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SEC Filings

S-4/A
EQUINIX INC filed this Form S-4/A on 04/20/2000
Entire Document
 
<PAGE>
 
                          EQUINIX, INC. AND SUBSIDIARY
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
     
  the warrant: deemed fair market value per share of $1.33, dividend yield of
  0%, expected volatility of 80%, risk-free interest rate of 5.0% and a
  contractual life of 5 years.     
     
     In November 1999, the Company entered into a definitive agreement with
  MCI Worldcom, or MCI, whereby MCI agreed to install high-bandwidth local
  connectivity services to the Company's first seven IBX centers by a pre-
  determined date in exchange for a warrant to purchase 675,000 shares of
  common stock of the Company at $0.67 per share (the "MCI Warrant"). The MCI
  Warrant is immediately exercisable and expires five years from the date of
  grant. As of December 31, 1999, warrants for 525,000 shares are subject to
  repurchase at the original exercise price if MCI's performance commitments
  are not completed. The MCI Warrant was valued at $2,145,600 using the
  Black-Scholes option-pricing model and was recorded to construction in
  progress on the accompanying consolidated balance sheet as of December 31,
  1999. Under the applicable guidelines in EITF 96-18, the underlying shares
  of common stock associated with the MCI Warrant subject to repurchase are
  revalued at each balance sheet date to reflect their current fair value
  until MCI's performance commitment is complete. Any resulting increase in
  fair value of the warrants is recorded as an additional cost component of
  the IBX center. In addition, the following assumptions were used in
  determining the fair value of the warrant: deemed fair market value per
  share of $3.67, dividend yield of 0%, expected volatility of 80%, risk-free
  interest rate of 5.5% and a contractual life of 5 years.     
     
     In November 1999, the Company entered into a master agreement with
  Bechtel Corporation, or Bechtel, whereby Bechtel agreed to act as the
  exclusive contractor under a Master Agreement to provide program
  management, site identification and evaluation, engineering and
  construction services to build approximately 29 IBX centers over a four
  year period under mutually agreed upon guaranteed completion dates. As part
  of the agreement, the Company granted Bechtel a warrant to purchase 352,500
  shares of the Company's common stock at $1.00 per share (the "Bechtel
  Warrant"). The Bechtel Warrant is immediately exercisable and expires five
  years from date of grant. As of December 31, 1999, warrants for 253,800
  shares are subject to repurchase at the original exercise price, if
  Bechtel's performance commitments are not complete. The Bechtel Warrant was
  valued at $1,043,300 using the Black-Scholes option-pricing model and was
  recorded to construction in progress on the accompanying consolidated
  balance sheet as of December 31, 1999. Under EITF 96-18, the underlying
  shares of common stock associated with the Bechtel Warrant subject to
  repurchase are revalued at each balance sheet date to reflect their current
  fair value until Bechtel's performance commitment is complete. Any
  resulting increase in fair value of the warrants is recorded as an
  additional cost component of the IBX center. In addition, the following
  assumptions were used in determining the fair value of the warrant: deemed
  fair market value per share of $3.67, dividend yield of 0%, expected
  volatility of 80%, risk-free interest rate of 5.5% and a contractual life
  of 5 years.     
 
     In addition, the Company has issued several warrants in connection with
  its debt facilities and capital lease obligations (see Note 3) and the
  Senior Notes (see Note 4). The Company has the following warrants
  outstanding as of December 31, 1999:
 

<TABLE>
<CAPTION>
                                                            Warrants   Exercise
     Series A preferred stock warrants                     outstanding  price
     ---------------------------------                     ----------- --------
     <S>                                                   <C>         <C>
     Comdisco Loan and Security Agreement Warrant.........    765,000   $0.67
     Comdisco Master Lease Agreement Warrant..............     30,000    1.67
     Comdisco Master Lease Agreement Addendum Warrant.....    150,000    3.00
     Venture Leasing Loan Agreement Warrant...............    300,000    3.00
                                                            ---------
                                                            1,245,000
                                                            =========
</TABLE>

 
 
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