Internap Completes Acquisition of VitalStream

February 21, 2007; 01:12 AM
Internap Network Services Corporation (NASDAQ: INAP) and VitalStream Holdings, Inc. (NASDAQ:VSTH) today announced that each company's respective stockholders provided the approvals necessary to complete Internap's acquisition of VitalStream and that the transaction has been completed.

The acquisition will allow Internap to facilitate the accelerated growth of VitalStream’s global platform, which enables the delivery of rich media and includes streaming audio and video services. The addition of VitalStream’s content monetization and advertising solutions also enhances Internap’s portfolio of IP and data center services and meets the increasing demands of businesses looking to transform Web-based content and assets into revenue.

Based on the preliminary tally of shares voted at a special meeting of Internap stockholders, approximately 99.90% of the shares of Internap common stock present and voting at the special meeting (in person or by proxy) voted in favor of Internap’s issuance to VitalStream’s stockholders of approximately 12.2 million shares of Internap’s common stock in connection with the transaction. The number of shares that voted to approve the issuance of shares of Internap’s common stock represents approximately 61.42% of the total number of shares of Internap common stock outstanding and entitled to vote as of December 29, 2006, the record date for the special meeting.

Based on the preliminary tally of shares voted at a special meeting of VitalStream stockholders, approximately 99.95% of the shares of VitalStream common stock present and voting at the special meeting (in person or by proxy) voted in favor of VitalStream's merger with Internap. The number of shares that voted to approve the merger represents approximately 74.58% of the total number of shares of VitalStream common stock outstanding and entitled to vote as of December 29, 2006, the record date for the special meeting.

VitalStream has notified the NASDAQ Global Select Market of the closing of the transaction and expects that no further trading in VitalStream stock will occur and that its shares will no longer be listed. Internap has appointed American Stock Transfer as exchange agent, and, as soon as practicable, will mail a letter of transmittal and instructions to all VitalStream stockholders of record. The letter of transmittal and instructions will contain information on how to surrender stock certificates representing shares of VitalStream common stock in exchange for certificates representing shares of Internap common stock. The exchange will be based upon a ratio of .5132 shares of Internap common stock issued for each share of VitalStream common stock owned, and stockholders will be paid cash in lieu of fractional shares. VitalStream’s stockholders of record should wait until they receive the letter of transmittal before surrendering their stock certificates. Stockholders who hold shares through a bank or broker will not have to take any action to have their shares converted into Internap shares as such conversions will be handled by the bank or broker.

"The completion of the transaction to acquire VitalStream marks yet another milestone in our disciplined approach to transform Internap and return value through both strategic and organic initiatives,” said James P. DeBlasio, chief executive officer of Internap. “By replicating the VitalStream platform, we can extend our global reach and acquire new customers, particularly those that need streaming media services. Furthermore, Internap is positioned to offer our existing customers a more robust, integrated solution that no other company can.”

DeBlasio added, “The addition of VitalStream’s employees also creates the ideal combination of innovation and technical expertise that strengthens Internap’s hallmark premium customer service. This ultimately allows us to offer the strongest, most comprehensive portfolio for businesses that depend on the Internet— all backed by the best minds in the industry.”

The acquisition results in Internap holding a market leadership position delivering streaming media content and will facilitate the company’s ability to generate organic growth via cross-selling opportunities for streaming media and on-line advertising segments to its 3000 enterprise customers. Internap now has approximately 450 employees, including a direct sales team of 135 with experience re-selling CDN and streaming media services.

Internap expects to provide an update on its integration with VitalStream during its year-end and fourth quarter 2006 conference call on March 1^st at 5:00 PM EST.

About Internap

Internap is a market leader of intelligent route control solutions that bring reliability, performance and security to the Internet, and a global provider of integrated content delivery services that enable businesses to stream digital media to large audiences over the Internet. The company provides patented and patent-pending technologies that address the inherent weaknesses of the Internet, enabling enterprises to take full advantage of the benefits of deploying business-critical applications such as e-commerce, VoIP, and audio/video across IP networks. The company provides additional solutions, including video and audio streaming, advertising placement, reporting and analysis, live event broadcasting, media asset management, integrated Web hosting and consulting services. Internap currently serves more than 3,000 customers throughout North America, Europe, Asia and Australia. For more information, please visit the company web site at www.internap.com.

Internap and VitalStream are trademarks of Internap Network Services Corporation and a wholly owned subsidiary, respectively. All other trademarks and brands are the property of their respective owners.