but the Committee shall not (subject to § 13) take any action, whether through amendment, cancellation, replacement grants, or any other means, to reduce the Option Price of any outstanding Options absent the approval of the Company’s stockholders. The Committee may appoint a delegate and authorize such delegate to make grants of Options to Eligible Employees who are not “insiders” within the meaning of Rule 16b-3 or “covered employees” under § 162(m) of the Code. Each grant of an Option to a Participant shall be evidenced by an Option Certificate, and each Option Certificate shall set forth whether the Option is an ISO or a Non-ISO and shall set forth such other terms and conditions of such grant as the Committee acting in its absolute discretion deems consistent with the terms of this Plan; however, (a) if the Committee grants an ISO and a Non-ISO to an Eligible Employee on the same date, the right of the Eligible Employee to exercise the ISO shall not be conditioned on his or her failure to exercise the Non-ISO and (b) the minimum period of time over which an Option shall vest (whether subject to vesting over a period of time only or achievement of performance objectives) shall be no less than the one (1) year period which starts on the date as of which the Option is granted unless the Committee determines that a shorter period of time (or no period of time) better serves the Company’s interest.

7.2 $100,000 Limit. No Option shall be treated as an ISO to the extent that the aggregate Fair Market Value of the Stock subject to the Option which would first become exercisable in any calendar year exceeds $100,000. Any such excess shall instead automatically be treated

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as a Non-ISO. The Committee shall interpret and administer the ISO limitation set forth in this § 7.2 in accordance with § 422(d) of the Code, and the Committee shall treat this § 7.2 as in effect only for those periods for which § 422(d) of the Code is in effect.

7.3 Option Price. The Option Price for each share of Stock subject to an Option shall be no less than the Fair Market Value of a share of Stock on the date the Option is granted; provided, however, if the Option is an ISO granted to an Eligible Employee who is a Ten Percent Stockholder, the Option Price for each share of Stock subject to such ISO shall be no less than 110% of the Fair Market Value of a share of Stock on the date such ISO is granted.

7.4 Payment. The Option Price shall be payable in full upon the exercise of any Option and, at the discretion of the Committee, an Option Certificate can provide for the payment of the Option Price either in cash, by check or in Stock which is acceptable to the Committee, or through any cashless exercise procedure which is effected by an unrelated broker through a sale of Stock in the open market and which is acceptable to the Committee, or in any combination of such forms of payment. Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date the certificate for such Stock (or proper evidence of such certificate) is presented to the Committee or its delegate in such form as acceptable to the Committee.

7.5 Exercise.

(a) Exercise Period. Each Option granted under this Plan shall be exercisable in whole or in part at such time or times as set forth in the related Option Certificate, but no Option Certificate shall make an Option exercisable on or after the earlier of

(1) the date which is the fifth anniversary of the date the Option is granted, if the Option is an ISO and the Eligible Employee is a Ten Percent Stockholder on the date the Option is granted, or

(2) the date which is the tenth anniversary of the date the Option is granted, if the Option is (a) a Non-ISO or (b) an ISO which is granted to an Eligible Employee who is not a Ten Percent Stockholder on the date the Option is granted.

(b) Termination of Status as Participant. Subject to § 7.5(a), an Option Certificate may provide for the exercise of an Option after a Participant’s status as such has terminated for any reason whatsoever, including retirement, death or disability.

§ 8

STOCK APPRECIATION RIGHTS

8.1 Committee Action. The Committee acting in its absolute discretion shall have the right to grant Stock Appreciation Rights to Participants under this Plan from time to time. The Committee may appoint a delegate and authorize such delegate to make grants of Stock Appreciation Rights to Eligible Employees who are not “insiders” within the meaning of Rule 16b-3 or “covered employees” under § 162(m) of the Code. Each Stock Appreciation Right grant shall be evidenced by a Stock Appreciation Right Certificate or, if such Stock

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Appreciation Right is granted as part of an Option, shall be evidenced by the Option Certificate for the related Option.

8.2 Terms and Conditions.

(a) Stock Appreciation Right Certificate. If a Stock Appreciation Right is granted independent of an Option, such Stock Appreciation Right shall be evidenced by a Stock Appreciation Right Certificate, and such certificate shall set forth the number of shares of Stock on which the Participant’s right to appreciation shall be based and the SAR Value of each share of Stock. Such SAR Value shall be no less than the Fair Market Value of a share of Stock on the date on which the Stock Appreciation Right is granted. The Stock Appreciation Right Certificate shall set forth such other terms and conditions for the exercise of the Stock Appreciation Right as the Committee deems appropriate under the circumstances, but no Stock Appreciation Right Certificate shall make a Stock Appreciation Right exercisable on or after the date which is the tenth anniversary of the date such Stock Appreciation Right is granted.

(b) Option Certificate. If a Stock Appreciation Right is granted together with an Option, such Stock Appreciation Right shall be evidenced by an Option Certificate, the number of shares of Stock on which the Participant’s right to appreciation shall be based shall be the same as the number of shares of Stock subject to the related Option, and the SAR Value for each such share of Stock shall be no less than the Option Price under the related Option. Each such Option Certificate shall provide that the exercise of the Stock Appreciation Right with respect to any share of Stock shall cancel the Participant’s right to exercise his or her Option with respect to such share and, conversely, that the exercise of the Option with respect to any share of Stock shall cancel the Participant’s right to exercise his or her Stock Appreciation Right with respect to such share. A Stock Appreciation Right which is granted as part of an Option shall be exercisable only while the related Option is exercisable. The Option Certificate shall set forth such other terms and conditions for the exercise of the Stock Appreciation Right as the Committee deems appropriate under the circumstances.

(c) Minimum Vesting Period. The minimum period of time over which a Stock Appreciation Right shall vest (whether subject to vesting over a period of time only or achievement of performance objectives) shall be no less than the one (1) year period which starts on the date as of which the Stock Appreciation Right is granted unless the Committee determines that a shorter period of time (or no period of time) better serves the Company’s interest.

8.3 Exercise. A Stock Appreciation Right shall be exercisable only when the Fair Market Value of a share of Stock on which the right to appreciation is based exceeds the SAR Value for such share, and the payment due on exercise shall be based on such excess with respect to the number of shares of Stock to which the exercise relates. A Participant upon the exercise of his or her Stock Appreciation Right shall receive a payment from the Company in cash or in Stock issued under this Plan, or in a combination of cash and Stock, and the number of shares of Stock issued shall be based on the Fair Market Value of a share of Stock on the date the Stock Appreciation Right is exercised. The Committee acting in its absolute

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discretion shall have the right to determine the form and time of any payment under this § 8.3. Subject to this § 8.3, a Stock Appreciation Right Certificate or an Option Certificate, as applicable, may provide for the exercise of a Stock Appreciation Right after a Participant’s status as such has terminated for any reason whatsoever, including retirement, death or disability.

§ 9

RESTRICTED STOCK AND RSUs

9.1 Committee Action. The Committee acting in its absolute discretion shall have the right to grant Restricted Stock and RSUs to Participants. The Committee may appoint a delegate and authorize such delegate to grant Restricted Stock and RSUs to Eligible Employees who are not “insiders” within the meaning of rule 16b-3 or “covered employees” under § 162(m) of the Code. Each grant of Restricted Stock or RSUs shall be evidenced by a Stock Grant Certificate, and each Stock Grant Certificate shall set forth the conditions, if any, under which Stock will be issued under the Restricted Stock grant or cash will be paid, or Stock will be issued, under the RSU grant and the conditions under which the Participant’s interest in any Stock or RSUs which have been issued will become non-forfeitable. Unless determined otherwise by the Committee, each Stock unit awarded under an RSU grant will be equal to one share of Stock and shall entitle a Participant to either an equivalent number of shares of Stock or an amount of cash determined with reference to the Fair Market Value of an equivalent number of shares of Stock. To the extent determined by the Committee, RSUs may be satisfied or settled in cash, in shares of Stock or in a combination thereof. RSUs shall be settled no later than the 15​th day of the third month after the RSUs vest. Restricted Stock and RSUs granted pursuant to the Plan need not be identical but shall be consistent with the terms of the Plan.

9.2 Conditions.

(a) Conditions to Issuance of Stock. The Committee acting in its absolute discretion may make the issuance of Stock under a Restricted Stock grant subject to the satisfaction of one, or more than one, condition which the Committee deems appropriate under the circumstances for Participants generally or for a Participant in particular, and the related Stock Grant Certificate shall set forth each such condition and the deadline for satisfying each such condition. Stock subject to a Restricted Stock grant shall be issued in the name of a Participant only after each such condition, if any, has been timely satisfied, and any Stock which is so issued shall be held by the Company pending the satisfaction of the forfeiture conditions, if any, under § 9.2(b) for the related Restricted Stock grant.

(b) Conditions on Forfeiture of Stock or Cash Payment. The Committee acting in its absolute discretion may make any cash payment due, or Stock to be issued, under an RSU grant or Stock issued in the name of a Participant under a Restricted Stock grant non-forfeitable subject to the satisfaction of one, or more than one, objective employment, performance or other conditions that the Committee acting in its absolute discretion deems appropriate under the circumstances for Participants generally or for a Participant in particular, and the related Stock Grant Certificate

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shall set forth each such condition, if any, and the deadline, if any, for satisfying each such condition. A Participant’s non-forfeitable interest in the shares of Stock underlying Restricted Stock or the cash payable, or Stock Issuable, under an RSU grant shall depend on the extent to which he or she timely satisfies each such condition. If a share of Stock is issued under this § 9.2(b) before a Participant’s interest in such share of Stock is non-forfeitable, (1) such share of Stock shall not be available for re-issuance under § 3 until such time, if any, as such share of Stock thereafter is forfeited as a result of a failure to timely satisfy a forfeiture condition and (2) the Company shall have the right to condition any such issuance on the Participant first signing an irrevocable stock power in favor of the Company with respect to the forfeitable shares of Stock issued to such Participant in order for the Company to effect any forfeiture called for under the related Stock Grant Certificate.

(c) Minimum Vesting Period. The minimum vesting period over which Restricted Stock or an RSU shall vest is as follows: (i) if subject to vesting over a period of time, such period shall be no less than the three (3) year period which starts on the date as of which the Restricted Stock or RSU is granted or (ii) if subject to achievement of performance objectives, such period shall be no less than the one (1) year period which starts on the date as of which the Restricted Stock or RSU is granted, unless in each case the Committee determines that a shorter period of time (or no period of time) better serves the Company’s interest.

(d) Termination of Status as Participant. Subject to § 9.1 and § 9.2, a Stock Grant Certificate may provide for the vesting and settlement of Restricted Stock or RSUs after a Participant’s status as such has terminated for any reason whatsoever, including retirement, death or disability.

9.3 Dividends and Voting Rights.

(a) Dividends, Voting, Liquidation and Other Rights. Except as otherwise provided in the Plan or in a Stock Grant Certificate, a participant shall have all voting, dividend, liquidation and other rights with respect to the shares of Stock issued to the Participant as a Restricted Stock award under this Section 9 upon the Participant becoming the holder of record of the Stock granted pursuant to such award. The Committee may, at the time of the grant of such award, provide that the payment of cash dividends with respect to such award be reinvested into additional Restricted Stock, subject in all cases to deferral and payment on a contingent basis based on the Participant’s achievement of the performance objectives, time vesting, or other conditions with respect to such additional Restricted Stock.

(b) Dividend Equivalents. The Committee may, at the date of the grant of such award, provide for the payment of dividend equivalents to a Participant either in cash or in shares of Stock, subject in all cases to deferral and payment on a contingent basis based on the Participant’s achievement of the performance objectives, time vesting or other conditions with respect to which such dividend equivalents are paid.

9.4 Satisfaction of Forfeiture Conditions. A share of Stock shall cease to be subject to a Restricted Stock grant at such time as a Participant’s interest in such Stock becomes non-forfeitable

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under this Plan, and the certificate or other evidence of ownership representing such share shall be transferred to the Participant as soon as practicable thereafter.

9.5 Income Tax Deduction.

(a) General. The Committee shall (where the Committee under the circumstances deems in the Company’s best interest) either (1) grant Restricted Stock and RSUs to Eligible Employees subject to at least one condition related to one, or more than one, performance goal based on the performance goals described in § 9.5(b) which seems likely to result in the Restricted Stock or RSU grant qualifying as “performance-based compensation” under § 162(m) of the Code or (2) grant Restricted Stock and RSUs to Eligible Employees under such other circumstances as the Committee deems likely to result in an income tax deduction for the Company with respect such Restricted Stock or RSUs. A performance goal may be set in any manner determined by the Committee, including looking to achievement on an absolute or relative basis in relation to peer groups or indexes, and no change may be made to a performance goal after the goal has been set, unless otherwise determined by the Committee at the time such performance goal is set.

(b) Performance Goals. A performance goal is described in this § 9.5(b) if such goal relates to (1) the Company’s return over capital costs or increases in return over capital costs, (2) the Company’s total earnings or the growth in such earnings, (3) the Company’s consolidated earnings or the growth in such earnings, (4) the Company’s earnings per share or the growth in such earnings, (5) the Company’s net earnings or the growth in such earnings, (6) the Company’s earnings before interest expense, taxes, depreciation, amortization, which may in the Committee’s discretion include one-time charges or the growth in such earnings, (7) the Company’s earnings before interest and taxes or the growth in such earnings, (8) the Company’s consolidated net income or the growth in such income, (9) the value of the Company’s stock or the growth in such value, (10) the Company’s stock price or the growth in such price, (11) the Company’s return on assets or the growth on such return, (12) the Company’s cash flow or the growth in such cash flow, including operating cash flow and free cash flow, (13) the Company’s total stockholder return or the growth in such return, (14) the Company’s expenses or the reduction of such expenses, (15) the Company’s revenues and/or revenue growth, (16) the Company’s overhead ratios or changes in such ratios, (17) the Company’s expense-to-sales ratios or the changes in such ratios, (18) the Company’s economic value added or changes in such value added, (19) the Company’s return on capital, (20) the Company’s return on equity, (21) the Company’s working capital, (22) the Company’s operating income, (23) the Company’s gross, operating or net profit margin, (23) customer satisfaction of the Company’s customers, (24) the Company’s market share, (25) the Company’s product development, (26) the Company’s bookings, (27) the Company’s customer attrition rate or the Company’s addition of new customers, (28) the Company’s capital expenditures, (29) debt of the Company, or (30) the Company’s accounts receivable.

(c) Adjustments. When the Committee determines whether a performance goal has been satisfied for any period, the Committee where the Committee deems appropriate may make such determination using calculations which alternatively

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include and exclude one, or more than one, “extraordinary items” as determined under U.S. generally accepted accounting principles, and the Committee may determine whether a performance goal has been satisfied for any period taking into account the alternative which the Committee deems appropriate under the circumstances. The Committee also may take into account any other unusual or non-recurring items, including, without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, and the cumulative effects of accounting changes and, further, may take into account any unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles or such other factors as the Committee may determine reasonable and appropriate under the circumstances (including, without limitation, any factors that could result in the Company’s paying non-deductible compensation to an Eligible Employee).

§ 10

NON-TRANSFERABILITY

No Option, Restricted Stock, RSU or Stock Appreciation Right shall (absent the Committee’s consent) be transferable by a Participant other than by will or by the laws of descent and distribution, and any Option or Stock Appreciation Right shall (absent the Committee’s consent) be exercisable during a Participant’s lifetime only by the Participant. The person or persons to whom an Option, Restricted Stock, RSU or Stock Appreciation Right is transferred by will or by the laws of descent and distribution (or with the Committee’s consent) thereafter shall be treated as the Participant.

§ 11

SECURITIES REGISTRATION

As a condition to the receipt of shares of Stock under this Plan, the Participant shall, if so requested by the Company, agree to hold such shares of Stock for investment and not with a view of resale or distribution to the public and, if so requested by the Company, shall deliver to the Company a written statement satisfactory to the Company to that effect. Furthermore, if so requested by the Company, the Participant shall make a written representation to the Company that he or she will not sell or offer for sale any of such Stock unless a registration statement shall be in effect with respect to such Stock under the 1933 Act and any applicable state securities law or he or she shall have furnished to the Company an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required. Certificates or other evidence of ownership representing the Stock transferred upon the exercise of an Option or Stock Appreciation Right or upon the lapse of the forfeiture conditions, if any, on any Restricted Stock may at the discretion of the Company bear a legend to the effect that such Stock has not been registered under the 1933 Act or any applicable state securities law and that such Stock cannot be sold or offered for sale in the absence of an effective registration statement as to such Stock under the 1933 Act and any applicable state securities law or an opinion in form and substance satisfactory to the Company of legal counsel satisfactory to the Company that such registration is not required.

§ 12

LIFE OF PLAN

No Option, Stock Appreciation Right, Restricted Stock or RSU shall be granted under this Plan on or after the earlier of:

12

(a) the tenth anniversary of the effective date of this Plan (as determined under § 4), in which event this Plan otherwise thereafter shall continue in effect until all outstanding Options, Stock Appreciation Rights have been exercised in full or no longer are exercisable and all Stock issued under any Restricted Stock or RSU awards under this Plan have been forfeited or have become non-forfeitable, or

(b) the date on which all of the Stock reserved under § 3 has (as a result of the exercise of Options or Stock Appreciation Rights granted under this Plan or the satisfaction of the forfeiture conditions, if any, on Restricted Stock or RSUs) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date.

§ 13

ADJUSTMENT

13.1 Capital Structure. The grant caps described in § 3.4, the number, kind or class (or any combination thereof) of shares of Stock subject to outstanding Options and Stock Appreciation Rights granted under this Plan and the Option Price of such Options and the SAR Value of such Stock Appreciation Rights as well as the number, kind or class (or any combination thereof) of shares of Stock subject to outstanding Restricted Stock or RSU grants made under this Plan shall be adjusted by the Committee in a reasonable and equitable manner to preserve immediately after

(a) any equity restructuring or change in the capitalization of the Company, including, but not limited to, spin offs, stock dividends, large non-reoccurring dividends, rights offerings or stock splits, or

(b) any other transaction described in § 424(a) of the Code which does not constitute a Change in Control of the Company the aggregate intrinsic value of each such outstanding Option, Stock Appreciation Right, Restricted Stock and RSU immediately before such restructuring or recapitalization or other transaction.

13.2 Available Shares. If any adjustment is made with respect to any outstanding Stock Award under § 13.1, then the Committee shall adjust the number, kind or class (or any combination thereof) of shares of Stock reserved under § 3.1 so that there is a sufficient number, kind and class of shares of Stock available for issuance pursuant to each such Stock Award as adjusted under § 13.1 without seeking the approval of the Company’s stockholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded. Furthermore, the Committee shall have the absolute discretion to further adjust such number, kind or class (or any combination thereof) of shares of Stock reserved under § 3.1 in light of any of the events described in § 13.1(a) and § 13.1(b) to the extent the Committee acting in good faith determinates that a further adjustment would be appropriate and proper under the circumstances and in keeping with the purposes of this Plan without seeking the approval of the Company’s stockholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded.

13.3 Transactions Described in § 424 of the Code. If there is a corporate transaction described in § 424(a) of the Code which does not constitute a Change in Control of the Company, the

13

Committee as part of any such transaction shall have right to make Stock Awards (without regard to any limitations set forth under 3.4 of this Plan) to effect the assumption of, or the substitution for, outstanding restricted stock, restricted stock unit, option and stock appreciation right grants previously made by any other corporation to the extent that such corporate transaction calls for such substitution or assumption of such outstanding restricted stock, restricted stock unit, stock option and stock appreciation right grants. Furthermore, if the Committee makes any such grants as part of any such transaction, the Committee shall have the right to increase the number of shares of Stock available for issuance under § 3.1 by the number of shares of Stock subject to such grants without seeking the approval of the Company’s stockholders for such adjustment unless such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are traded.

13.4 Fractional Shares. If any adjustment under this § 13 would create a fractional share of Stock or a right to acquire a fractional share of Stock under any Stock Award, such fractional share shall be disregarded and the number of shares of Stock reserved under this Plan and the number subject to any Stock Awards shall be the next lower number of shares of Stock, rounding all fractions downward. An adjustment made under this § 13 by the Committee shall be conclusive and binding on all affected persons.

§ 14

CHANGE IN CONTROL

14.1 Acceleration of Vesting. Unless otherwise determined by the Committee, in the event of a Change in Control of the Company, effective as of the Change Effective Date, any surviving corporation or acquiring corporation shall assume all Stock Awards outstanding under the Plan or shall substitute similar stock awards (including an award to be settled in cash or to acquire the same consideration paid to the stockholders in the Change in Control for those Stock Awards outstanding under the Plan). In the event any surviving corporation or acquiring corporation refuses to assume such Stock Awards or to substitute similar stock awards for those outstanding under the Plan as of the Change Effective Date, then with respect to Stock Awards held by any Participant whose employment or service with the Company has not terminated, the vesting of such stock Awards (and, if applicable, the time during which such Stock Awards may be exercised) shall be accelerated in full, and, if applicable, be exercisable for a reasonable period of time immediately prior to the Change Effective Date, subject to the transaction occurring, and the Stock Awards shall terminate if not exercised (if applicable) at or prior to the Change Effective Date; provided, that (a) if any issuance or forfeiture condition described in a Stock Award relates to satisfying any performance goal and there is a target for such performance goal, such issuance or forfeiture condition shall be deemed satisfied under this § 14.1 only to the extent of such target unless such target has been exceeded before the Change Effective Date, in which such issuance or forfeiture condition shall be deemed satisfied to the extent that such target has been so exceeded, and (b) a Change in Control shall effect a Stock Appreciation Right or RSU which is subject to § 409A of the Code only if the Change in Control also constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of § 409A(a)(2)(A)(v) of the Code. With respect to any other Stock Awards outstanding under the Plan, such Stock Awards shall terminate if not exercised (if applicable) prior to such event.

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14.2 Cash Payment for Options and Stock Appreciation Rights. If and to the extent that Participants are entitled to accelerated vesting in the event of a Change in Control as provided in the above § 14.1, then the Committee, in its sole discretion and without the consent of any Participant affected thereby, may determine that some or all Participants holding outstanding Options and/or Stock Appreciation Rights shall receive, with respect to some or all of the shares of Stock subject to such Options and/or Stock Appreciation Rights, as of the Change Effective Date, for any Options and Stock Appreciation Rights, cash in an amount equal to the greater of the excess of (i) the highest price of the Stock on Nasdaq on the last trading date immediately prior to the Change Effective Date (or, if the Stock is not listed on Nasdaq, an amount equal to the highest price of the Stock on such other United States-based quotation system or stock exchange on which the Stock may be traded such date; or, if the Stock is not traded on any such quotation system or stock exchange, an amount equal to the value of the Stock determined by the Committee in its discretion according to any stock valuation method which complies with the requirements of § 409A or § 422 of the Code, as applicable, based on the provisions of such statutory provision and any formal guidance issued by the Internal Revenue Service), or (ii) the highest price per share actually paid in connection with the Change in Control of the Company, over the exercise price per share of such Options or the SAR Value per share of such Stock Appreciation Rights. Upon a Participant’s receipt of such amount with respect to some or all of his or her Options and/or Stock Appreciation Rights, the respective Options and/or Stock Appreciation Rights shall be cancelled and may no longer be exercised by such Participant.

§ 15

AMENDMENT OR TERMINATION

This Plan may be amended by the Board or the Committee from time to time to the extent that the Board or Committee deems necessary or appropriate; provided, however, (a) no amendment shall be made absent the approval of the stockholders of the Company to the extent such approval is required under applicable law or the rules of the stock exchange on which shares of Stock are listed and (b) no amendment shall be made to § 14 on or after the date of any Change in Control which might adversely affect any rights which otherwise would vest on the related Change Effective Date. In addition, the Board and the Committee each may suspend granting or making any Stock Awards under this Plan at any time and may terminate this Plan at any time; provided, however, neither the Board nor the Committee shall have the right unilaterally to modify, amend or cancel any Option, Stock Appreciation Right, Restricted Stock or RSU granted before such suspension or termination unless (1) the Participant consents in writing to such modification, amendment or cancellation or (2) there is a dissolution or liquidation of the Company or a transaction described in § 13.1 or § 14.

§ 16

INDEMNIFICATION

Neither any member or former member of the Committee, nor any individual or group to whom authority or responsibility of the Committee is or has been delegated, shall be personally responsible or liable for any act or omission in connection with the performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the Plan. Each person who is or shall have been a member of the Committee and any other individual or group exercising delegated authority or responsibility with respect to the Plan shall be indemnified and held harmless by the Company from and against any cost, liability or expense imposed or incurred in connection with such person’s or the Committee’s taking or failing

15

to take any action under the Plan or the exercise of discretion or judgment in the administration and implementation of the Plan. The indemnification obligation of the Company pursuant to this Section shall not apply to the extent that it is adjudged that a person otherwise entitled to indemnification by the Company hereunder did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company. This Section shall not be construed as limiting the Company’s or any subsidiary’s ability to terminate or otherwise alter the terms and conditions of the employment of an individual or group exercising delegated authority or responsibility with respect to the Plan, or to discipline any such person. Each such person shall be justified in relying on information furnished in connection with the Plan’s administration by any appropriate person or persons.

§ 17

MISCELLANEOUS

17.1 Stockholder Rights. No Participant shall have any rights as a stockholder of the Company as a result of the grant of an Option, Stock Appreciation Right or RSU pending the actual delivery of the Stock subject to such Option, Stock Appreciation Right or RSU to such Participant. A Participant’s rights as a stockholder in the shares of Stock which remain subject to forfeiture under § 9.2(b) shall be set forth in the related Stock Grant Certificate. The Committee may specify in an Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate that the Participant’s rights, payments and benefits with respect to such award shall be subject to reduction cancellation, forfeiture or recoupment upon the occurrence of certain event, in addition to applicable vesting conditions of such award. Such events may include, without limitation: breach of non-competition, non-solicitation, confidentiality or other restrictive covenants that are contained in the Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate or otherwise applicable to such Participant; a termination of a Participant’s Continuous Service for cause; or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.

17.2 Deferral of Stock Awards. The Committee may establish one or more programs under this Plan to permit selected Participants the opportunity to elect to defer consideration upon exercise of a Stock Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of shares of Stock or other consideration under a Stock Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payment of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral program.

17.3 Other Provisions. The Option Certificates, Stock Appreciation Right Certificates and Stock Grant Certificates authorized under this Plan may contain such other provisions not inconsistent with this Plan as the Committee may deem advisable, including, without limitation, restrictions upon the exercise of Stock Awards.

17.4 Section 409A. This Plan is intended to comply with § 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, this Plan shall be interpreted and administered in compliance therewith. Any payments described in this Plan that are due within the “short-term deferral period” as defined in § 409A of the Code shall not be treated as deferred compensation unless applicable laws require otherwise. Notwithstanding

16

anything to the contrary in this Plan, to the extent required to avoid accelerated taxation and tax penalties under § 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six-month period immediately following a Participant’s termination of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of such Participant’s separation from service (or such person’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under § 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.

17.5 Section 162(m). To the extent the Committee issues any award under this Plan that is intended to be exempt from the deduction limitation of § 162(m) of the Code, the Committee may, without stockholder or grantee approval, amend the Plan or the relevant Option Certificate, Stock Appreciation Right Certificate, or Stock Grant Certificate retroactively or prospectively to the extent it determines necessary in order to comply with any subsequent clarification of § 162(m) of the Code required to preserve the Company’s federal income tax deduction for compensation paid pursuant to any such award.

17.6 Rule 16b-3. The Committee shall have the right to amend any Stock Award to withhold or otherwise restrict the transfer of any Stock or cash under this Plan to a Participant as the Committee deems appropriate in order to satisfy any condition or requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be applicable to such grant or transfer.

17.7 Clawback Policies. Notwithstanding any other provisions in this Plan, except as otherwise determined by the Committee, all Stock Awards under this Plan shall be subject to such “clawback” or similar policies relating to the recovery of compensation as may be (a) adopted by the Company from time to time, (b) set forth in an Option Certificate, Stock Appreciation Right Certificate, Stock Grant Certificate or other grant agreement, or (c) required by any applicable law, rule, regulation or stock exchange listing requirement.

17.8 Withholding. Each Stock Award shall be made subject to the condition that the Participant consents to whatever action the Committee directs to satisfy the minimum statutory federal and state tax withholding requirements, if any, which the Company determines are applicable to the exercise of such Stock Award or to the satisfaction of an feiture conditions with respect to Stock subject to a Restricted Stock or RSU grant issued in the name of the Participant. No withholding shall be effected under this Plan which exceeds the minimum statutory federal and state withholding requirements.

17.9 Beneficiary Designation. Each Participant who receives a Stock Award may from time to time name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in the case of such Participant’s death. Each designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime.

17.10 Non-Uniform Treatment. The Committee’s determinations under this Plan need not be uniform and may be made by the Committee selectively among persons who are eligible to receive, or actually receive, Stock Awards under this Plan.

17

17.11 No Repricing. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), Stock Awards issued under this Plan may not be repriced, replaced, regranted through cancellation, modified or exchanged for cash or property without stockholder approval if the effect of such repricing, replacement, regrant or modification would be to reduce the exercise price or base price of such Stock Awards to the same Participants. Without limiting the generality of the foregoing, without the approval of the Company’s stockholders, no Option or Stock Appreciation Right may be repurchased or otherwise cancelled in exchange for cash or other property (except in connection with a corporate transaction as contemplated by the foregoing sentence) if the exercise price of the Option or the grant price of the Stock Appreciation Right is equal to or less than the Fair Market Value of the Common Stock at the time of such repurchase or exchange.

17.12 No Contract of Employment. The grant of a Stock Award to a Participant under this Plan shall not constitute a contract of employment or a right to continue to serve on the Board and shall not confer on a Participant any rights upon his or her termination of employment or service in addition to those rights, if any, expressly set forth in this Plan or the related Option Certificate, Stock Appreciation Right Certificate, or Stock Grant Certificate.

17.13 Expenses. The costs of administering this Plan shall be paid by the Company.

17.14 Construction. All references to sections (§) are to sections (§) of this Plan unless otherwise indicated. This Plan shall be construed under the laws of the State of Delaware. Each term set forth in § 2 shall, unless otherwise stated, have the meaning set forth opposite such term for purposes of this Plan and, for purposes of such definitions, the singular shall include the plural and the plural shall include the singular. Finally, if there is any conflict between the terms of this Plan and the terms of any Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate, the terms of this Plan shall control.

17.15 Other Conditions. Each Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate may require that a Participant (as a condition to the exercise of an Option or a Stock Appreciation Right or the issuance of Stock subject to a grant of Restricted Stock or RSUs) enter into any agreement or make such representations prepared by the Company, including (without limitation) any agreement which restricts the transfer of Stock acquired pursuant to a Restricted Stock grant or RSU grant or the exercise of an Option or a Stock Appreciation Right or provides for the repurchase of such Stock by the Company.

17.16 Coordination with Employment Agreements and Other Agreements. If the Company enters into an employment agreement or other agreement with a Participant which expressly provides for the acceleration in vesting of an outstanding Stock Award or for the extension of the deadline to exercise any rights under an outstanding Stock Award, any such acceleration or extension shall be deemed effected pursuant to, and in accordance with, the terms of such outstanding Stock Award and this Plan even if such employment agreement or other agreement is first effective after the date the outstanding Stock Award was granted or made.

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*******************************************

Plan History:

• The Board of Directors approved this Plan on February 18, 2014.

o The Plan was approved by the shareholders at the Annual Meeting of Shareholders on May 30, 2014.

• The Compensation Committee amended this Plan effective June 6, 2019.

o No shareholder approval was required.

19

EX-10.7+#

INTERNAP CORPORATION

AMENDED AND RESTATED 2017 STOCK INCENTIVE PLAN

STOCK GRANT CERTIFICATE

FOR RESTRICTED STOCK GRANTED TO U.S. EMPLOYEES

1.    Award of Stock. Internap Corporation (the “Company”) hereby awards to the employee (“Participant”) named in the Notice of Grant of Restricted Stock (“Notice”), a grant of Restricted Stock (“Stock”) for the total number of shares set forth on the Notice (the “Award”), subject to the terms, definitions and provisions of the Internap Corporation Amended and Restated 2017 Stock Incentive Plan, (the “Plan”), which is incorporated herein by reference, and the terms of this Stock Grant Certificate (the “Certificate”) and Plan Prospectus. Unless otherwise defined herein, terms not defined in this Certificate shall have the meanings ascribed to them in the Plan. In the event of a conflict between the terms and conditions of the Plan and those of this Certificate, the terms and conditions of the Plan shall prevail.

2.    Terms of Award.

2.1    Performance and Time Vesting. The Award granted to the Participant hereunder shall become vested on the dates set forth on Annex A (the “Vesting Date”) provided; that the Participant is employed or providing services to the Company or its affiliates or subsidiaries on the Vesting Date.

2.2    Lapsing of Restrictions. Subject to the limitations contained herein, the restrictions on the Award shall lapse, and the Award shall vest, as provided in the Notice, provided that vesting shall cease upon the termination of Participant’s status as an employee. The period during which the Stock is subject to restrictions imposed by the Plan and this Certificate shall be known as the “Restricted Period.”

2.3    Number of Shares of Stock. The number of shares of Stock subject to the Award may be adjusted from time-to-time as provided in Section 11 of the Plan.

2.4    Restrictive Legends. The shares issued under the Award shall be endorsed with appropriate legends determined by the Company.

3.    Effect of Termination of Status. Except as otherwise provided in an employment, consulting or other written agreement between the Participant and the Company, if the Participant’s employment with the Company is terminated, the unvested portion of any Stock (“Unvested Shares”) shall be forfeited without any consideration to the Participant on the date of termination of service.

4.Rights as a Stockholder. During the Restricted Period, Participant shall have all voting, dividend, liquidation and other rights with respect to the Stock held of record by Participant as if Participant held unrestricted Stock; provided, however, that the Unvested Shares shall be subject to any restrictions on transferability or risks of forfeiture imposed pursuant to the Plan, the Notice or this Certificate. Any noncash dividends or distributions paid with respect to Unvested Shares shall be subject to the same restrictions as those relating to the Stock awarded under this Certificate. After the restrictions applicable to the Stock lapse, Participant shall have all stockholder rights, including the right to transfer the shares, subject to such conditions as the Company may reasonably specify to ensure compliance with federal and state securities laws.

5.    No Obligation to Employ. Nothing in this Certificate or the Plan shall confer on Participant any right to continue in the employ of, or other relationship with, the Company, or limit in any way the right of the Company to terminate Participant’s employment or other relationship at any time, with or without cause.

6.    Taxes andWithholding. The Participant shall be responsible for all income taxes payable in respect of the Stock. Upon the vesting of any shares of Stock, the Participant shall be required to pay to the Company, and the Company shall have the right and is hereby authorized to (a) withhold and deduct from Participant’s future wages (or from other amounts that may be due and owing to Participant from the Company), or make other arrangement for the collection of, all legally required amounts necessary to satisfy any and all federal, state and local withholding and employment-related tax requirements attributable to the Stock awarded under this Certificate, including, without limitation, the award or vesting of, or payments of dividends with respect to, the Stock; or (b) require Participant promptly to remit the amount of such withholding to the Company before taking any action with respect to the Stock. Unless the Compensation Committee provides otherwise, withholding may be satisfied by withholding common stock to be received having a fair market value equal to such withholding liability. Unless the tax withholding obligations of the Company are satisfied, the Company shall have no obligation to issue a certificate for such shares or release such shares from any escrow provided for herein.

7.    Transferability. Until the restrictions lapse as set forth herein, the Stock granted under this Certificate may not be sold, pledged, loaned, gifted, or otherwise transferred in any manner (otherwise than by will or by the laws of descent and distribution), and may not be subject to lien, garnishment, attachment or other legal process. In addition, the Participant agrees to comply with any written holding requirements adopted by the Company for officers or employees in respect of any Stock.

8.    Interpretation. Any dispute regarding the interpretation of this Certificate or Plan shall be submitted by Participant or the Company to the Compensation Committee for review. The resolution of such a dispute by the Compensation Committee shall be final and binding on the Company and Participant.

9.    Governing Law.  This Certificate shall be governed by and construed according to the laws of the State of Delaware without regard to its principles of conflict of laws.

10.    Entire Agreement.  The Plan, Notice and Prospectus are hereby incorporated by reference and made a part hereof. This Certificate, Plan, Notice and Prospectus constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof.

11.    Successors and Assigns. The Company may assign any of its rights under this Certificate. This Certificate shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Certificate shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

12.    Amendments.  This Certificate may be amended or modified at any time only by an instrument in writing signed by each of the parties hereto.

13.    Clawback/Forfeiture. If the Participant receives any amount in excess of what the Participant should have received with respect to the Stock for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be required to repay any such excess amount to the Company upon thirty (30) days prior written demand by the Compensation Committee. To the extent required by the Company’s Clawback Policy or applicable law (including without limitation Section 304 of the Sarbanes Oxley Act and Section 954 of the Dodd Frank Act), the Stock shall be subject to any required clawback, forfeiture or similar requirement.

14.    Section 409A. It is intended that the Stock be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended and this Certificate shall be interpreted consistent therewith. This Certificate is subject to Section 15.4 of the Plan.

15.    Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery:

if to the Company:

Internap Corporation

One Enterprise Avenue, N

Secaucus, NJ 07094

Attn: Legal Department – Richard Diegnan, General Counsel

E-mail: legal@INAP.com

if to the Participant, at the Participant’s last known address on file with the Company.

All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five business days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.

16.    Acceptance. By accepting the Notice, Participant acknowledges receipt of a copy of the Plan, Notice and Prospectus and this Certificate and that Participant has read and understands the terms and provisions hereof and thereof, and accepts the Award subject to all the terms and conditions of the Plan, Notice and Prospectus and this Certificate. Participant acknowledges that there may be adverse tax consequences upon acceptance of the Award and that Participant should consult a tax adviser prior to such acceptance or disposition of Stock regarding the consequences, including the applicability and effect of all U.S. federal, state and local tax laws. The Company does not provide tax advice to its employees.

Annex A

Performance and Time Targets for Current Fiscal Year

Performance Criteria (50% of the Award)

If EBITDA less Capital Expenditures (i.e. Free Cash Flow) for fiscal year of the Company equals or exceeds 100 percent (100%) of the EBITDA less Capital Expenditures Target for such fiscal year, then fifty percent (50%) of the total Award shall vest as follows: 33 1/3 percent (33.33%) of the Award shall vest upon the Compensation Committee’s determination that the performance targets were achieved by the Company (“Achievement Date”), (33.33%) of the Award shall vest one (1) year from the Achievement Date and the remaining (33.33%) of the Award shall vest two (2) years from the Achievement Date. If this performance target is not met, the Award shall terminate, and all shares shall be forfeited without any further consideration to the Participant. Notwithstanding the foregoing, in the event of a change of control (as such term is defined in the Plan) during fiscal year, the Award shall fully vest immediately prior to the change of control and if the change of control occurs after the end of the fiscal year and prior to the Vesting Date, the shares with respect to this Award shall vest immediately prior to the change of control as if the Award would have vested on the Vesting Date.

Definition of “EBITDA” and “Capital Expenditures”

“EBITDA” as defined in the Board of Directors’ approved budget for the consolidated Company for the fiscal year.

“Capital Expenditures” as defined in the Board of Directors’ approved budgets for consolidated Company for fiscal year.

Time Criteria (50% of the Award)

If Participant remains continuously employed by the Company until the Vesting Date then fifty percent (50%) of the total Award shall vest as follows: 33 1/3 percent (33.33%) of the Award shall vest one year from the grant date, (33.33%) of the Award shall vest on two (2) years from the grant date and the remaining (33.33%) of the Award shall vest on three (3) years from the grant date.

Additional Information

The number of Awards vesting on each date shall be rounded up to the nearest whole number.

In the event of a change in control (as defined in the Plan), any surviving or acquiring corporation would be required to assume any outstanding award under the Plan or substitute similar awards. If the surviving or acquiring corporation does not assume outstanding awards or substitute similar awards, then subject to the change in control occurring, all outstanding Awards of Participants whose services with the Company has not terminated would be accelerated in full before the effective time of the change in control.

In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or similar event, the Awards set forth above shall be adjusted by the Compensation Committee in a proportionate or equitable manner to reflect such event.

1

EX-10.8+#

INTERNAP CORPORATION

AMENDED AND RESTATED 2017 STOCK INCENTIVE PLAN

STOCK UNIT GRANT CERTIFICATE

FOR RESTRICTED STOCK UNITS GRANTED TO CANADIAN EMPLOYEES

1.    Award of Stock Units. Internap Corporation (the “Company”) hereby awards to the employee (“Participant”) named in the Notice of Restricted Stock Unit Award (“Notice”), the total number of RSUs set forth on the Notice (the “Award”), subject to the terms, definitions and provisions of the Internap Corporation Amended and Restated 2017 Stock Incentive Plan (the “Plan”), which is incorporated herein by reference, and the terms of this Stock Unit Grant Certificate (the “Certificate”) and Plan Prospectus. Unless otherwise defined herein, terms not defined in this Certificate shall have the meanings ascribed to them in the Plan. In the event of a conflict between the terms and conditions of the Plan and those of this Certificate, the terms and conditions of the Plan shall prevail.

2.    Terms of Award.

2.1    Performance and Time Vesting. The Award granted to the Participant hereunder shall become vested on the dates set forth on Annex A once the Compensation Committee certifies that the applicable performance and time goals set forth in Annex A hereto have been achieved (the “Vesting Date”) provided; that the Participant is employed or providing service to the Company or its affiliates or subsidiaries on the Vesting Date.

2.2    Lapsing of Restrictions. Subject to the limitations contained herein, the restrictions on the Award shall lapse, and the Award shall vest, as provided in the Notice, provided that vesting shall cease upon the termination of Participant’s status as an employee. The period during which the RSUs are subject to restrictions imposed by the Plan and this Certificate shall be known as the “Restricted Period.” The RSUs will be settled in shares of Company Stock on a one-for-one basis promptly after the Award vests (but in no event later than the 15^th day of the third month after the vesting date). No Stock will be issued if the RUSs do not vest.

2.3    Forfeiture. Except as otherwise provided in an employment, consulting or other written agreement between the Participant and the Company, if the Participant’s employment with the Company is terminated, the unvested RSUs and the Stock underlying the unvested RSUs shall be forfeited without any consideration to the Participant on the date of termination of service.    

2.4    Number of Shares of Stock. The RSUs and the number of shares of Stock underlying the Award may be adjusted from time-to-time as provided in Section 11 of the Plan.

3.    Rights as a Stockholder. During the Restricted Period, Participant shall have no voting, dividend, liquidation and other rights with respect to the Stock underlying the RSUs until the RSUs vest and the RSUs are converted to shares of unrestricted Stock. The RSUs shall be subject to any restrictions on transferability or risks of forfeiture imposed pursuant to the Plan, the Notice or this Certificate. After the restrictions applicable to the RSUs lapse and the RSUs are converted to Shares, Participant shall have all stockholder rights, including the right to transfer the Shares, subject to such conditions as the Company may reasonably specify to ensure compliance with federal and state securities laws.

1

4.    No Obligation to Employ; Voluntary Participation. Nothing in this Certificate or the Plan shall confer on Participant any right to continue in the employ of, or other relationship with, the Company or an affiliate, or limit in any way the right of the Company to terminate Participant’s employment or other relationship at any time, with or without cause. By accepting this Award, Participant acknowledges and agrees that Participant’s participation in the Plan is voluntary and has not been induced by expectation of employment, appointment, continued employment or continued appointment, as applicable.

5.    Taxes andWithholding. The Participant shall be responsible for all income taxes payable in respect of the Stock. Upon the vesting of any shares of Stock, the Participant shall be required to pay to the Company and the Company shall have the right and hereby is authorized to (a) withhold and deduct from Participant’s future wages (or from other amounts that may be due and owing to Participant from the Company), or make other arrangement for the collection of, all legally required amounts necessary to satisfy any and all federal, provincial, state and local withholding and employment-related tax requirements attributable to the RSUs or Stock issued upon vesting of the RSUs under this Certificate, including, without limitation, the award or vesting of the Stock units or the issuance of the Stock; or (b) require Participant promptly to remit the amount of such withholding to the Company before taking any action with respect to the RSUs. Unless the Compensation Committee provides otherwise, withholding may be satisfied by withholding common stock to be received having a fair market value equal to such withholding liability. Unless the tax withholding obligations of the Company are satisfied, the Company shall have no obligation to issue a certificate for such Shares or release such Shares from any escrow provided for herein.

6.    Transferability. Until the restrictions lapse as set forth herein and the RSUs are converted to Stock, the RSUs may not be sold, pledged, loaned, gifted, or otherwise transferred in any manner (otherwise than by will or by the laws of descent and distribution) and may not be subject to lien, garnishment, attachment or other legal process. In addition, the Participant agrees to comply with any written holding requirements adopted by the Company for officers or employees in respect of any Stock.

7.    Interpretation. Any dispute regarding the interpretation of this Certificate shall be submitted by Participant or the Company to the Compensation Committee for review. The resolution of such a dispute by the Compensation Committee shall be final and binding on the Company and Participant.

8.    Governing Law.  This Certificate shall be governed by and construed according to the laws of the State of Delaware without regard to its principles of conflict of laws.

9.    Entire Agreement.  The Plan, Notice and Prospectus are hereby incorporated by reference and made a part hereof. This Certificate, Plan, Notice and Prospectus constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof.

10.    Successors and Assigns. The Company may assign any of its rights under this Certificate. This Certificate shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Certificate shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

11.    Amendments.  This Certificate may be amended or modified at any time only by an instrument in writing signed by each of the parties hereto.

12.Clawback/Forfeiture. If the Participant receives any amount in excess of what the Participant should have received with respect to the Stock for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant

2

shall be required to repay any such excess amount to the Company upon thirty (30) days prior written demand by the Compensation Committee. To the extent required by the Company’s Clawback Policy or applicable law (including without limitation Section 304 of the Sarbanes Oxley Act and Section 954 of the Dodd Frank Act), the Stock shall be subject to any required clawback, forfeiture or similar requirement.

13.    Section 409A. It is intended that the Stock be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended and this Certificate shall be interpreted consistent therewith. This Certificate is subject to Section 15.4 of the Plan.

14.    Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery:

if to the Company:

Internap Corporation

One Enterprise Avenue, N

Secaucus, NJ 07094

Attn: Legal Department – Richard Diegnan, General Counsel

E-mail: RDiegnan@INAP.com

if to the Participant, at the Participant’s last known address on file with the Company.

All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five business days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.

15.Resale. With respect to Canada, the Participant Employee has been informed that the RSUs, the Award or other securities of the Company received by the Employee Participant are subjected to restrictions on resale under Canadian securities laws. The Participant agrees not to sell any RSUs, any Award or securities except in accordance with such laws. Participant should consult a securities adviser prior to such disposition of Stock regarding the Canadian securities laws. The Company does not provide securities advice to its employees.

16.    Language. The parties hereto have expressly requested that this Certificate, all documents incorporated herein by reference, any notices or other documents to be given under such Certificate and other documents related thereto be drawn up in the English language. Les parties aux présentes ont expressément exigé que le présent certificat et tous les documents qui y sont incorporés par renvoi, ainsi que tout avis donné en vertu dudit certificat ou tout autre document qui s’y rapporte, soient rédigés en anglais.

17.    Acceptance. By accepting the Notice, Participant acknowledges receipt of a copy of the Plan, Notice and Prospectus and this Certificate and that Participant has read and understands the terms and provisions hereof and thereof, and accepts the Award subject to all the terms and conditions of the Plan, Notice and Prospectus and this Certificate. Participant acknowledges that there may be

3

adverse tax consequences upon acceptance or disposition of the Award and that Participant should consult a tax adviser prior to such exercise or disposition of Stock regarding the consequences, including the applicability and effect of all Canadian laws. The Company does not provide tax advice to its employees.

4

Annex A

Performance and Time Targets for Current Fiscal Year

Performance Criteria (50% of the Award)

If EBITDA less Capital Expenditures (i.e Free Cash Flow) for fiscal year 2017 of the Company equals or exceeds 100 percent (100%) of the EBITDA less Capital Expenditures Target for such fiscal year, then fifty percent (50%) of the total Award shall vest as follows: 33 1/3 percent (33.33%) of the Award shall become vested upon the Compensation Committee’s determination that the performance targets were achieved by the Company (“Achievement Date”), (33.33%) of the Award shall become vested one (1) year from the Achievement Date, and the remaining (33.33%) of the Award shall become vested two (2) years from the Achievement Date. If this performance target is not met, the Award shall terminate. Notwithstanding the foregoing, in the event of a change of control (as such term is defined in the Plan) during fiscal year, the Award to be vested in this Award shall fully vest immediately prior to the change of control and if the change of control occurs after the end of the fiscal year and prior to the Vesting Date, the shares with respect to this Award shall vest immediately prior to the change of control as if the Award would have vested on the Vesting Date.

Definition of “EBITDA” and “Capital Expenditures”

“EBITDA” as defined in the Board of Directors’ approved budget for the consolidated Company for the fiscal year.

“Capital Expenditures” as defined in the Board of Directors’ approved budgets for consolidated Company for fiscal year.

Time Criteria (50% of the Award)

If Participant remains continuously employed by the Company until the Vesting Date then fifty percent (50%) of the total Award shall vest as follows: 33 1/3 percent (33.33%) of the Award shall become vested one year from the grant date, (33.33%) of the Award shall become vested on two years from the grant date, and the remaining (33.33%) of the Award shall become vested on three years from the grant date.

Additional Information

The number of Awards vesting on each date shall be rounded up to the nearest whole number.

In the event of a change in control (as defined in the Plan), any surviving or acquiring corporation would be required to assume any outstanding award under the Plan or substitute similar awards. If the surviving or acquiring corporation does not assume outstanding awards or substitute similar awards, then subject to the change in control occurring, all outstanding Awards of Participants whose services with the Company has not terminated would be accelerated in full before the effective time of the change in control.

In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or similar event, the Awards set forth above shall be adjusted by the Compensation Committee in a proportionate or equitable manner to reflect such event.

5

EX-10.9+#

INTERNAP CORPORATION

AMENDED AND RESTATED 2017 STOCK INCENTIVE PLAN

STOCK GRANT CERTIFICATE

FOR RESTRICTED STOCK GRANTED TO DIRECTORS

1.    Award of Stock. Internap Corporation (the “Company”) hereby awards to the director (“Participant”) named in the Notice of Grant of Restricted Stock (“Notice”), a grant of Restricted Stock (“Stock”) for the total number of shares set forth on the Notice (the “Award”), subject to the terms, definitions and provisions of the Internap Corporation Amended and Restated 2017 Stock Incentive Plan, (the “Plan”), which is incorporated herein by reference, and the terms of this Stock Grant Certificate (the “Certificate”) and Plan Prospectus. Unless otherwise defined herein, terms not defined in this Certificate shall have the meanings ascribed to them in the Plan. In the event of a conflict between the terms and conditions of the Plan and those of this Certificate, the terms and conditions of the Plan shall prevail.

2.    Terms of Award.

2.1    Performance and Time Vesting. The Award granted to the Participant hereunder shall become vested on the dates set forth on Annex A (the “Vesting Date”) provided; that the Participant is providing service to the Company or its affiliates or subsidiaries on the Vesting Date.

2.2    Lapsing of Restrictions. Subject to the limitations contained herein, the restrictions on the Award shall lapse, and the Award shall vest, as provided in the Notice, provided that vesting shall cease upon the termination of Participant’s status as a Director. The period during which the Stock is subject to restrictions imposed by the Plan and this Certificate shall be known as the “Restricted Period.”

2.3    Number of Shares of Stock. The number of shares of Stock subject to the Award may be adjusted from time-to-time as provided in Section 11 of the Plan.

2.4    Restrictive Legends. The shares issued under the Award shall be endorsed with appropriate legends determined by the Company.

3.    Effect of Termination of Status. Except as otherwise provided in an written agreement between the Participant and the Company or resolution of the Compensation Committee, if the Participant’s services with the Company is terminated, the unvested portion of any Stock (“Unvested Shares”) shall be forfeited without any consideration to the Participant on the date of termination of service.

4.Rights as a Stockholder. During the Restricted Period, Participant shall have all voting, dividend, liquidation and other rights with respect to the Stock held of record by Participant as if Participant held unrestricted Stock; provided, however, that the Unvested Shares shall be subject to any restrictions on transferability or risks of forfeiture imposed pursuant to the Plan, the Notice or this Certificate. Any noncash dividends or distributions paid with respect to Unvested Shares shall be subject to the same restrictions as those relating to the Stock awarded under this Certificate. After the restrictions applicable to the Stock lapse, Participant shall have all stockholder rights, including the right to transfer the shares, subject to such conditions as the Company may reasonably specify to ensure compliance with federal and state securities laws.

5.    No Obligation to Employ. Nothing in this Certificate or the Plan shall confer on Participant any right to continue in the employ of, or other relationship with, the Company, or limit in any way the right of the Company to terminate Participant’s employment or other relationship at any time, with or without cause.

6.    Taxes andWithholding. The Participant shall be responsible for all amounts necessary to satisfy any and all federal, state and local withholding attributable to the Stock awarded under this Certificate, including, without limitation, the award or vesting of, or payments of dividends with respect to, the Stock, and shall remit such amounts as required directly to the Internal Revenue Service.

7.    Transferability. Until the restrictions lapse as set forth herein, the Stock granted under this Certificate may not be sold, pledged, loaned, gifted, or otherwise transferred in any manner (otherwise than by will or by the laws of descent and distribution) and may not be subject to lien, garnishment, attachment or other legal process. In addition, the Participant agrees to comply with any written holding requirements adopted by the Company for directors in respect of any Stock.

8.    Interpretation. Any dispute regarding the interpretation of this Certificate or Plan shall be submitted by Participant or the Company to the Compensation Committee for review. The resolution of such a dispute by the Compensation Committee shall be final and binding on the Company and Participant.

9.    Governing Law.  This Certificate shall be governed by and construed according to the laws of the State of Delaware without regard to its principles of conflict of laws.

10.    Entire Agreement.  The Plan, Notice and Prospectus are hereby incorporated by reference and made a part hereof. This Certificate, Plan, Notice and Prospectus constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof.

11.    Successors and Assigns. The Company may assign any of its rights under this Certificate. This Certificate shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Certificate shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

12.    Amendments.  This Certificate may be amended or modified at any time only by an instrument in writing signed by each of the parties hereto.

13.    Clawback/Forfeiture. If the Participant receives any amount in excess of what the Participant should have received with respect to the Stock for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be required to repay any such excess amount to the Company upon thirty (30) days prior written demand by the Compensation Committee. To the extent required by the Company’s Clawback Policy or applicable law (including without limitation Section 304 of the Sarbanes Oxley Act and Section 954 of the Dodd Frank Act), the Stock, shall be subject to any required clawback, forfeiture or similar requirement.

14.    Section 409A. It is intended that the Stock be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended and this Certificate shall be interpreted consistent therewith. This Certificate is subject to Section 15.4 of the Plan.

15.    Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery:

if to the Company:

Internap Corporation

One Enterprise Avenue, N

Secaucus, NJ 07094

Attn: Legal Department – Richard Diegnan, General Counsel

E-mail: RDiegnan@INAP.com

if to the Participant, at the Participant’s last known address on file with the Company.

All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five business days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.

16.    Acceptance. By accepting the Notice, Participant acknowledges receipt of a copy of the Plan, Notice and Prospectus and this Certificate and that Participant has read and understands the terms and provisions hereof and thereof, and accepts the Award subject to all the terms and conditions of the Plan, Notice and Prospectus and this Certificate. Participant acknowledges that there may be adverse tax consequences upon acceptance of the Award and that Participant should consult a tax adviser prior to such acceptance or disposition of Stock regarding the consequences, including the applicability and effect of all U.S. federal, state and local tax laws. The Company does not provide tax advice to its directors.

Annex A

Time Targets for Current Fiscal Year

Time Criteria

If Participant continuously provides services to the Company until the Vesting Date then one hundred percent (100%) of the total Award shall vest one year from the grant date.

Additional Information

In the event of a change in control (as defined in the Plan), any surviving or acquiring corporation would be required to assume any outstanding award under the Plan or substitute similar awards. If the surviving or acquiring corporation does not assume outstanding awards or substitute similar awards, then subject to the change in control occurring, all outstanding Awards of Participants whose employment with the Company has not terminated would be accelerated in full before the effective time of the change in control.

In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or similar event, the Awards set forth above shall be adjusted by the Compensation Committee in a proportionate or equitable manner to reflect such event.

1

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Peter D. Aquino, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Internap Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2019	/s/ Peter D. Aquino
	Peter D. Aquino
	President, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, James C. Keeley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Internap Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2019	/s/ James C. Keeley
	James C. Keeley
	Executive Vice President, Chief Financial Officer

EX-32.1*

Exhibit 32.1

STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code and shall not be relied on by any other person for any other purpose.

In connection with the Quarterly Report on Form 10-Q of Internap Corporation (the “Company”) for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Peter D. Aquino, President, Chief Executive Officer of the Company, certifies that

• the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2019
	/s/ Peter D. Aquino
	Peter D. Aquino
	President, Chief Executive Officer

EX-32.2*

Exhibit 32.2

STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code and shall not be relied on by any other person for any other purpose.

In connection with the Quarterly Report on Form 10-Q of Internap Corporation (the “Company”) for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, James C. Keeley, Executive Vice President, Chief Financial Officer of the Company, certifies that

• the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2019
	/s/ James C. Keeley
	James C. Keeley
	Executive Vice President, Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 05, 2019
Document and Entity Information Abstract
Entity Registrant Name	Internap Corp
Entity Central Index Key	0001056386
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		26,750,106
Entity Current Reporting Status	Yes

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Net revenues	$ 73,134	$ 81,962	$ 146,698	$ 156,163
Operating costs and expenses:
Costs of sales and services, exclusive of depreciation and amortization	25,949	27,331	51,682	51,938
Costs of customer support	8,726	8,841	17,516	16,228
Sales, general and administrative	15,683	19,602	33,204	39,456
Depreciation and amortization	21,955	22,712	44,133	43,870
Exit activities, restructuring and impairments	231	826	1,647	793
Total operating costs and expenses	72,544	79,312	148,182	152,285
Income (loss) from operations	590	2,650	(1,484)	3,878
Interest expense	19,218	16,739	36,665	32,343
Loss (gain) on foreign currency, net	118	26	322	(189)
Total non-operating expenses	19,336	16,765	36,987	32,154
Loss before income taxes and equity in earnings of equity-method investment	(18,746)	(14,115)	(38,471)	(28,276)
(Benefit) provision for income taxes	(211)	141	(314)	241
Net loss	(18,535)	(14,256)	(38,157)	(28,517)
Less net income attributable to non-controlling interests	20	23	42	50
Net loss attributable to INAP shareholders	(18,555)	(14,279)	(38,199)	(28,567)
Other comprehensive (loss) income:
Foreign currency translation adjustment	(27)	61	170	122
Total other comprehensive (loss) income	(27)	61	170	122
Comprehensive loss	$ (18,582)	$ (14,218)	$ (38,029)	$ (28,445)
Basic and diluted net loss per share (in dollars per share)	$ (0.78)	$ (0.71)	$ (1.61)	$ (1.43)
Weighted average shares outstanding used in computing basic and diluted net loss per share (in shares)	23,667	20,053	23,716	19,985

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 10,468	$ 17,823
Accounts receivable, net of allowance for doubtful accounts of $1,091 and $1,547, respectively	18,563	20,054
Contract assets	9,130	8,844
Term loan, less discount and prepaid costs of $4,971	614	0
Prepaid expenses and other assets	7,807	7,377
Total current assets	46,582	54,098
Property and equipment, net	223,497	478,061
Operating lease right-of-use assets	35,488	0
Finance lease right-of-use assets	229,228	0
Intangible assets, net	67,446	73,042
Goodwill	116,217	116,217
Contract assets	15,217	16,104
Deposits and other assets	7,121	7,409
Total assets	740,796	744,931
Current liabilities:
Accounts payable	25,826	23,435
Accrued liabilities	11,287	15,540
Deferred revenues	7,917	8,022
Capital lease obligations	0	9,080
Revolving credit facility	6,000	0
Term loan, less discount and prepaid costs of $4,036	0	321
Exit activities and restructuring liability	466	2,526
Short-term operating lease liabilities	6,584	0
Short-term finance lease liabilities	5,930	0
Other current liabilities	70	1,063
Total current liabilities	64,080	59,987
Deferred revenues	312	511
Operating lease liabilities	32,253	0
Finance lease liabilities	262,476	0
Capital lease obligations	0	262,382
Term loan, less discount and prepaid costs of $9,007 and $9,508, respectively	413,958	415,278
Deferred tax liability	1,617	2,211
Other long-term liabilities	3,633	4,505
Total liabilities	778,329	744,874
Commitments and contingencies (Refer to Note 10)
Stockholders’ (deficit) equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding	0	0
Common stock, $0.001 par value; 50,000 shares authorized; 26,770 and 25,455 shares outstanding, respectively	27	25
Additional paid-in capital	1,370,835	1,368,968
Treasury stock, at cost, 387 and 330, respectively	(7,956)	(7,646)
Accumulated deficit	(1,401,270)	(1,363,019)
Accumulated items of other comprehensive loss	(895)	(1,065)
Total INAP stockholders’ deficit	(39,259)	(2,737)
Non-controlling interests	1,726	2,794
Total stockholders’ (deficit) equity	(37,533)	57
Total liabilities and stockholders’ (deficit) equity	$ 740,796	$ 744,931

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 1,091	$ 1,547
Term loan current, discount and prepaid costs	4,971	4,036
Term loan deferred, discount and prepaid costs	$ 9,007	$ 9,508
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000	5,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	50,000	50,000
Common stock, shares outstanding (in shares)	26,770	25,455
Treasury stock, shares (in shares)	387	330

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Deficit	Accumulated Items of Other Comprehensive Loss	Non-Controlling Interest
Balance (in shares) at Dec. 31, 2017		20,804
Balance at Dec. 31, 2017	$ (1,032)	$ 21	$ 1,327,084	$ (7,159)	$ (1,323,723)	$ (1,324)	$ 4,069
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(14,261)				(14,261)
Net income attributable to non-controlling interest					(27)		27
Foreign currency translation	61					61
INAP Japan	(990)						(990)
Common stock issuance (in shares)		343
Employee taxes paid on withholding shares (in shares)		(20)
Employee taxes paid on withholding shares	(270)			(270)
Stock-based compensation	869		869
Proceeds from exercise of stock options, net (in shares)		4
Proceeds from exercise of stock options, net	32		32
Balance (in shares) at Mar. 31, 2018		21,131
Balance at Mar. 31, 2018	8,594	$ 21	1,327,985	(7,429)	(1,313,826)	(1,263)	3,106
Balance (in shares) at Dec. 31, 2017		20,804
Balance at Dec. 31, 2017	(1,032)	$ 21	1,327,084	(7,159)	(1,323,723)	(1,324)	4,069
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(28,517)
Net income attributable to non-controlling interest	(50)
Foreign currency translation	122
Balance (in shares) at Jun. 30, 2018		21,219
Balance at Jun. 30, 2018	(5,605)	$ 21	1,329,368	(7,630)	(1,329,086)	(1,202)	2,924
Balance (in shares) at Mar. 31, 2018		21,131
Balance at Mar. 31, 2018	8,594	$ 21	1,327,985	(7,429)	(1,313,826)	(1,263)	3,106
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(14,256)				(14,256)
Net income attributable to non-controlling interest	(23)				(23)		23
Foreign currency translation	61					61
INAP Japan	(205)						(205)
Common stock issuance (in shares)		104
Employee taxes paid on withholding shares (in shares)		(16)
Employee taxes paid on withholding shares	(201)			(201)
Stock-based compensation	1,382		1,382
Proceeds from exercise of stock options, net	1		1
Balance (in shares) at Jun. 30, 2018		21,219
Balance at Jun. 30, 2018	$ (5,605)	$ 21	1,329,368	(7,630)	(1,329,086)	(1,202)	2,924
Balance (in shares) at Dec. 31, 2018	25,455	25,455
Balance at Dec. 31, 2018	$ 57	$ 25	1,368,968	(7,646)	(1,363,019)	(1,065)	2,794
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(19,622)				(19,622)
Net income attributable to non-controlling interest					(22)		22
Foreign currency translation	197					197
INAP Japan	(1,133)						(1,133)
Common stock issuance (in shares)		1,339
Common stock issuance	(41)	$ 2	(43)
Employee taxes paid on withholding shares (in shares)		(48)
Employee taxes paid on withholding shares	(268)			(268)
Stock-based compensation	890		890
Balance (in shares) at Mar. 31, 2019		26,746
Balance at Mar. 31, 2019	$ (19,972)	$ 27	1,369,815	(7,914)	(1,382,715)	(868)	1,683
Balance (in shares) at Dec. 31, 2018	25,455	25,455
Balance at Dec. 31, 2018	$ 57	$ 25	1,368,968	(7,646)	(1,363,019)	(1,065)	2,794
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(38,157)
Net income attributable to non-controlling interest	(42)
Foreign currency translation	$ 170
Balance (in shares) at Jun. 30, 2019	26,770	26,770
Balance at Jun. 30, 2019	$ (37,533)	$ 27	1,370,835	(7,956)	(1,401,270)	(895)	1,726
Balance (in shares) at Mar. 31, 2019		26,746
Balance at Mar. 31, 2019	(19,972)	$ 27	1,369,815	(7,914)	(1,382,715)	(868)	1,683
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(18,535)				(18,535)
Net income attributable to non-controlling interest	(20)				(20)		20
Foreign currency translation	(27)					(27)
INAP Japan	23						23
Common stock issuance (in shares)		33
Employee taxes paid on withholding shares (in shares)		(9)
Employee taxes paid on withholding shares	(42)			(42)
Stock-based compensation	$ 1,020		1,020
Balance (in shares) at Jun. 30, 2019	26,770	26,770
Balance at Jun. 30, 2019	$ (37,533)	$ 27	$ 1,370,835	$ (7,956)	$ (1,401,270)	$ (895)	$ 1,726

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash Flows from Operating Activities:
Net loss	$ (38,157)	$ (28,517)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	44,133	43,870
Loss (gain) on disposal of fixed asset	481	(29)
Amortization of debt discount and issuance costs	2,546	1,712
Stock-based compensation expense, net of capitalized amount	1,901	2,232
Provision for doubtful accounts	380	604
Non-cash change in finance lease liabilities	3,520	(371)
Non-cash change in exit activities and restructuring liability	1,405	1,112
Non-cash change in deferred rent	0	(559)
Deferred taxes	(612)	60
Accreted interest	357	0
Other, net	(81)	3
Changes in operating assets and liabilities:
Accounts receivable	1,210	(2,165)
Prepaid expenses, deposits and other assets	298	(4,073)
Operating lease right-of-use assets	2,151	0
Accounts payable	3,375	6,939
Accrued and other liabilities	(3,146)	(585)
Deferred revenues	(323)	1,249
Exit activities and restructuring liability	(3,540)	(2,676)
Short and long-term operating lease liabilities	(1,964)	0
Asset retirement obligation	147	(188)
Other liabilities	0	(85)
Net cash provided by operating activities	14,081	18,533
Cash Flows from Investing Activities:
Purchases of property and equipment	(15,642)	(16,102)
Proceeds from disposal of property and equipment	100	541
Business acquisition, net of cash acquired	0	(131,748)
Additions to acquired and developed technology	(817)	(1,340)
Net cash used in investing activities	(16,359)	(148,649)
Cash Flows from Financing Activities:
Proceeds from credit agreements	6,000	146,000
Principal payments on credit agreements	(2,178)	(2,178)
Debt issuance costs	(2,815)	(7,696)
Payments on finance lease liabilities	(4,696)	(4,424)
Acquisition of non-controlling interests	(973)	(1,130)
Proceeds from exercise of stock options	0	(108)
Acquisition of common stock for income tax withholdings	(310)	(471)
Other, net	50	264
Net cash (used in) provided by in financing activities	(4,922)	130,257
Effect of exchange rates on cash and cash equivalents	(155)	(5)
Net (decrease) increase in cash and cash equivalents	(7,355)	136
Cash and cash equivalents at beginning of period	17,823	14,603
Cash and cash equivalents at end of period	10,468	14,739
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	29,859	29,965
Additions to property and equipment included in accounts payable	$ 1,268	$ 4,023

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NATURE OF OPERATIONS AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Internap Corporation (“we,” “us,” “our,” “INAP,” or “the Company”) is a leading-edge provider of high-performance data center and cloud solutions with over 100 network Points of Presence (“POP”) worldwide. INAP's full-spectrum portfolio of high-density colocation, managed cloud hosting and network solutions supports evolving IT infrastructure requirements for customers ranging from the Fortune 500 to emerging start-ups. INAP operates 21 metropolitan markets, primarily in North America, with data centers connected by a low-latency, high-capacity fiber network. INAP has over one million gross square feet in its portfolio, with approximately 600,000 square feet of sellable data center space. 

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated all intercompany transactions and balances in the accompanying financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature with the exception of those related to the adoption of new accounting standards as discussed in Note 2, "Recent Accounting Pronouncements" and Note 4, "Leases."

We have condensed or omitted certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP. The accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, necessary for a fair statement of our financial position as of June 30, 2019 and our operating results and cash flows for the interim periods presented. The balance sheet at December 31, 2018 was derived from our audited financial statements, but does not include all disclosures required by GAAP. You should read the accompanying financial statements and the related notes in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”).

The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the 2019 fiscal year or any future periods.

Out of Period Adjustment

In connection with the preparation, review and audit of the Company's consolidated financial statements required to be included in the Annual Report on Form 10-K for the year ended December 31, 2018, management identified certain errors in the Company's historical financial statements, resulting in a conclusion that certain corrections need to be made to the Company's unaudited quarters during 2018. The Company has revised its prior period consolidated financial statements accordingly and included such revisions herein. Based on an analysis of quantitative and qualitative factors, the Company concluded that these errors were not material to the consolidated financial position, results of operations or cash flows as presented in the Company’s quarterly financial statements that have been previously filed in the Company’s Quarterly Reports on Form 10-Q. As a result, amendment of such reports was not required. The revisions to correct errors relate to the correction of accounting for an amendment to a capital lease executed in February 2018.

The adjustments to the Company’s previously issued quarterly financial statements for the three and six months ended June 30, 2018 are as follows (in thousands):

	Three and Six Months Ended June 30, 2018
	As reported			Adjustments			As adjusted
Costs of sales and services, exclusive of depreciation and amortization - QTD	$	27,976		$	(645	)	$	27,331
Costs of sales and services, exclusive of depreciation and amortization - YTD	53,013			(1,075		)	51,938
Depreciation and amortization - QTD	22,590			122			22,712
Depreciation and amortization - YTD	43,667			203			43,870
Interest expense - QTD	15,860			879			16,739
Interest expense - YTD	30,887			1,456			32,343
Net loss attributable to INAP shareholders - QTD	(13,923		)	(356		)	(14,279		)
Net loss attributable to INAP shareholders - YTD	(27,983		)	(584		)	(28,567		)
Property and equipment, net	452,958			10,315			463,273
Total assets	724,707			10,315			735,022
Capital lease obligations - non-current	220,721			10,855			231,576
Total liabilities	729,728			10,855			740,583
Accumulated deficit	(1,328,502		)	(584		)	(1,329,086		)
Total stockholders' (deficit) equity	$	(5,021	)	$	(584	)	$	(5,605	)

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RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which states that a lessee should recognize the assets and liabilities that arise from leases. The standard has since been modified with several ASUs (collectively, the "new lease standard"). The new lease standard is effective for annual and interim periods beginning after December 15, 2018. Earlier adoption is permitted. The Company adopted the new lease standard on January 1, 2019, the beginning of fiscal 2019. Prior periods presented in our condensed consolidated financial statements continue to be presented in accordance with the former lease standard, Topic 840, Leases.

The new lease standard provides entities two options for applying the modified retrospective approach (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative-effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption (January 1, 2019) through a cumulative-effect adjustment recognized then. The Company adopted the new lease standard by recognizing and measuring leases at the adoption date with a cumulative effect of initially applying the guidance recognized at the date of initial application. The most significant impact relates to the recognition on the Company's balance sheet of right-of-use ("ROU") assets and lease liabilities for all operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily depends on its classification. For income statement purposes, operating leases will result in a straight-line expense while finance leases will result in a front-loaded expense pattern.

The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company did not separately record lease components from non-lease components, and accounts for them together as a single lease component. INAP made an accounting policy election to not record leases with an initial term of 12 months or less on the balance sheet. The Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term in the consolidated statements of operations and comprehensive loss. The Company has elected to not record a ROU asset or ROU liability for leases with an asset or liability balance that would be less than one thousand dollars ($1,000) on the adoption date on the basis of materiality. This threshold continues to be consistent with the Company’s Property and Equipment capitalization threshold.

As a result of our adoption of the new lease standard, we have implemented a new lease accounting system, accounting policies and processes which changed the Company's internal controls over financial reporting for lease accounting.

The Company primarily has capital leases which have been recorded on the consolidated balance sheets and as of the January 1, 2019 transition date, the capital leases became finance leases establishing the ROU asset and liability. The ROU assets and liabilities for operating leases were $28.5 million and $31.0 million of total Company assets and liabilities, respectively, as of January 1, 2019.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets including trade receivables, loans and held-to-maturity debt securities held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This will result in the earlier recognition of credit losses. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. If expected cash flows improve, an entity will reduce the allowance and reverse the expense through income. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Entities will have to make more disclosures, including disclosures by year of origination for certain financing receivables. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220). This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) (“AOCI”) to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017. This standard was effective for interim and annual reporting periods beginning after December 15, 2018. We did not exercise the option to make this reclassification.

In June 2018, the FASB issued ASU 2018-07, Improvements to Non-employee Share-Based Payment Accounting broadens the scope of FASB ASC Topic 718, Compensation — Stock Compensation, which currently covers only share-based payments to employees. The change substantially aligns the accounting for share-based payments for both employees and non-employees. The ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Non-Employees. The measurement of equity-classified non-employee awards will be fixed at the grant date, and entities will measure the cost of awards subject to a performance condition using the outcome that is probable at the balance sheet date. Entities may use the expected term to measure non-employee options or elect to use the contractual term as the expected term, on an award-by-award basis. Entities will recognize a cumulative-effect adjustment to retained earnings for equity classified non-employee awards for which a measurement date has not been established and liability-classified non-employee awards that have not been settled. The guidance is effective for calendar-year public business entities in annual periods beginning after December 15, 2018, and interim periods within those years. The Company adopted this pronouncement in the first quarter of 2019 and it did not have a material impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), relating to a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by a vendor (i.e., a service contract). Under the new guidance, a customer will apply the same criteria for capitalizing implementation costs as it would for an arrangement that has a software license. The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted.  The Company can choose to adopt the new guidance (1) prospectively to eligible costs incurred on or after the date this guidance is first applied, or (2) retrospectively. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which removes, adds and modifies certain disclosure requirements for fair value measurements in Topic 820. The Company will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the valuation processes of Level 3 fair value measurements. However, the Company will be required to additionally disclose the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, and the range and weighted average of assumptions used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  The amendments relating to additional disclosure requirements will be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments will be applied retrospectively to all periods presented upon their effective date. The Company is permitted to early adopt either the entire ASU or only the provisions that eliminate or modify the requirements. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

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REVENUES

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

REVENUES

REVENUES

We generate revenues primarily from the sale of data center services, including colocation, hosting and cloud, and IP services. Our revenues typically consist of monthly recurring revenues from contracts with terms of one year or more and we typically recognize the monthly minimum as revenue each month as our performance obligations are fulfilled. We recorded installation fees as deferred revenue and recognized the revenue ratably over the estimated customer life.

For our data center service revenues, we determine colocation revenues by occupied square feet and both allocated and variable-based usage, which includes both physical space for hosting customers' network and other equipment plus associated services such as power and network connectivity, environmental controls and security. We determine hosting revenues by the number of servers utilized (physical or virtual) and cloud revenues by the amount of processing and storage consumed. We recognize IP services revenues on fixed-commitment or usage-based pricing. IP service contracts usually have fixed minimum commitments based on a certain level of bandwidth usage with additional charges for any usage over a specified limit. If a customer's usage of our services exceeds the monthly minimum, we recognize revenue for such excess in the period of the usage. We use contracts and sales or purchase orders as evidence of an arrangement. We test for availability or connectivity to verify delivery of our services.

We assess whether:

a. the parties to the contract have an approved contract;

b. the Company can identify each party's rights regarding the goods and services to be transferred;

c. the Company can identify the payment terms for the goods or services to be transferred;

d. the contract has commercial substance; and

e. it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the goods and services that will be transferred to the customer.

The transaction price reflects INAP’s expectations about the consideration it will be entitled to receive from the customer. The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. After contract inception, the transaction price can change for various reasons, including the resolution of uncertain events or other changes in circumstances that change the amount of consideration to which INAP expects to be entitled in exchange for the promised goods or services. Once the separate performance obligations are identified and the transaction price has been determined, the Company allocates the transaction price to the performance obligations in proportion to their standalone selling price ("SSP"). When allocating on a relative SSP basis, any discount within the contract generally is allocated proportionately to all of the performance obligations in the contract.

To allocate the transaction price on a relative SSP basis, the Company first determines the SSP of the distinct good or service underlying each performance obligation. It is the price at which the Company would sell a good or service on a standalone (or separate) basis at contract inception. The observable price of a good or service sold separately provides the best evidence of SSP. If a SSP is not directly observable, the Company would estimate the SSP. The Company will be able to consider its facts and circumstances in order to determine how frequently it will need to update the estimates. If the information used to estimate the SSP for similar transactions has not changed, the Company can determine that it is reasonable to use the previously determined SSP.

Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

The Company's contracts with customers often include performance obligations to transfer multiple products and services to a customer. Common performance obligations of the Company include delivery of services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment by the Company.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Total transaction price is estimated for impact of variable consideration, such as INAP's service level arrangements, additional usage and late fees, discounts and promotions, and customer care credits. The majority of contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, the Company allocates the contract's transaction price to each performance obligation based on its relative SSP.

The SSP is determined based on observable price. In instances where the SSP is not directly observable, such as when the Company does not sell the product or service separately, INAP determines the SSP using information that may include market conditions and other observable inputs. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP.

The most significant impact of the adoption of the new standard was the requirement for incremental costs to obtain a customer, such as commissions, which previously were expensed as incurred, to be deferred and amortized over the period of contract performance or a longer period if renewals are expected and the renewal commission does not equal with the initial commission.

In addition, installation revenues are recognized over the initial contract life rather than over the estimated customer life, as they are not significant to the total contract and therefore do not represent a material right.

Most performance obligations, with the exception of certain sales of equipment or hardware, are satisfied over time as the customer consumes the benefits as we perform. For equipment and hardware sales, the performance obligation is satisfied when control transfers to the customer.

In evaluating the treatment of certain contracts, the Company exercised heightened judgment in deferring installation revenue as well as expense fulfillment and commission costs over the appropriate life. With the exception of the revenues noted above, revenue recognition remains materially consistent with historical practice.

The Company routinely reviews the collectability of its accounts receivable and payment status of customers. If INAP determines that collection of revenue is uncertain, it does not recognize revenue until collection is reasonably assured. Additionally, the Company maintains an allowance for doubtful accounts resulting from the inability of the Company's customers to make required payments on accounts receivable. The allowance for doubtful accounts is based on historical write-offs as a percentage of revenues. INAP assesses the payment status of customers by reference to the terms under which it provides services or goods, with any payments not made on or before their due date considered past-due. Once all collection efforts have been exhausted, the uncollectible balance is written off against the allowance for doubtful accounts. The Company routinely performs credit checks for new and existing customers and requires deposits or prepayments for customers that are perceived as being a credit risk. In addition, INAP records a reserve amount for potential credits to be issued under service level agreements and other sales adjustments.

Management expects that commission fees paid to sales representatives as a result of obtaining service contracts and contract renewals are recoverable and therefore the Company capitalized them as contract costs in the amount of $24.3 million and $24.9 million at June 30, 2019 and December 31, 2018, respectively. Capitalized commission fees are amortized on a straight-line basis over the determined life, which vary based on the customer segment. For the three months ended June 30, 2019 and June 30, 2018, amortization recognized was $2.4 million for both years. For the six months ended June 30, 2019 and June 30, 2018, amortization recognized was $4.8 million and $4.7 million, respectively. There was no impairment loss recorded on capitalized contract costs for the three and six months ended June 30, 2019 and June 30, 2018.

Applying the practical expedient pertaining to contract costs, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in "Sales, general and administrative" expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

The Company includes only those incremental costs that would not have been incurred if the contracts had not been entered into as follows (in thousands):

	Current			Non-current
Balance at December 31, 2018	$	8,844		$	16,104
Deferred customer acquisition costs incurred in the period	862			3,353
Amounts recognized as expense in the period	(4,816		)	—
Reclassification between short-term and long-term	4,240			(4,240		)
Balance at June 30, 2019	$	9,130		$	15,217

The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, the Company recognizes a receivable for revenues related to its time and materials and transaction or volume-based contracts. The Company presents such receivables in "Accounts receivable, net" it its condensed consolidated balance sheets at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.

Amounts collected in advance of services being provided are accounted for as contract liabilities, which are presented as "Deferred revenues" on the accompanying condensed consolidated balance sheets and are realized with the associated revenue recognized under the contract. Nearly all of the Company's contract liabilities balance is related to service revenue.

Significant changes in the deferred revenues balance (current and noncurrent) during the period are as follows (in thousands):

Balance - December 31, 2018	$	8,533
Revenue recognized that was included in the deferred revenue balance at December 31, 2018	(5,300		)
Increases due to cash received, excluding amounts recognized as revenue during the period	4,996
Balance - June 30, 2019	$	8,229

Revenues recognized during the three and six months ended June 30, 2019 for performance obligations satisfied or partially satisfied in previous periods were immaterial.

In accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"), the Company disaggregates revenue from contracts with customers based on the timing of revenue recognition. The Company determined that disaggregating revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. As discussed in this note and Note 11, “Operating Segments,” the Company business consists of INAP US and INAP INTL colocation, cloud and network services. The following table presents disaggregated revenues by category as follows (in thousands):

	Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
Colocation	$	27,557	$	1,457	$	30,866	$	1,459
Network services	11,414		2,678		13,563		2,792
Cloud	18,490		11,538		19,638		13,644
	$	57,461	$	15,673	$	64,067	$	17,895

	Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
Colocation	$	54,911	$	2,892	$	61,802	$	2,977
Network services	23,156		5,452		27,382		5,763
Cloud	36,914		23,373		31,958		26,281
	$	114,981	$	31,717	$	121,142	$	35,021

Revenue by geography is as follows (in thousands):

	Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
United States	$	58,461	$	—	$	65,168	$	—
Canada	—		8,084		—		9,549
Other countries	—		6,589		—		7,245
	$	58,461	$	14,673	$	65,168	$	16,794

	Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
United States	$	117,025	$	—	$	123,319	$	—
Canada	—		16,027		—		18,659
Other countries	—		13,646		—		14,185
	$	117,025	$	29,673	$	123,319	$	32,844

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LEASES

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

LEASES

LEASES

We have commitments under leases arrangements for data centers, office space, partner sites and equipment. Our leases have initial lease terms ranging from 2 years to 34 years, most of which includes options to extend or renew the leases for 5 to 15 years, and some of which may include options to terminate the leases within 4 to 120 months.

At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time). Operating leases are accounted for on the condensed consolidated balance sheets with ROU assets being recognized in "Operating lease right-of-use assets" and lease liabilities recognized in "Short-term operating lease liabilities" and "Operating lease liabilities." Finance leases are accounted for on the condensed consolidated balance sheets with ROU assets being recognized in "Finance lease right-of-use assets" and lease liabilities recognized in "Short-term finance lease liabilities" and "Finance lease liabilities."

All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for initial direct costs, prepaid rent, and lease incentives received. The operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for initial direct costs, prepaid or accrued lease payments and lease incentives. The finance lease ROU assets are subsequently amortized using the straight-line method.

Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability.

We have elected to combine lease and non-lease components for all lease contracts where we are the lessee. Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.

Lease related costs for the three and six months ended June 30, 2019 are as follows (in thousands):

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Finance lease cost
Amortization of right-of-use assets		$	4,131	$	8,523
Interest on lease liabilities		7,325		14,575
Finance lease cost		$	11,456	$	23,098
Operating lease cost		$	1,932	$	3,697
Short-term lease cost		879		2,369
Total lease cost		$	14,267	$	29,164

Other information related to leases as of June 30, 2019 is as follows (in thousands, except lease term and rate):

	Operating Leases			Finance Leases
Right-of-use assets	$	35,488		$	229,228
Lease liabilities	38,837			268,406
Weighted-average remaining lease term (years)	5.46			19.26
Weighted-average discount rate	7.24		%	13.79		%

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the six months ended June 30, 2019 (in thousands):

Operating Leases
Operating cash paid to settle operating lease liabilities	$	3,660
Right-of-use assets obtained in exchange for lease liabilities	921
Finance Leases
Operating cash paid for interest	$	11,171
Right-of-use assets obtained in exchange for lease liabilities	18

Future minimum lease payments under non-cancellable leases as of June 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)		$	4,527		$	16,416
2020		9,089			33,106
2021		9,114			34,933
2022		8,534			33,676
2023		7,549			32,916
Thereafter		8,737			631,020
Total undiscounted lease payments		$	47,550		$	782,067
Less: Imputed interest		8,713			513,661
Total lease liabilities		$	38,837		$	268,406

As of June 30, 2019, we did not have additional operating and finance leases that have not yet commenced.

LEASES

LEASES

We have commitments under leases arrangements for data centers, office space, partner sites and equipment. Our leases have initial lease terms ranging from 2 years to 34 years, most of which includes options to extend or renew the leases for 5 to 15 years, and some of which may include options to terminate the leases within 4 to 120 months.

At contract inception, we evaluate whether an arrangement is or contains a lease for which we are the lessee (that is, arrangements which provide us with the right to control a physical asset for a period of time). Operating leases are accounted for on the condensed consolidated balance sheets with ROU assets being recognized in "Operating lease right-of-use assets" and lease liabilities recognized in "Short-term operating lease liabilities" and "Operating lease liabilities." Finance leases are accounted for on the condensed consolidated balance sheets with ROU assets being recognized in "Finance lease right-of-use assets" and lease liabilities recognized in "Short-term finance lease liabilities" and "Finance lease liabilities."

All lease liabilities are measured at the present value of the unpaid lease payments, discounted using our incremental borrowing rate based on the information available at commencement date of the lease. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for initial direct costs, prepaid rent, and lease incentives received. The operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for initial direct costs, prepaid or accrued lease payments and lease incentives. The finance lease ROU assets are subsequently amortized using the straight-line method.

Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability.

We have elected to combine lease and non-lease components for all lease contracts where we are the lessee. Additionally, for arrangements with lease terms of 12 months or less, we do not recognize ROU assets and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.

Lease related costs for the three and six months ended June 30, 2019 are as follows (in thousands):

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Finance lease cost
Amortization of right-of-use assets		$	4,131	$	8,523
Interest on lease liabilities		7,325		14,575
Finance lease cost		$	11,456	$	23,098
Operating lease cost		$	1,932	$	3,697
Short-term lease cost		879		2,369
Total lease cost		$	14,267	$	29,164

Other information related to leases as of June 30, 2019 is as follows (in thousands, except lease term and rate):

	Operating Leases			Finance Leases
Right-of-use assets	$	35,488		$	229,228
Lease liabilities	38,837			268,406
Weighted-average remaining lease term (years)	5.46			19.26
Weighted-average discount rate	7.24		%	13.79		%

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the six months ended June 30, 2019 (in thousands):

Operating Leases
Operating cash paid to settle operating lease liabilities	$	3,660
Right-of-use assets obtained in exchange for lease liabilities	921
Finance Leases
Operating cash paid for interest	$	11,171
Right-of-use assets obtained in exchange for lease liabilities	18

Future minimum lease payments under non-cancellable leases as of June 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)		$	4,527		$	16,416
2020		9,089			33,106
2021		9,114			34,933
2022		8,534			33,676
2023		7,549			32,916
Thereafter		8,737			631,020
Total undiscounted lease payments		$	47,550		$	782,067
Less: Imputed interest		8,713			513,661
Total lease liabilities		$	38,837		$	268,406

As of June 30, 2019, we did not have additional operating and finance leases that have not yet commenced.

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ACQUISITION

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

ACQUISITION

ACQUISITION

On February 28, 2018, the Company acquired SingleHop LLC ("SingleHop"), a provider of high-performance data center services including colocation, managed hosting, cloud and network services for $132.0 million net of working capital adjustments of approximately $0.4 million, liabilities assumed, and net of cash acquired. The transaction was funded with an incremental term loan and cash from the balance sheet. As part of the financing, INAP obtained an amendment to its credit agreement to allow for the incremental term loan and to provide further operational flexibility under the credit agreement covenants. The amendments to the credit agreement are described in more detail in Note 8, "Debt."

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date and includes purchase accounting adjustments subsequent to the acquisition date (in thousands):

	Final Valuation as of December 31, 2018
Cash	$	2,823
Prepaid expenses and other assets	2,227
Property, plant and equipment	14,253
Other long term assets	576
Intangible assets:
Noncompete agreements	4,000
Trade names	1,700
Technology	15,100
Customer relationships	34,100
Goodwill	66,008
Total assets acquired	140,787
Accounts payable and accrued liabilities	2,819
Deferred revenue	2,434
Long term liabilities	534
Net assets acquired	$	135,000

The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. The intangible assets are being amortized over periods which reflect the pattern in which economic benefits of the assets are expected to be realized. The customer relationships are being amortized on an accelerated basis over an estimated useful life of ten years and the noncompete agreements, trade names, and technology are being amortized on a straight-line basis over four, eight, and seven years, respectively.

Goodwill represents the excess of the consideration transferred over the aggregate fair values of assets acquired and liabilities assumed. The goodwill recorded in connection with this acquisition was based on operating synergies and other benefits expected to result from the combined operations and the assembled workforce acquired. The goodwill acquired is deductible for tax purposes.

Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations of INAP and SingleHop as if the acquisition had occurred on January 1, 2017. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the INAP and SingleHop acquisition been completed as of January 1, 2017, and should not be taken as indicative of our future consolidated results of operations. The pro forma results are as follows (in thousands, except for per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
		2018				2018
Revenues		$	81,962			$	164,288
Net loss		(14,256		)		$	(29,718	)
Basic and diluted net loss per share		(0.71		)		$	(1.48	)
Weighted average shares outstanding used in computing basic and diluted net loss per share		20,053				19,985

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

• Level 1: Quoted prices in active markets for identical assets or liabilities;

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):

	Level 1		Level 2		Level 3		Total
June 30, 2019
Available-for-sale securities	$	—	$	2,381	$	—	$	2,381
Asset retirement obligations(1)	—		—		2,237		2,237
December 31, 2018
Available-for-sale securities	$	—	$	2,309	$	—	$	2,309
Asset retirement obligations(1)	—		—		2,090		2,090

⁽¹⁾  We calculated the fair value of asset retirement obligations by discounting the estimated amount using the current Treasury bill rate adjusted for our credit risk. At June 30, 2019 and December 31, 2018, the balances are included in “Other long-term liabilities,” in the accompanying condensed consolidated balance sheets.

The following table provides a summary of changes in our Level 3 asset retirement obligations for the three months ended June 30, 2019 (in thousands): 

	2019
Balance, January 1, 2019	$	2,090
Accretion	147
Payments	—
Balance, June 30, 2019	$	2,237

As of June 30, 2019, the Company held $2.4 million of available-for-sale debt securities which are reported at fair value on the Company's condensed consolidated balance sheets in "Deposits and other assets." Unrealized holding gains and losses are reported within accumulated other comprehensive loss in the condensed consolidated statements of operations and comprehensive loss. A decline in the fair value of a marketable security below the Company's cost basis is determined to be other than temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and maturity management.

The fair values of our Level 2 available-for-sale debt securities, based upon quoted prices for similar items in active markets, are as follows (in thousands):

	June 30, 2019
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Japanese Corporate Bonds	$	2,221	$	127	$	(57	)	$	2,291
Japanese Government Bonds	88		4		(2		)	90
Total Bonds	$	2,309	$	131	$	(59	)	$	2,381
	December 31, 2018
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Japanese Corporate Bonds	$	2,184	$	144	$	(107	)	$	2,221
Japanese Government Bonds	87		5		(4		)	88
Total Bonds	$	2,271	$	149	$	(111	)	$	2,309

The fair values of our Level 2 debt liabilities, based upon quoted prices for similar items in active markets, are as follows (in thousands):

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term loan	$	427,322	$	376,043	$	429,143	$	428,071
Revolving credit facility	6,000		5,280		—		—

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GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company tests goodwill and intangible assets with indefinite lives for impairment annually in the third quarter as of August 1. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit or indefinite lived intangible asset below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

The Company tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass this qualitative assessment for some or all of its reporting units and perform a quantitative test.

Goodwill is considered impaired if the carrying amount of the net assets exceeds the fair value of the reporting unit. Impairment, if any, would be recorded in operating income / (loss) and this could result in a material impact to net income / (loss) and income / (loss) per share.

Interim Testing

During the second quarter of 2019, the Company identified a significant decrease in its share price which was considered an impairment indicator. As a result, the Company performed a goodwill impairment test as of June 1, 2019. The Company determined after performing the fair value analysis, which was based on the discounted cash flow method, that all reporting units' fair values were in excess of its carrying value and therefore no impairment of goodwill exists. While management believes the assumptions used are reasonable and commensurate with the views of a market participant, changes in key assumptions for these reporting units, including increasing the discount rate, lowering revenue forecasts, lowering the operating margin or lowering long-term growth rate, could result in a future impairment.

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DEBT

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

DEBT

DEBT

Credit Agreement

On April 6, 2017, we entered into a new Credit Agreement (the “2017 Credit Agreement”), which provides for a $300.0 million term loan facility ("2017 term loan") and a $25.0 million Revolving Credit Facility (the "2017 Revolving Credit Facility"). The proceeds of the 2017 term loan were used to refinance the Company’s existing credit facility and to pay costs and expenses associated with the 2017 Credit Agreement.

Certain portions of refinancing transaction were considered an extinguishment of debt and certain portions were considered a modification. A total of $5.7 million was paid for debt issuance costs related to the 2017 Credit Agreement. Of the $5.7 million in costs paid, $1.9 million related to the exchange of debt and was expensed, $3.3 million related to 2017 term loan third party costs and will be amortized over the 2017 term loan and $0.4 million prepaid debt issuance costs related to the 2017 Revolving Credit Facility and will be amortized over the term of the 2017 Revolving Credit Facility. In addition, $4.8 million of debt discount and debt issuance costs related to the previous credit facility were expensed due to the extinguishment of that credit facility. The maturity date of the 2017 term loan is April 6, 2022 and the maturity date of the 2017 Revolving Credit Facility is October 6, 2021. As of June 30, 2019, the outstanding balance of the 2017 term loan and the 2017 Revolving Credit Facility was $413.3 million and $6.0 million, respectively. The interest rate on the 2017 term loan and the 2017 Revolving Credit Facility as of June 30, 2019 was 9.40% and 11.50%, respectively.

Borrowings under the 2017 Credit Agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, a base rate or an adjusted LIBOR rate. The applicable margin for loans under the 2017 Revolving Credit Facility is 6.00% for loans bearing interest calculated using the base rate (“Base Rate Loans”) and 7.00% for loans bearing interest calculated using the adjusted LIBOR rate. The applicable margin for loans under the 2017 term loan is 4.75% for Base Rate Loans and 5.75% for adjusted LIBOR rate loans. The base rate is equal to the highest of (a) the adjusted U.S. Prime Lending Rate as published in the Wall Street Journal, (b) with respect to term loans issued on the closing date, 2.00%, (c) the federal funds effective rate from time to time, plus 0.50%, and (d) the adjusted LIBOR rate, as defined below, for a one-month interest period, plus 1.00%. The adjusted LIBOR rate is equal to the rate per annum (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered in the interbank Eurodollar market for the applicable interest period (one, two, three or six months), as quoted on Reuters screen LIBOR (or any successor page or service). The financing commitments of the lenders extending the 2017 Revolving Credit Facility are subject to various conditions, as set forth in the 2017 Credit Agreement. As of June 30, 2019, the Company has been in compliance with all covenants.  

First Amendment

On June 28, 2017, the Company entered into an amendment to the 2017 Credit Agreement ("First Amendment"), by and among the Company, each of the lenders party thereto, and Jefferies Finance LLC, as Administrative Agent. The First Amendment clarified that for all purposes the Company's liabilities pursuant to any lease that was treated as rental and lease expense, and not as a capital lease obligation or indebtedness on the closing date of the 2017 Credit Agreement, would continue to be treated as a rental and lease expense, and not as a capital lease obligations or indebtedness, for all purposes of the 2017 Credit Agreement, notwithstanding any amendment of the lease that results in the treatment of such lease as a capital lease obligation or indebtedness for financial reporting purposes.

Second Amendment

On February 6, 2018, the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent, entered into a Second Amendment to Credit Agreement (the "Second Amendment") that amended the 2017 Credit Agreement.

The Second Amendment, among other things, amends the 2017 Credit Agreement to (i) permit the Company to incur incremental term loans under the 2017 Credit Agreement of up to $135.0 million to finance the Company's acquisition of SingleHop and to pay related fees, costs and expenses, and (ii) revise the maximum total net leverage ratio and minimum consolidated interest coverage ratio covenants.  The financial covenant amendments became effective upon the consummation of the SingleHop acquisition, while the other provisions of the Second Amendment became effective upon the execution and delivery of the Second Amendment. This transaction was considered a modification.

A total of $1.0 million was paid for debt issuance costs related to the Second Amendment. Of the $1.0 million in costs paid, $0.2 million related to the payment of legal and professional fees which were expensed, $0.8 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Third Amendment

On February 28, 2018, INAP entered into the Incremental and Third Amendment to the Credit Agreement among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the "Third Amendment"). The Third Amendment provides for a funding of the new incremental term loan facility under the 2017 Credit Agreement of $135.0 million (the "Incremental Term Loan"). The Incremental Term Loan has terms and conditions identical to the existing loans under the 2017 Credit Agreement, as amended.  Proceeds of the Incremental Term Loan were used to complete the acquisition of SingleHop and to pay fees, costs and expenses related to the acquisition, the Third Amendment and the Incremental Term Loan. This transaction was considered a modification. 

A total of $5.0 million was paid for debt issuance costs related to the Third Amendment. Of the $5.0 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $4.9 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Fourth Amendment

On April 9, 2018, the Company entered into the Fourth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the "Fourth Amendment"). The Fourth Amendment amends the 2017 Credit Agreement to lower the interest rate margins applicable to the outstanding term loans under the 2017 Credit Agreement by 1.25%. This transaction was considered a modification.

A total of $1.7 million was paid for debt issuance costs related to the Fourth Amendment. Of the $1.7 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $1.6 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

Fifth Amendment

On August 28, 2018, the Company entered into the Fifth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the “Fifth Amendment”).  The Fifth Amendment amended the 2017 Credit Agreement by increasing the aggregate revolving commitment capacity by $10.0 million to $35.0 million.

Sixth Amendment

On May 8, 2019, the Company entered into the Sixth Amendment to the 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the “Sixth Amendment”). The Sixth Amendment (i) adjusted the applicable interest rates under the 2017 Credit Agreement, (ii) modified the maximum Total Net Leverage Ratio requirements and the minimum Consolidated Interest Coverage Ratio requirements and (iii) modified certain other covenants.

Pursuant to the Sixth Amendment, the applicable margin for adjusted base rate term loans was increased from 4.75% per annum to 5.25% per annum and for Eurodollar term loans was increased from 5.75% per annum to 6.25% per annum, with such interest payable in cash, and in addition such term loans bear interest payable in kind at the rate of 0.75% per annum.

The Sixth Amendment also made the following modifications:

• An additional basket of $500,000 for finance lease obligations.

• The maximum amount of permitted asset dispositions was decreased from $150,000,000 to $50,000,000.

• The amount of net cash proceeds from asset sales that may be reinvested is limited to $2,500,000 in any fiscal year of the Company, with net cash proceeds that are not so reinvested used to prepay loans under the Credit Agreement.

• The restricted payment basket was decreased from $5,000,000 to $1,000,000.

The maximum total leverage ratio increases to 6.80 to 1 as of June 30, 2019, 6.90 to 1 as of September 30, 2019 - December 31, 2019, decreases to 6.75 to 1 as of March 31, 2020, 6.25 to 1 as of June 30, 2020, 6.00 to 1 as of September 30, 2020, 5.75 to 1 as of December 31, 2020, 5.50 to 1 as of March 2021, 5.00 to 1 as of June 30, 2021 and 4.50 to 1 as of September 30, 2021 and thereafter.

The minimum consolidated interest coverage ratio decreases to 1.75 to 1 as of June 30, 2019, 1.70 to 1 as of September 30, 2019 - March 31, 2020, increases to 1.80 to 1 as of June 30, 2020, 1.85 to 1 as of September 2020 and 2.00 to 1 as of December 31, 2020 and thereafter. This transaction was considered a modification.

A total of $2.9 million was paid for debt issuance costs related to the Sixth Amendment. Of the $2.9 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $2.8 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement.

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EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES

EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES

During 2019 and 2018, we recorded exit activity charges due to ceasing use of office space. We include initial charges and plan adjustments in “Exit activities, restructuring and impairments” in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2019 and 2018.

The following table displays the transactions and balances for exit activities and restructuring charges during the six months ended June 30, 2019 and 2018 (in thousands). Our real estate and severance obligations are substantially related to our INAP US segment.

	Balance										Balance
	December 31, 2018		Initial Charges		Plan Adjustments			Cash Payments			June 30, 2019
Activity for 2019 restructuring charge:
Real estate obligations	$	—	$	1,252	$	(133	)	$	(973	)	$	146
Activity for 2018 restructuring charge:
Real estate obligations	1,922		$	96	$	83		$	(2,011	)	90
Activity for 2017 restructuring charge:
Real estate obligations	100		—		—			(91		)	9
Activity for 2016 restructuring charge:
Real estate obligations	125		—		21			(80		)	66
Activity for 2015 restructuring charge:
Real estate obligation	27		—		13			(26		)	14
Service contracts	221		—		19			(99		)	141
Activity for 2014 restructuring charge:
Real estate obligation	206		—		54			(260		)	—
	$	2,601	$	1,348	$	57		$	(3,540	)	$	466

	Balance									Balance
	December 31, 2017		Initial Charges		Plan Adjustments		Cash Payments			June 30, 2018
Activity for 2018 restructuring charge:
Real estate obligations	$	—	$	741	$	45	$	(163	)	$	623
Activity for 2017 restructuring charge:
Real estate obligations	3,380		—		143		(1,896		)	1,627
Activity for 2016 restructuring charge:
Severance	46		—		34		(34		)	46
Real estate obligations	247		—		14		(77		)	184
Activity for 2015 restructuring charge:
Real estate obligation	64		—		9		(28		)	45
Service contracts	388		—		14		(99		)	303
Activity for 2014 restructuring charge:
Real estate obligation	691		—		112		(379		)	424
	$	4,816	$	741	$	371	$	(2,676	)	$	3,252

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COMMITMENTS, CONTINGENCIES AND LITIGATION

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS, CONTINGENCIES AND LITIGATION

COMMITMENTS, CONTINGENCIES AND LITIGATION

We are subject to legal proceedings, claims and litigation arising in the ordinary course of business. Although the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse impact on our financial condition, results of operations or cash flows.

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OPERATING SEGMENTS

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

OPERATING SEGMENTS

OPERATING SEGMENTS

The Company has two reportable segments: INAP US and INAP INTL. These segments are comprised of strategic businesses that are defined by the location of the service offerings. Our INAP US segment consists of US Colocation, US Cloud, and US Network services based in the United States. Our INAP INTL segment consists of these same services based in countries other than the United States, and Ubersmith.

Each segment is managed as an operation with well-established strategic directions and performance requirements. Each segment is led by a separate General Manager who reports directly to the Company’s CODM. Effective January 1, 2019, both segments are led by the Chief Operating Officer, who reports directly to the Company's CODM. The CODM evaluates segment performance using business unit contribution which is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing, exclusive of depreciation and amortization.

Our services, which are included within both our reportable segments, are described as follows:

Colocation

Colocation involves providing conditioned power with back-up capacity and physical space within data centers along with associated services such as interconnection, remote hands, environmental controls, monitoring and security while allowing our customers to deploy and manage their servers, storage and other equipment in our secure data centers. We design the data center infrastructure, procure the capital equipment, deploy the infrastructure and are responsible for the operation and maintenance of the facility.

Cloud

Cloud services involve providing compute resources and storage services on demand via an integrated platform that includes our automated bare metal solutions. We offer our next generation cloud platforms in our high density colocation facilities and utilize the INAP performance IP for low latency connectivity. 

Network

Network services includes our patented Performance IP™ service, content delivery network services, IP routing hardware and software platform. By intelligently routing traffic with redundant, high-speed connections over multiple, major Internet backbones, our IP connectivity provides high-performance and highly-reliable delivery of content, applications and communications to end users globally. We deliver our IP connectivity through more than 100 network POPs around the world.

The following table provides segment results (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenues:
INAP US	$	57,461		$	64,067		$	114,981		$	121,142
INAP INTL	15,673			17,895			31,717			35,021
Net revenues	73,134			81,962			146,698			156,163
Cost of sales and services, customer support and sales and marketing:
INAP US	31,976			34,228			64,860			64,335
INAP INTL	10,049			11,872			19,744			23,005
Total costs of sales and services, customer support and sales and marketing	42,025			46,100			84,604			87,340
										.
Segment profit:
INAP US	25,485			29,839			50,121			56,808
INAP INTL	5,624			6,023			11,973			12,015
Total segment profit	31,109			35,862			62,094			68,823
Exit activities, restructuring and impairments	231			826			1,647			793
Other operating expenses, including sales, general and administrative and depreciation and amortization expenses	30,288			32,386			61,931			64,152
Income (loss) from operations	590			2,650			(1,484		)	3,878
Non-operating expenses	19,336			16,765			36,987			32,154
Loss before income taxes and equity in earnings of equity-method investment	$	(18,746	)	$	(14,115	)	$	(38,471	)	$	(28,276	)

The CODM does not manage the operating segments based on asset allocations. Therefore, assets by operating segment have not been provided.

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NET LOSS PER SHARE

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

NET LOSS PER SHARE

NET LOSS PER SHARE

We compute basic net loss per share by dividing net loss attributable to our common stockholders by the weighted average number of shares of common stock outstanding during the period. We exclude all outstanding options and unvested restricted stock as such securities are anti-dilutive for all periods presented.

Basic and diluted net loss per share is calculated as follows (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net loss	$	(18,535	)	$	(14,256	)	$	(38,157	)	$	(28,517	)
Less net income attributable to non-controlling interests	20			23			42			50
Net loss attributable to common stock	$	(18,555	)	$	(14,279	)	$	(38,199	)	$	(28,567	)
Weighted average shares outstanding, basic and diluted	23,667			20,053			23,716			19,985
Net loss per share, basic and diluted	$	(0.78	)	$	(0.71	)	$	(1.61	)	$	(1.43	)
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans	2,244			1,345			2,244			1,345

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INVESTMENT IN AFFLIATES AND OTHER ENTITIES

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN AFFLIATES AND OTHER ENTITIES

INVESTMENT IN AFFLIATES AND OTHER ENTITIES

In the normal course of business, INAP enters into various types of investment arrangements, each having unique terms and conditions.

In previous years, INAP invested $4.1 million in Internap Japan Co., Ltd., our joint venture with NTT-ME Corporation ("NTT-ME") and Nippon Telegraph and Telephone Corporation. Through August 15, 2017, we qualified and accounted for this investment using the equity method. We recorded our proportional share of the income and losses of INAP Japan one month in arrears on the accompanying consolidated balance sheets as a long-term investment and our share of INAP Japan's income and losses, net of taxes, as a separate caption in our accompanying consolidated statements of operations and comprehensive loss.

On August 15, 2017, INAP exercised certain rights to obtain a controlling interest in Internap Japan Co., Ltd. Upon obtaining control of the venture, we recognized INAP Japan's assets and liabilities at fair value resulting in a gain of $1.1 million. Once INAP obtained control of the Internap Japan Co., Ltd. venture, the investment was consolidated with INAP using the voting model.

On January 15, 2019, NTT-ME exercised its first put option that resulted in NTT-ME having an ownership of 15% and INAP of 85%. The put option was exercised at $1.0 million which represents the fair market value of the shares purchased.

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RECENT ACCOUNTING PRONOUNCEMENTS (Policies)

6 Months Ended

Jun. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Basis of Presentation

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated all intercompany transactions and balances in the accompanying financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature with the exception of those related to the adoption of new accounting standards as discussed in Note 2, "Recent Accounting Pronouncements" and Note 4, "Leases."

We have condensed or omitted certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP. The accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, necessary for a fair statement of our financial position as of June 30, 2019 and our operating results and cash flows for the interim periods presented. The balance sheet at December 31, 2018 was derived from our audited financial statements, but does not include all disclosures required by GAAP. You should read the accompanying financial statements and the related notes in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the 2019 fiscal year or any future periods.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which states that a lessee should recognize the assets and liabilities that arise from leases. The standard has since been modified with several ASUs (collectively, the "new lease standard"). The new lease standard is effective for annual and interim periods beginning after December 15, 2018. Earlier adoption is permitted. The Company adopted the new lease standard on January 1, 2019, the beginning of fiscal 2019. Prior periods presented in our condensed consolidated financial statements continue to be presented in accordance with the former lease standard, Topic 840, Leases.

The new lease standard provides entities two options for applying the modified retrospective approach (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative-effect adjustment recognized at the beginning of the earliest comparative period presented or (2) retrospectively at the beginning of the period of adoption (January 1, 2019) through a cumulative-effect adjustment recognized then. The Company adopted the new lease standard by recognizing and measuring leases at the adoption date with a cumulative effect of initially applying the guidance recognized at the date of initial application. The most significant impact relates to the recognition on the Company's balance sheet of right-of-use ("ROU") assets and lease liabilities for all operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily depends on its classification. For income statement purposes, operating leases will result in a straight-line expense while finance leases will result in a front-loaded expense pattern.

The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company did not separately record lease components from non-lease components, and accounts for them together as a single lease component. INAP made an accounting policy election to not record leases with an initial term of 12 months or less on the balance sheet. The Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term in the consolidated statements of operations and comprehensive loss. The Company has elected to not record a ROU asset or ROU liability for leases with an asset or liability balance that would be less than one thousand dollars ($1,000) on the adoption date on the basis of materiality. This threshold continues to be consistent with the Company’s Property and Equipment capitalization threshold.

As a result of our adoption of the new lease standard, we have implemented a new lease accounting system, accounting policies and processes which changed the Company's internal controls over financial reporting for lease accounting.

The Company primarily has capital leases which have been recorded on the consolidated balance sheets and as of the January 1, 2019 transition date, the capital leases became finance leases establishing the ROU asset and liability. The ROU assets and liabilities for operating leases were $28.5 million and $31.0 million of total Company assets and liabilities, respectively, as of January 1, 2019.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets including trade receivables, loans and held-to-maturity debt securities held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This will result in the earlier recognition of credit losses. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. If expected cash flows improve, an entity will reduce the allowance and reverse the expense through income. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Entities will have to make more disclosures, including disclosures by year of origination for certain financing receivables. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220). This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) (“AOCI”) to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017. This standard was effective for interim and annual reporting periods beginning after December 15, 2018. We did not exercise the option to make this reclassification.

In June 2018, the FASB issued ASU 2018-07, Improvements to Non-employee Share-Based Payment Accounting broadens the scope of FASB ASC Topic 718, Compensation — Stock Compensation, which currently covers only share-based payments to employees. The change substantially aligns the accounting for share-based payments for both employees and non-employees. The ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Non-Employees. The measurement of equity-classified non-employee awards will be fixed at the grant date, and entities will measure the cost of awards subject to a performance condition using the outcome that is probable at the balance sheet date. Entities may use the expected term to measure non-employee options or elect to use the contractual term as the expected term, on an award-by-award basis. Entities will recognize a cumulative-effect adjustment to retained earnings for equity classified non-employee awards for which a measurement date has not been established and liability-classified non-employee awards that have not been settled. The guidance is effective for calendar-year public business entities in annual periods beginning after December 15, 2018, and interim periods within those years. The Company adopted this pronouncement in the first quarter of 2019 and it did not have a material impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), relating to a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by a vendor (i.e., a service contract). Under the new guidance, a customer will apply the same criteria for capitalizing implementation costs as it would for an arrangement that has a software license. The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application is permitted.  The Company can choose to adopt the new guidance (1) prospectively to eligible costs incurred on or after the date this guidance is first applied, or (2) retrospectively. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which removes, adds and modifies certain disclosure requirements for fair value measurements in Topic 820. The Company will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the valuation processes of Level 3 fair value measurements. However, the Company will be required to additionally disclose the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, and the range and weighted average of assumptions used to develop significant unobservable inputs for Level 3 fair value measurements. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  The amendments relating to additional disclosure requirements will be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments will be applied retrospectively to all periods presented upon their effective date. The Company is permitted to early adopt either the entire ASU or only the provisions that eliminate or modify the requirements. The Company is evaluating the impact, if any, that this pronouncement will have on its condensed consolidated financial statements.

Fair Value Measurements

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

• Level 1: Quoted prices in active markets for identical assets or liabilities;

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Goodwill

The Company tests goodwill and intangible assets with indefinite lives for impairment annually in the third quarter as of August 1. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit or indefinite lived intangible asset below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

The Company tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass this qualitative assessment for some or all of its reporting units and perform a quantitative test.

Goodwill is considered impaired if the carrying amount of the net assets exceeds the fair value of the reporting unit. Impairment, if any, would be recorded in operating income / (loss) and this could result in a material impact to net income / (loss) and income / (loss) per share.

Operating Segments

Each segment is managed as an operation with well-established strategic directions and performance requirements. Each segment is led by a separate General Manager who reports directly to the Company’s CODM. Effective January 1, 2019, both segments are led by the Chief Operating Officer, who reports directly to the Company's CODM. The CODM evaluates segment performance using business unit contribution which is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing, exclusive of depreciation and amortization.

Net Loss Per Share

We compute basic net loss per share by dividing net loss attributable to our common stockholders by the weighted average number of shares of common stock outstanding during the period. We exclude all outstanding options and unvested restricted stock as such securities are anti-dilutive for all periods presented.

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NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The adjustments to the Company’s previously issued quarterly financial statements for the three and six months ended June 30, 2018 are as follows (in thousands):

	Three and Six Months Ended June 30, 2018
	As reported			Adjustments			As adjusted
Costs of sales and services, exclusive of depreciation and amortization - QTD	$	27,976		$	(645	)	$	27,331
Costs of sales and services, exclusive of depreciation and amortization - YTD	53,013			(1,075		)	51,938
Depreciation and amortization - QTD	22,590			122			22,712
Depreciation and amortization - YTD	43,667			203			43,870
Interest expense - QTD	15,860			879			16,739
Interest expense - YTD	30,887			1,456			32,343
Net loss attributable to INAP shareholders - QTD	(13,923		)	(356		)	(14,279		)
Net loss attributable to INAP shareholders - YTD	(27,983		)	(584		)	(28,567		)
Property and equipment, net	452,958			10,315			463,273
Total assets	724,707			10,315			735,022
Capital lease obligations - non-current	220,721			10,855			231,576
Total liabilities	729,728			10,855			740,583
Accumulated deficit	(1,328,502		)	(584		)	(1,329,086		)
Total stockholders' (deficit) equity	$	(5,021	)	$	(584	)	$	(5,605	)

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REVENUES (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of contract with customer, asset and liability

The Company includes only those incremental costs that would not have been incurred if the contracts had not been entered into as follows (in thousands):

	Current			Non-current
Balance at December 31, 2018	$	8,844		$	16,104
Deferred customer acquisition costs incurred in the period	862			3,353
Amounts recognized as expense in the period	(4,816		)	—
Reclassification between short-term and long-term	4,240			(4,240		)
Balance at June 30, 2019	$	9,130		$	15,217

Significant changes in the deferred revenues balance (current and noncurrent) during the period are as follows (in thousands):

Balance - December 31, 2018	$	8,533
Revenue recognized that was included in the deferred revenue balance at December 31, 2018	(5,300		)
Increases due to cash received, excluding amounts recognized as revenue during the period	4,996
Balance - June 30, 2019	$	8,229

Summary of revenue by source

The following table presents disaggregated revenues by category as follows (in thousands):

	Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
Colocation	$	27,557	$	1,457	$	30,866	$	1,459
Network services	11,414		2,678		13,563		2,792
Cloud	18,490		11,538		19,638		13,644
	$	57,461	$	15,673	$	64,067	$	17,895

	Six Months Ended June 30, 2019				Six Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
Colocation	$	54,911	$	2,892	$	61,802	$	2,977
Network services	23,156		5,452		27,382		5,763
Cloud	36,914		23,373		31,958		26,281
	$	114,981	$	31,717	$	121,142	$	35,021

Revenue by geography is as follows (in thousands):

	Three Months Ended June 30, 2019				Three Months Ended June 30, 2018
	INAP US		INAP INTL		INAP US		INAP INTL
United States	$	58,461	$	—	$	65,168	$	—
Canada	—		8,084		—		9,549
Other countries	—		6,589		—		7,245
	$	58,461	$	14,673	$	65,168	$	16,794

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LEASES (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of lease related costs

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the six months ended June 30, 2019 (in thousands):

Operating Leases
Operating cash paid to settle operating lease liabilities	$	3,660
Right-of-use assets obtained in exchange for lease liabilities	921
Finance Leases
Operating cash paid for interest	$	11,171
Right-of-use assets obtained in exchange for lease liabilities	18

Lease related costs for the three and six months ended June 30, 2019 are as follows (in thousands):

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Finance lease cost
Amortization of right-of-use assets		$	4,131	$	8,523
Interest on lease liabilities		7,325		14,575
Finance lease cost		$	11,456	$	23,098
Operating lease cost		$	1,932	$	3,697
Short-term lease cost		879		2,369
Total lease cost		$	14,267	$	29,164

Other information related to leases as of June 30, 2019 is as follows (in thousands, except lease term and rate):

	Operating Leases			Finance Leases
Right-of-use assets	$	35,488		$	229,228
Lease liabilities	38,837			268,406
Weighted-average remaining lease term (years)	5.46			19.26
Weighted-average discount rate	7.24		%	13.79		%

Schedule of assets and liabilities leases

Other information related to leases as of June 30, 2019 is as follows (in thousands, except lease term and rate):

	Operating Leases			Finance Leases
Right-of-use assets	$	35,488		$	229,228
Lease liabilities	38,837			268,406
Weighted-average remaining lease term (years)	5.46			19.26
Weighted-average discount rate	7.24		%	13.79		%

Schedule of future minimum lease payments under non-cancellable leases

Future minimum lease payments under non-cancellable leases as of June 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)		$	4,527		$	16,416
2020		9,089			33,106
2021		9,114			34,933
2022		8,534			33,676
2023		7,549			32,916
Thereafter		8,737			631,020
Total undiscounted lease payments		$	47,550		$	782,067
Less: Imputed interest		8,713			513,661
Total lease liabilities		$	38,837		$	268,406

Finance Lease, Liability, Maturity

Future minimum lease payments under non-cancellable leases as of June 30, 2019 are as follows (in thousands):

	Operating Leases			Finance Leases
2019 (excluding the six months ended June 30, 2019)		$	4,527		$	16,416
2020		9,089			33,106
2021		9,114			34,933
2022		8,534			33,676
2023		7,549			32,916
Thereafter		8,737			631,020
Total undiscounted lease payments		$	47,550		$	782,067
Less: Imputed interest		8,713			513,661
Total lease liabilities		$	38,837		$	268,406

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ACQUISITION (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Schedule of fair value of acquired assets

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date and includes purchase accounting adjustments subsequent to the acquisition date (in thousands):

	Final Valuation as of December 31, 2018
Cash	$	2,823
Prepaid expenses and other assets	2,227
Property, plant and equipment	14,253
Other long term assets	576
Intangible assets:
Noncompete agreements	4,000
Trade names	1,700
Technology	15,100
Customer relationships	34,100
Goodwill	66,008
Total assets acquired	140,787
Accounts payable and accrued liabilities	2,819
Deferred revenue	2,434
Long term liabilities	534
Net assets acquired	$	135,000

Summary of unaudited pro forma financial information

The following unaudited pro forma financial information presents the combined results of operations of INAP and SingleHop as if the acquisition had occurred on January 1, 2017. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the INAP and SingleHop acquisition been completed as of January 1, 2017, and should not be taken as indicative of our future consolidated results of operations. The pro forma results are as follows (in thousands, except for per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
		2018				2018
Revenues		$	81,962			$	164,288
Net loss		(14,256		)		$	(29,718	)
Basic and diluted net loss per share		(0.71		)		$	(1.48	)
Weighted average shares outstanding used in computing basic and diluted net loss per share		20,053				19,985

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):

	Level 1		Level 2		Level 3		Total
June 30, 2019
Available-for-sale securities	$	—	$	2,381	$	—	$	2,381
Asset retirement obligations(1)	—		—		2,237		2,237
December 31, 2018
Available-for-sale securities	$	—	$	2,309	$	—	$	2,309
Asset retirement obligations(1)	—		—		2,090		2,090

⁽¹⁾  We calculated the fair value of asset retirement obligations by discounting the estimated amount using the current Treasury bill rate adjusted for our credit risk. At June 30, 2019 and December 31, 2018, the balances are included in “Other long-term liabilities,” in the accompanying condensed consolidated balance sheets.

Schedule of changes in asset retirement obligations

The following table provides a summary of changes in our Level 3 asset retirement obligations for the three months ended June 30, 2019 (in thousands): 

	2019
Balance, January 1, 2019	$	2,090
Accretion	147
Payments	—
Balance, June 30, 2019	$	2,237

Schedule of fair values of our Level 2 available-for-sale debt securities

The fair values of our Level 2 available-for-sale debt securities, based upon quoted prices for similar items in active markets, are as follows (in thousands):

	June 30, 2019
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Japanese Corporate Bonds	$	2,221	$	127	$	(57	)	$	2,291
Japanese Government Bonds	88		4		(2		)	90
Total Bonds	$	2,309	$	131	$	(59	)	$	2,381
	December 31, 2018
	Cost		Unrealized Gain		Unrealized Loss			Fair Value
Japanese Corporate Bonds	$	2,184	$	144	$	(107	)	$	2,221
Japanese Government Bonds	87		5		(4		)	88
Total Bonds	$	2,271	$	149	$	(111	)	$	2,309

Schedule of fair value of term loan and revolving credit facility

The fair values of our Level 2 debt liabilities, based upon quoted prices for similar items in active markets, are as follows (in thousands):

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term loan	$	427,322	$	376,043	$	429,143	$	428,071
Revolving credit facility	6,000		5,280		—		—

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EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Schedule of transactions and balances for exit activities and restructuring charges

The following table displays the transactions and balances for exit activities and restructuring charges during the six months ended June 30, 2019 and 2018 (in thousands). Our real estate and severance obligations are substantially related to our INAP US segment.

	Balance										Balance
	December 31, 2018		Initial Charges		Plan Adjustments			Cash Payments			June 30, 2019
Activity for 2019 restructuring charge:
Real estate obligations	$	—	$	1,252	$	(133	)	$	(973	)	$	146
Activity for 2018 restructuring charge:
Real estate obligations	1,922		$	96	$	83		$	(2,011	)	90
Activity for 2017 restructuring charge:
Real estate obligations	100		—		—			(91		)	9
Activity for 2016 restructuring charge:
Real estate obligations	125		—		21			(80		)	66
Activity for 2015 restructuring charge:
Real estate obligation	27		—		13			(26		)	14
Service contracts	221		—		19			(99		)	141
Activity for 2014 restructuring charge:
Real estate obligation	206		—		54			(260		)	—
	$	2,601	$	1,348	$	57		$	(3,540	)	$	466

	Balance									Balance
	December 31, 2017		Initial Charges		Plan Adjustments		Cash Payments			June 30, 2018
Activity for 2018 restructuring charge:
Real estate obligations	$	—	$	741	$	45	$	(163	)	$	623
Activity for 2017 restructuring charge:
Real estate obligations	3,380		—		143		(1,896		)	1,627
Activity for 2016 restructuring charge:
Severance	46		—		34		(34		)	46
Real estate obligations	247		—		14		(77		)	184
Activity for 2015 restructuring charge:
Real estate obligation	64		—		9		(28		)	45
Service contracts	388		—		14		(99		)	303
Activity for 2014 restructuring charge:
Real estate obligation	691		—		112		(379		)	424
	$	4,816	$	741	$	371	$	(2,676	)	$	3,252

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OPERATING SEGMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of operating results for business segments, along with reconciliation from segment profit to loss before income taxes and equity in (earnings) of equity-method investment

The following table provides segment results (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenues:
INAP US	$	57,461		$	64,067		$	114,981		$	121,142
INAP INTL	15,673			17,895			31,717			35,021
Net revenues	73,134			81,962			146,698			156,163
Cost of sales and services, customer support and sales and marketing:
INAP US	31,976			34,228			64,860			64,335
INAP INTL	10,049			11,872			19,744			23,005
Total costs of sales and services, customer support and sales and marketing	42,025			46,100			84,604			87,340
										.
Segment profit:
INAP US	25,485			29,839			50,121			56,808
INAP INTL	5,624			6,023			11,973			12,015
Total segment profit	31,109			35,862			62,094			68,823
Exit activities, restructuring and impairments	231			826			1,647			793
Other operating expenses, including sales, general and administrative and depreciation and amortization expenses	30,288			32,386			61,931			64,152
Income (loss) from operations	590			2,650			(1,484		)	3,878
Non-operating expenses	19,336			16,765			36,987			32,154
Loss before income taxes and equity in earnings of equity-method investment	$	(18,746	)	$	(14,115	)	$	(38,471	)	$	(28,276	)

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NET LOSS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of basic and diluted net loss per share

Basic and diluted net loss per share is calculated as follows (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net loss	$	(18,535	)	$	(14,256	)	$	(38,157	)	$	(28,517	)
Less net income attributable to non-controlling interests	20			23			42			50
Net loss attributable to common stock	$	(18,555	)	$	(14,279	)	$	(38,199	)	$	(28,567	)
Weighted average shares outstanding, basic and diluted	23,667			20,053			23,716			19,985
Net loss per share, basic and diluted	$	(0.78	)	$	(0.71	)	$	(1.61	)	$	(1.43	)
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans	2,244			1,345			2,244			1,345

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NATURE OF OPERATIONS AND BASIS OF PRESENTATION - Narrative (Details)	6 Months Ended
	Jun. 30, 2019 ft² market point_of_presence
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of POPs (point of presence) | point_of_presence	100
Number of metropolitan markets (market) | market	21
Area under lease (sqft)	1,000,000
Area of data centers (sqft)	600,000

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NATURE OF OPERATIONS AND BASIS OF PRESENTATION - Adjustments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Costs of sales and services, exclusive of depreciation and amortization	$ 25,949	$ 27,331	$ 51,682	$ 51,938
Depreciation and amortization	21,955	22,712	44,133	43,870
Interest expense	19,218	16,739	36,665	32,343
Net loss attributable to INAP shareholders	(18,555)	(14,279)	(38,199)	(28,567)
Property and equipment, net	223,497	463,273	223,497	463,273		$ 478,061
Assets	740,796	735,022	740,796	735,022		744,931
Capital lease obligations	0	231,576	0	231,576		9,080
Liabilities	778,329	740,583	778,329	740,583		744,874
Accumulated deficit	(1,401,270)	(1,329,086)	(1,401,270)	(1,329,086)		(1,363,019)
Total stockholders’ (deficit) equity	$ (37,533)	(5,605)	$ (37,533)	(5,605)	$ (19,972)	$ 57	$ 8,594	$ (1,032)
As Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Costs of sales and services, exclusive of depreciation and amortization		27,976		53,013
Depreciation and amortization		22,590		43,667
Interest expense		15,860		30,887
Net loss attributable to INAP shareholders		(13,923)		(27,983)
Property and equipment, net		452,958		452,958
Assets		724,707		724,707
Capital lease obligations		220,721		220,721
Liabilities		729,728		729,728
Accumulated deficit		(1,328,502)		(1,328,502)
Total stockholders’ (deficit) equity		(5,021)		(5,021)
Adjustments | Reclassification
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Costs of sales and services, exclusive of depreciation and amortization		(645)		(1,075)
Depreciation and amortization		122		203
Interest expense		879		1,456
Net loss attributable to INAP shareholders		(356)		(584)
Property and equipment, net		10,315		10,315
Assets		10,315		10,315
Capital lease obligations		10,855		10,855
Liabilities		10,855		10,855
Accumulated deficit		(584)		(584)
Total stockholders’ (deficit) equity		$ (584)		$ (584)

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RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
ROU Assets, operating leases	$ 35,488	$ 28,500	$ 0
Lease Liabilities, operating leases	$ 38,837	$ 31,000

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REVENUES - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Capitalized Contract Cost [Line Items]
Capitalized contract cost, impairment loss	$ 0	$ 0	$ 0	$ 0
Fulfillment Costs And Commission Fees
Capitalized Contract Cost [Line Items]
Capitalized contract cost	24,300,000		24,300,000		$ 24,900,000
Amortization of capitalized contract costs	$ 2,400,000		$ 4,800,000	$ 4,700,000

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REVENUES - Rollforward of Contract Assets (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Dec. 31, 2018	Jun. 30, 2019	Jun. 30, 2019
Change in Contract with Customer, Asset and Liability [Roll Forward]
Balance at March 31, 2019, current			$ 8,844
Balance at March 31, 2019, noncurrent			16,104
Balance - December 31, 2018		$ 8,533
Amounts recognized as expense in the period			(4,816)
Revenue recognized that was included in the deferred revenue balance at December 31, 2018	$ (5,300)
Increases due to cash received, excluding amounts recognized as revenue during the period		4,996
Balance at June 30, 2019, current	8,844	9,130	9,130
Balance at June 30, 2019, noncurrent	$ 16,104	15,217	15,217
Balance - June 30, 2019		8,229	8,229
Current
Change in Contract with Customer, Asset and Liability [Roll Forward]
Balance at March 31, 2019, current		8,844
Deferred customer acquisition costs incurred in the period		862
Reclassification between short-term and long-term		4,240
Balance at June 30, 2019, current		9,130	9,130
Non-current
Change in Contract with Customer, Asset and Liability [Roll Forward]
Balance at March 31, 2019, noncurrent		16,104
Deferred customer acquisition costs incurred in the period		3,353
Amounts recognized as expense in the period		0
Reclassification between short-term and long-term		(4,240)
Balance at June 30, 2019, noncurrent		$ 15,217	$ 15,217

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REVENUES - Summary of Revenue by Source (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Net revenues	$ 73,134	$ 81,962	$ 146,698	$ 156,163
INAP US
Disaggregation of Revenue [Line Items]
Net revenues	57,461	64,067	114,981	121,142
INAP US | Colocation Services
Disaggregation of Revenue [Line Items]
Net revenues	27,557	30,866	54,911	61,802
INAP US | Network services
Disaggregation of Revenue [Line Items]
Net revenues	11,414	13,563	23,156	27,382
INAP US | Cloud Services
Disaggregation of Revenue [Line Items]
Net revenues	18,490	19,638	36,914	31,958
INAP INTL
Disaggregation of Revenue [Line Items]
Net revenues	15,673	17,895	31,717	35,021
INAP INTL | Colocation Services
Disaggregation of Revenue [Line Items]
Net revenues	1,457	1,459	2,892	2,977
INAP INTL | Network services
Disaggregation of Revenue [Line Items]
Net revenues	2,678	2,792	5,452	5,763
INAP INTL | Cloud Services
Disaggregation of Revenue [Line Items]
Net revenues	$ 11,538	$ 13,644	$ 23,373	$ 26,281

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REVENUES - Summary of Revenue by Geography (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Net revenues	$ 73,134	$ 81,962	$ 146,698	$ 156,163
INAP US
Disaggregation of Revenue [Line Items]
Net revenues	57,461	64,067	114,981	121,142
INAP INTL
Disaggregation of Revenue [Line Items]
Net revenues	15,673	17,895	31,717	35,021
INAP US
Disaggregation of Revenue [Line Items]
Net revenues	58,461	65,168	117,025	123,319
INAP INTL
Disaggregation of Revenue [Line Items]
Net revenues	14,673	16,794	29,673	32,844
UNITED STATES | INAP US
Disaggregation of Revenue [Line Items]
Net revenues	58,461	65,168	117,025	123,319
UNITED STATES | INAP INTL
Disaggregation of Revenue [Line Items]
Net revenues	0	0	0	0
CANADA | INAP US
Disaggregation of Revenue [Line Items]
Net revenues	0	0	0	0
CANADA | INAP INTL
Disaggregation of Revenue [Line Items]
Net revenues	8,084	9,549	16,027	18,659
Other Non-Us | INAP US
Disaggregation of Revenue [Line Items]
Net revenues	0	0	0	0
Other Non-Us | INAP INTL
Disaggregation of Revenue [Line Items]
Net revenues	$ 6,589	$ 7,245	$ 13,646	$ 14,185

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LEASES - Narrative (Details)	6 Months Ended
	Jun. 30, 2019
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	2 years
Renewal term	5 years
Termination period	4 months
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	34 years
Renewal term	15 years
Termination period	120 months

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LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Finance lease cost
Amortization of right-of-use assets	$ 4,131	$ 8,523
Interest on lease liabilities	7,325	14,575
Finance lease cost	11,456	23,098
Operating lease cost	1,932	3,697
Short-term lease cost	879	2,369
Total lease cost	$ 14,267	$ 29,164

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LEASES - Other Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Right-of-use assets, operating leases	$ 35,488	$ 28,500	$ 0
Right-of-use assets, finance leases	229,228		$ 0
Lease Liabilities, operating leases	38,837	$ 31,000
Lease Liabilities, finance leases	$ 268,406
Weighted-average remaining lease term, operating lease	5 years 5 months 16 days
Weighted-average remaining lease term, finance lease	19 years 3 months 4 days
Weighted-average discount rate, operating lease	7.24%
Weighted-average discount rate, finance lease	13.79%
Cash paid for amounts included in the measurement of lease liabilities
Operating cash paid to settle operating lease liabilities	$ 3,660
Right-of-use assets obtained in exchange for lease liabilities	921
Operating cash paid for interest	11,171
Right-of-use assets obtained in exchange for lease liabilities	$ 18

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LEASES - Maturity of Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Operating Leases, After Adoption of 842:
2019 (excluding the six months ended June 30, 2019)	$ 4,527
2020	9,089
2021	9,114
2022	8,534
2023	7,549
Thereafter	8,737
Total undiscounted lease payments	47,550
Less: Imputed interest	8,713
Total lease liabilities	38,837	$ 31,000
Finance Leases, After Adoption of 842:
2019 (excluding the six months ended June 30, 2019)	16,416
2020	33,106
2021	34,933
2022	33,676
2023	32,916
Thereafter	631,020
Total undiscounted lease payments	782,067
Less: Imputed interest	513,661
Total lease liabilities	$ 268,406

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ACQUISITION - Narrative (Details) - SingleHop, LLC $ in Millions	Feb. 28, 2018 USD ($)
Business Acquisition [Line Items]
Payment to acquire business	$ 132.0
Working capital adjustment	$ 0.4
Customer relationships
Business Acquisition [Line Items]
Weighted Average	10 years
Noncompete agreements
Business Acquisition [Line Items]
Weighted Average	4 years
Trade names
Business Acquisition [Line Items]
Weighted Average	8 years
Technology
Business Acquisition [Line Items]
Weighted Average	7 years

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ACQUISITION - Schedule of Fair Value of Acquired Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Intangible assets:
Goodwill	$ 116,217	$ 116,217
SingleHop, LLC
Business Acquisition [Line Items]
Cash		2,823
Prepaid expenses and other assets		2,227
Property, plant and equipment		14,253
Other long term assets		576
Intangible assets:
Goodwill		66,008
Total assets acquired		140,787
Accounts payable and accrued liabilities		2,819
Deferred revenue		2,434
Long term liabilities		534
Net assets acquired		135,000
SingleHop, LLC | Noncompete agreements
Intangible assets:
Finite lived intangible assets		4,000
SingleHop, LLC | Trade names
Intangible assets:
Finite lived intangible assets		1,700
SingleHop, LLC | Technology
Intangible assets:
Finite lived intangible assets		15,100
SingleHop, LLC | Customer relationships
Intangible assets:
Finite lived intangible assets		$ 34,100

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ACQUISITION - Summary of Unaudited Proforma Financial Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
Business Combinations [Abstract]
Revenues	$ 81,962	$ 164,288
Net loss	$ (14,256)	$ (29,718)
Basic and diluted net loss per share (in dollars per share)	$ (0.71)	$ (1.48)
Weighted average shares outstanding used in computing basic and diluted net loss per share (in shares)	20,053	19,985

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FAIR VALUE MEASUREMENTS - Summary of Assets and liabilities measured at fair value on recurring basis (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 2,381	$ 2,309
Recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	2,381	2,309
Recurring basis | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring basis | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	2,381	2,309
Recurring basis | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	0	0
Recurring basis | Asset retirement obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset retirement obligations	2,237	2,090
Recurring basis | Asset retirement obligations | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset retirement obligations	0	0
Recurring basis | Asset retirement obligations | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset retirement obligations	0	0
Recurring basis | Asset retirement obligations | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset retirement obligations	$ 2,237	$ 2,090

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FAIR VALUE MEASUREMENTS - Summary of changes in Level 3 financial asset - Asset retirement obligation (Details) - Asset retirement obligations $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	$ 2,090
Accretion	147
Payments	0
Balance, end of period	$ 2,237

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FAIR VALUE MEASUREMENTS - Amortized cost vs fair value (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]
Cost	$ 2,309	$ 2,271
Unrealized Gain	131	149
Unrealized Loss	(59)	(111)
Fair Value	2,381	2,309
Japanese Corporate Bonds
Debt Securities, Available-for-sale [Line Items]
Cost	2,221	2,184
Unrealized Gain	127	144
Unrealized Loss	(57)	(107)
Fair Value	2,291	2,221
Japanese Government Bonds
Debt Securities, Available-for-sale [Line Items]
Cost	88	87
Unrealized Gain	4	5
Unrealized Loss	(2)	(4)
Fair Value	$ 90	$ 88

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FAIR VALUE MEASUREMENTS - Summary of fair value Level 2 debt (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Term loan	$ 427,322	$ 429,143
Revolving credit facility	6,000	0
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Term loan	376,043	428,071
Revolving credit facility	$ 5,280	$ 0

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DEBT - Narrative (Details)								6 Months Ended
	May 08, 2019 USD ($)	May 07, 2019 USD ($)	Aug. 28, 2018 USD ($)	Apr. 09, 2018 USD ($)	Feb. 28, 2018 USD ($)	Feb. 06, 2018 USD ($)	Apr. 06, 2017 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)
Short-term Debt [Line Items]
Debt issuance costs								$ 2,815,000	$ 7,696,000
Term Loan | Base Rate
Short-term Debt [Line Items]
Interest rate during period for the credit agreement								4.75%
Term Loan | London Interbank Offered Rate (LIBOR)
Short-term Debt [Line Items]
Interest rate during period for the credit agreement								5.75%
Revolving credit facility
Short-term Debt [Line Items]
Debt issuance costs								$ 2,900,000
In kind Interest Rate	0.75%
Permitted asset dispositions	$ 50,000,000	$ 150,000,000
Maximum sales proceeds that may be reinvested	2,500,000
Restricted payment	$ 1,000,000	$ 5,000,000
Revolving credit facility | As of June 30 2019
Short-term Debt [Line Items]
Maximum total leverage ratio	6.80
Revolving credit facility | September 30, 2019 - December 31, 2019
Short-term Debt [Line Items]
Maximum total leverage ratio	6.90
Revolving credit facility | March 31, 2020
Short-term Debt [Line Items]
Maximum total leverage ratio	6.75
Revolving credit facility | June 30, 2020
Short-term Debt [Line Items]
Maximum total leverage ratio	6.25
Revolving credit facility | September 30, 2020
Short-term Debt [Line Items]
Maximum total leverage ratio	6.00
Revolving credit facility | December 31, 2020
Short-term Debt [Line Items]
Maximum total leverage ratio	5.75
Revolving credit facility | March 2021
Short-term Debt [Line Items]
Maximum total leverage ratio	5.50
Revolving credit facility | June 30, 2021
Short-term Debt [Line Items]
Maximum total leverage ratio	5.00
Revolving credit facility | June 30, 2021
Short-term Debt [Line Items]
Maximum total leverage ratio	4.50
Revolving credit facility | June 30, 2019
Short-term Debt [Line Items]
Minimum consolidated interest coverage ratio	1.75
Revolving credit facility | September 30, 2019 - March 31, 2020
Short-term Debt [Line Items]
Minimum consolidated interest coverage ratio	1.70
Revolving credit facility | June 30, 2020
Short-term Debt [Line Items]
Minimum consolidated interest coverage ratio	1.80
Revolving credit facility | September 2020
Short-term Debt [Line Items]
Minimum consolidated interest coverage ratio	1.85
Revolving credit facility | December 31, 2020 and thereafter
Short-term Debt [Line Items]
Minimum consolidated interest coverage ratio	2.00
Revolving credit facility | Base Rate
Short-term Debt [Line Items]
Interest rate during period for the credit agreement								6.00%
Basis spread on variable rate	5.25%	4.75%
Revolving credit facility | London Interbank Offered Rate (LIBOR)
Short-term Debt [Line Items]
Interest rate during period for the credit agreement								7.00%
Revolving credit facility | Eurodollar
Short-term Debt [Line Items]
Basis spread on variable rate	6.25%	5.75%
Capital Lease Obligations Basket
Short-term Debt [Line Items]
Total amount available under Credit Agreement	$ 500,000
2017 Credit Agreement | Line of Credit
Short-term Debt [Line Items]
Debt issuance costs							$ 5,700,000
2017 Credit Agreement | Term Loan
Short-term Debt [Line Items]
Total amount available under Credit Agreement							300,000,000.0
Debt issuance costs							3,300,000
Debt balance								$ 413,300,000
Interest rate at period end								9.40%
2017 Credit Agreement | Term Loan | Line of Credit
Short-term Debt [Line Items]
Loss on extinguishment and modification of debt							1,900,000
2017 Credit Agreement | Revolving credit facility
Short-term Debt [Line Items]
Total amount available under Credit Agreement							25,000,000.0
Debt issuance costs							400,000
Debt balance								$ 6,000,000
Interest rate at period end								11.50%
2017 Credit Agreement | Incremental Term Loan
Short-term Debt [Line Items]
Total amount available under Credit Agreement					$ 135,000,000.0	$ 135,000,000.0
Credit Agreement
Short-term Debt [Line Items]
Loss on extinguishment and modification of debt							$ 4,800,000
Credit Agreement | London Interbank Offered Rate (LIBOR)
Short-term Debt [Line Items]
Basis spread on variable rate								1.00%
Credit Agreement | Prime Rate
Short-term Debt [Line Items]
Basis spread on variable rate								2.00%
Credit Agreement | Federal Funds Effective Swap Rate
Short-term Debt [Line Items]
Basis spread on variable rate								0.50%
Second Amendment to 2017 Credit Agreement | Line of Credit
Short-term Debt [Line Items]
Debt issuance costs						1,000,000
Legal and professional expenses						200,000
Second Amendment to 2017 Credit Agreement | Term Loan | Line of Credit
Short-term Debt [Line Items]
Debt issuance costs						$ 800,000
Third Amendment To 2017 Credit Agreement | Line of Credit
Short-term Debt [Line Items]
Debt issuance costs					5,000,000
Legal and professional expenses					100,000
Third Amendment To 2017 Credit Agreement | Term Loan | Line of Credit
Short-term Debt [Line Items]
Debt issuance costs					$ 4,900,000
Fourth Amendment to Credit Agreement | Term Loan | Line of Credit
Short-term Debt [Line Items]
Debt issuance costs				$ 1,700,000
Debt issuance costs				1,600,000
Legal and professional expenses				$ 100,000
Reduction of interest rate margins				1.25%
Fifth Amendment To Credit Agreement | Revolving credit facility
Short-term Debt [Line Items]
Total amount available under Credit Agreement			$ 35,000,000.0
Credit facility increase			$ 10,000,000.0
Legal and Professional Fees | Revolving credit facility
Short-term Debt [Line Items]
Debt issuance costs								$ 100,000
Lender Fees | Revolving credit facility
Short-term Debt [Line Items]
Debt issuance costs								$ 2,800,000

XML

EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES - Exit activities and restructuring charges for Real estate obligations (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Restructuring Reserve [Roll Forward]
Balance, beginning of period	$ 2,601	$ 4,816
Initial Charges	1,348	741
Plan Adjustments	57	371
Cash Payments	(3,540)	(2,676)
Balance, end of period	466	3,252
Activity for 2019 restructuring charge: | Real estate obligations
Restructuring Reserve [Roll Forward]
Balance, beginning of period	0
Initial Charges	1,252
Plan Adjustments	(133)
Cash Payments	(973)
Balance, end of period	146
Activity for 2018 restructuring charge: | Real estate obligations
Restructuring Reserve [Roll Forward]
Balance, beginning of period	1,922	0
Initial Charges	96	741
Plan Adjustments	83	45
Cash Payments	(2,011)	(163)
Balance, end of period	90	623
Activity for 2017 restructuring charge: | Real estate obligations
Restructuring Reserve [Roll Forward]
Balance, beginning of period	100	3,380
Initial Charges	0	0
Plan Adjustments	0	143
Cash Payments	(91)	(1,896)
Balance, end of period	9	1,627
Activity for 2016 restructuring charge: | Real estate obligations
Restructuring Reserve [Roll Forward]
Balance, beginning of period	125	247
Initial Charges	0	0
Plan Adjustments	21	14
Cash Payments	(80)	(77)
Balance, end of period	66	184
Activity for 2016 restructuring charge: | Severance
Restructuring Reserve [Roll Forward]
Balance, beginning of period		46
Initial Charges		0
Plan Adjustments		34
Cash Payments		(34)
Balance, end of period		46
Activity for 2015 restructuring charge: | Real estate obligations
Restructuring Reserve [Roll Forward]
Balance, beginning of period	27	64
Initial Charges	0	0
Plan Adjustments	13	9
Cash Payments	(26)	(28)
Balance, end of period	14	45
Activity for 2015 restructuring charge: | Service contracts
Restructuring Reserve [Roll Forward]
Balance, beginning of period	221	388
Initial Charges	0	0
Plan Adjustments	19	14
Cash Payments	(99)	(99)
Balance, end of period	141	303
Activity for 2014 restructuring charge: | Real estate obligations
Restructuring Reserve [Roll Forward]
Balance, beginning of period	206	691
Initial Charges	0	0
Plan Adjustments	54	112
Cash Payments	(260)	(379)
Balance, end of period	$ 0	$ 424

XML

OPERATING SEGMENTS - Narrative (Details)	6 Months Ended
	Jun. 30, 2019 point_of_presence segment
Segment Reporting [Abstract]
Number of reportable segments (segment) | segment	2
Segment Reporting Information [Line Items]
Number of POPs (point of presence)	100
Network services
Segment Reporting Information [Line Items]
Number of POPs (point of presence)	100

XML

OPERATING SEGMENTS - Summary of operating results for business segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues:
Total revenues	$ 73,134	$ 81,962	$ 146,698	$ 156,163
Cost of sales and services, customer support and sales and marketing:
Total costs of sales and services, customer support and sales and marketing	42,025	46,100	84,604	87,340
Segment profit:
Total segment profit	31,109	35,862	62,094	68,823
Exit activities, restructuring and impairments	231	826	1,647	793
Other operating expenses, including sales, general and administrative and depreciation and amortization expenses	30,288	32,386	61,931	64,152
Income (loss) from operations	590	2,650	(1,484)	3,878
Non-operating expenses	19,336	16,765	36,987	32,154
Loss before income taxes and equity in earnings of equity-method investment	(18,746)	(14,115)	(38,471)	(28,276)
INAP US
Revenues:
Total revenues	57,461	64,067	114,981	121,142
Cost of sales and services, customer support and sales and marketing:
Total costs of sales and services, customer support and sales and marketing	31,976	34,228	64,860	64,335
Segment profit:
Total segment profit	25,485	29,839	50,121	56,808
INAP INTL
Revenues:
Total revenues	15,673	17,895	31,717	35,021
Cost of sales and services, customer support and sales and marketing:
Total costs of sales and services, customer support and sales and marketing	10,049	11,872	19,744	23,005
Segment profit:
Total segment profit	$ 5,624	$ 6,023	$ 11,973	$ 12,015

XML

NET LOSS PER SHARE - Schedule of basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Net loss	$ (18,535)	$ (19,622)	$ (14,256)	$ (14,261)	$ (38,157)	$ (28,517)
Less net income attributable to non-controlling interests	20		23		42	50
Net loss attributable to INAP shareholders	$ (18,555)		$ (14,279)		$ (38,199)	$ (28,567)
Weighted average shares outstanding, basic and diluted (in shares)	23,667		20,053		23,716	19,985
Net loss per share, basic and diluted (in dollars per share)	$ (0.78)		$ (0.71)		$ (1.61)	$ (1.43)
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans (in shares)	2,244		1,345		2,244	1,345

XML

INVESTMENT IN AFFLIATES AND OTHER ENTITIES (Details) - USD ($) $ in Millions	Aug. 15, 2017	Jun. 30, 2019	Jan. 15, 2019
Schedule of Equity Method Investments [Line Items]
Equity method investments		$ 4.1
Recognition of assets and liabilities, fair value resulting in a gain	$ 1.1
NTT ME
Schedule of Equity Method Investments [Line Items]
Ownership percentage by noncontrolling owenrs			15.00%
INAP
Schedule of Equity Method Investments [Line Items]
Ownership percentage			85.00%
Put Option
Schedule of Equity Method Investments [Line Items]
Settlement alternatives, Cash at fair value			$ 1.0

XML

Label	Element	Value
Accounting Standards Update 2016-16 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (52,000)
Accounting Standards Update 2016-16 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(52,000)
Accounting Standards Update 2014-09 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	24,185,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(981,000)
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	24,185,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (981,000)