EXHIBIT 4.2
PSINET INC.
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT, dated as of May 4, 1999, by and between PSINet
Inc., a New York corporation (the "COMPANY"), and Wilmington Trust Company (the
"DEPOSIT AGENT"), as deposit agent for the benefit of the registered holders
(the "HOLDERS") of the 6 3/4% Series C Cumulative Convertible Preferred Stock
(the "PREFERRED STOCK").
This Agreement is made to induce all present and future Holders to
purchase the Preferred Stock by providing a non-interest bearing trust deposit
account (the "DEPOSIT ACCOUNT") to secure the obligation of the Holders to
acquire from the Company common stock, par value $0.01 per share, of the Company
(the "COMMON STOCK"), on each Deposit Payment Date (as defined below) as
provided herein and, in lieu thereof, to provide for a quarterly cash payment to
the Holders in an amount equal to $0.84375 per share of Preferred Stock (the
"QUARTERLY RETURN AMOUNT") in the manner hereinafter provided.
NOW, THEREFORE, the parties hereto agrees as follows:
1. Establishment of Deposit Account.
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(a) The Deposit Account shall be established in connection with the
offering of 8,000,000 shares of Preferred Stock (the "OFFERING"), and 1,200,000
additional shares of Preferred Stock (the "OVER-ALLOTMENT SHARES") subject to
acquisition in connection therewith, and shall be held subject to the terms and
conditions of this Agreement.
(b) Simultaneously with each closing in respect of the Offering, the
underwriters of the Offering shall deliver, at the request of the purchasers of
the Preferred Stock and on their behalf, an amount in cash equal to
approximately 19.34% of the purchase price of the Preferred Stock (or
approximately $9.36 of the $48.37 purchase price per share) payable by the
underwriters pursuant to that certain Underwriting Agreement, dated April 28,
1999 in respect of the Offering (the "UNDERWRITING AGREEMENT"), plus a ratable
amount to be deposited in respect of any Additional Shares (as defined in the
Underwriting Agreement) purchased by the Underwriters, sufficient to pay,
together with the earnings thereon, any Quarterly Return Amount from the Deposit
Account required to be made hereunder prior to the Deposit Expiration Date, as
defined below (such amount together with any earnings, interest and other
proceeds of investments are referred to as the "DEPOSIT FUND"), to the Deposit
Agent against the Deposit Agent's written acknowledgment and receipt of such
amount, in the form attached hereto as EXHIBIT A, which amount the Deposit Agent
will deposit into the Deposit Account and hold pursuant to the terms of this
Agreement. Funds placed in the Deposit Account will be the property of the
Holders, and not of the Company. The Deposit Account will secure the obligation
of the Holders to acquire from the Company shares of its Common Stock at the
election of the Company on each Deposit Payment Date, as set forth herein. The
Deposit Fund
shall be invested as provided on EXHIBIT B to be attached at the closing of the
Offering (and which may be amended by delivery by the Company of a revised
Exhibit B in the event of the issuance of the Over-Allotment Shares), which
investment will provide sufficient funds, without any further investment, to
equal the aggregate Quarterly Return Amount due on the outstanding Preferred
Stock, as such Quarterly Return Amount becomes due, on each Deposit Payment
Date. The Deposit Agent shall have no responsibility for determining whether
funds held in the Deposit Account shall have been invested in a such a manner so
as to comply with the requirements of this SECTION 1(B).
2. Distribution, Reduction and Termination of Deposit Account.
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(a) Unless on or prior to the Notice Date (as defined in Section
2(h)), the Company shall have delivered to the Deposit Agent a Direction Notice
(as defined in Section 2(h)) in respect of a Deposit Payment Date or the Deposit
Expiration Date), the Deposit Agent shall deliver to each Holder of Record (as
defined in Section 3) appearing on the list provided to the Deposit Agent in
accordance with Section 3, the Quarterly Return Amount on August 15, November
15, February 15 and May 15 of each year (each such date being a "DEPOSIT PAYMENT
DATE"), commencing August 15, 1999 and continuing until the earlier of (i) May
15, 2002 (the "DEPOSIT EXPIRATION DATE") and (ii) such earlier time as the
Deposit Account is terminated in accordance with Section 2(f) below. The sole
source of funds for each Quarterly Return Amount delivered to Holders of Record
by the Deposit Agent in accordance herewith shall be the Deposit Account and the
Deposit Agent shall have no liability in respect of any deficiency thereof
(subject to Section 6(d)).
(b) If the Company shall have delivered a Direction Notice to the
Deposit Agent on or prior to the Notice Date relating to a Deposit Payment Date
or the Deposit Expiration Date, the Deposit Agent shall, as instructed by the
Company in such Direction Notice, purchase, on behalf of the Holders of Record,
from the Company, with funds from the Deposit Account, that number of whole
shares of Common Stock as is determined by the Company (as set forth in the
Direction Notice) by dividing all or such portion of the Quarterly Return Amount
as set forth in the Direction Notice (the "SHARE CONSIDERATION") as the Company
shall direct by 95% of the Market Value (as defined in Section 2(h)) of the
Common Stock as of the Notice Date. The Deposit Agent shall pay the Share
Consideration from the Deposit Account to the Company in consideration for such
purchase of shares and the Deposit Agent, or the Company upon the written
request of the Deposit Agent, shall transfer such shares of Common Stock on such
Deposit Payment Date or Deposit Expiration Date to Holders of Record appearing
on the list provided to the Deposit Agent in accordance with Section 3, each
such Holder of Record to receive the number of such shares of Common Stock as is
directed by the Company in writing. The Deposit Agent shall transfer to Holders
of Record on the next Deposit Payment Date or Deposit Expiration Date any
portion of such Quarterly Return Amount as is not utilized to purchase Common
Stock from the Company. The Deposit Agent's obligation hereunder to cause shares
of Common Stock to be purchased by the Deposit Account from the Company shall be
secured by, and limited to, the funds in the Deposit Account, and the Deposit
Agent shall have no liability to the Company, the Holders or any other person to
the extent that there are not sufficient funds in the Deposit Account to make
any purchase, payment or transfer required under this Agreement.
(c) In the event of any conversion of the Preferred Stock into shares
of Common
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Stock prior to the Deposit Expiration Date, and assuming that, at the time of
such conversion, the Company has not delivered a redemption notice, then, in
those circumstances, the Company will be paid any funds remaining in the Deposit
Account allocable to those shares of Preferred Stock so converted (and as a
result, holders of Preferred Stock will not receive any partial payment from the
Deposit Account if they convert their shares prior to receipt of a full
Quarterly Return Amount). If, however, the Company has delivered a redemption
notice, and a holder converts its Preferred Stock into shares of Common Stock
between the date of the redemption notice and the second day preceding the
redemption date (and, in any case, prior to the Deposit Expiration Date or the
termination of the Deposit Account), then, in those circumstances, any funds
remaining in the Deposit Account allocable to those shares of Preferred Stock
converted in the circumstances described in this sentence will be paid to those
holders whose shares have been converted. The Company will deliver a statement
and written directions to the Deposit Agent setting forth the allocation of
funds pro rata based upon the number of shares of Preferred Stock so converted
and directions regarding the payment of such funds.
(d) In the event of any redemption of Preferred Stock (written notice
of which shall be provided to the Deposit Agent by the Company) prior to the
earlier of (i) the Deposit Expiration Date and (ii) such earlier time as the
Deposit Account is terminated in accordance with Section 2(f) below, the Deposit
Agent shall, at the written direction of the Company, make a payment to the
Holders whose shares of Preferred Stock have been redeemed of any funds
remaining in the Deposit Account allocable to such Holders' shares so redeemed
(to the extent that the Deposit Account has not been terminated as described in
clause (g) hereof). The Company shall give such notice promptly after any such
redemption and shall include in its written direction (i) the Holders whose
shares have been so redeemed, (ii) the number of shares of each such Holder that
have been so redeemed, and (iii) the amount of the payment per share redeemed to
be made to each such Holder.
(e) On the Deposit Expiration Date, the Deposit Agent shall deliver
to the Holders of Record appearing on the list provided in accordance with
Section 3, on a pro rata basis, any cash remaining in the Deposit Account on
such date unless, prior thereto, the Company delivers a Direction Notice to the
Deposit Agent requiring the Deposit Agent to purchase with funds from the
Deposit Account from the Company for transfer to Holders of Record that number
of whole shares of Common Stock determined by dividing the Share Consideration
by 95% of the Market Value of the Common Stock as of the conversion date. In any
such event, the Company shall deliver a Direction Notice as contemplated by
Exhibit C hereto.
(f) Notwithstanding any other provision herein to the contrary, if
(A) the Company obtains any required amendments to the covenants under its
various debt obligations that would permit the Company to pay cash dividends on
the Preferred Stock prior to the Deposit Expiration Date and (B) at the time the
Company obtains such amendments or at any time thereafter (so long as the
amendments remain effective), the trading price, on any date, for the Preferred
Stock equals or exceeds the liquidation preference in respect thereof, then, in
such event, the Company may thereafter, upon notice to the Holders, elect to
exchange the Deposit Account for an obligation to accrue dividends on the
Preferred Stock from the Deposit Payment Date immediately preceding the date of
such election by instructing the Deposit Agent in writing to distribute the
remaining balance
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of the Deposit Account to the Company in accordance with this clause (f). If the
Company elects to so terminate the Deposit Account, the Preferred Stock will
begin to accrue dividends from the last Deposit Payment Date preceding such
election.
(g) Upon the final resolution (including the final resolution of all
appeals or rights to appeal in any court) of any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Deposit Agent shall,
upon the written direction of the Company, return to the Holders any funds at
the time remaining in the Deposit Account.
(h) For purposes of this Agreement: (i) the term "NOTICE DATE" means
the tenth day prior to the applicable Deposit Payment Date or Deposit Expiration
Date, as the case may be; (ii) the term "MARKET VALUE" means, as of any date,
the average of the daily closing price for the five consecutive trading days
ending on such date; the closing price for each day shall be the last sales
price or, in case no such reported sales take place on such day, the average of
the last reported bid and asked price, in either case on the principal national
securities exchange on which the shares of the Common Stock are admitted to
trading or listed, or if not listed or admitted to trading on such exchange, the
representative closing bid price as reported by the Nasdaq National Market, or
other similar organization if the Nasdaq National Market is no longer reporting
such information, or if not so available, the fair market price as determined,
in good faith, by the Board of Directors of the Company and (iii) the term
"DIRECTION NOTICE" means a notice from the Company, in the form attached as
Exhibit C, delivered to the Deposit Agent directing the Deposit Agent use funds
from the Deposit Account to purchase Common Stock from the Company to distribute
to holders of Preferred Stock.
(i) This Agreement shall remain in full force and effect until all
amounts held hereunder by the Deposit Agent have been finally distributed in
accordance herewith.
3. Record Date. The Quarterly Return Amount or, if a Direction
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Notice has been delivered by the Company, Common Stock, shall be returned or
delivered to the Holders of Record of the Preferred Stock, as they appear on the
stock register of the Company or its transfer agent or registrar 10 business
days prior to each Deposit Payment Date (such Holders, the "HOLDERS OF RECORD").
A list of the Holders of Record, including the number of shares of Preferred
Stock held by each such Holder, shall be delivered to the Deposit Agent by the
Company or its transfer agent or registrar at least 5 days prior to each Deposit
Payment Date.
4. Expenses. The Deposit Agent shall be entitled to customary fees
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and expenses for performing its duties hereunder, as may be agreed from time to
time by the Company and the Deposit Agent. The Deposit Agent shall be entitled
to prompt reimbursement of all reasonable expenses incurred by the Deposit Agent
in carrying out its duties hereunder, including, without limitation, reasonable
travel and other out-of-pocket expenses and reasonable fees and expenses of its
legal counsel arising in connection with the entering into this Agreement or the
negotiation, interpretation or enforcement of any provision hereof or any
arbitration or other proceeding hereunder. The fees and expenses of the Deposit
Agent in carrying out its duties hereunder shall be paid or reimbursed by the
Company. In the event the Deposit Agent renders any extraordinary services in
connection with the Deposit Account or otherwise under this Agreement at the
request of the Company or the Holders, the Deposit Agent shall be entitled to
reasonable
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additional compensation therefor. The terms of this Section 4 shall survive
termination of this Deposit Agreement.
5. Notices. All notices, requests, demands and other communications
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hereunder shall be deemed to have been duly given on the next business day after
being sent if by hand or if by overnight courier service for next business day
delivery, or five days after being sent if mailed, certified or registered mail,
return receipt requested, with postage prepaid:
(a) if to the Holders, to their address as set forth in the stock
transfer records of the Company;
(b) if to the Company, to PSINet Inc., 000 Xxxxxxx Xxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, Attention: Treasurer, or to such other person or
address as the Company shall designate in writing, with a copy to PSINet Inc.,
000 Xxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: General Counsel, and
to Nixon, Hargrave, Devans & Xxxxx, LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxxxx, Xx., Esq. and Xxxxx X. Xxxxxxxxx, Esq.; and
(c) if to Deposit Agent, to Wilmington Trust Company, Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X.
Xxxxxx.
Any party may change the address (or the person to whose attention such notice
is directed) by notice given to the other parties hereto as aforesaid.
6. Concerning the Deposit Agent. In order to induce the Deposit
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Agent to act as deposit agent hereunder, the Company hereby covenants and agrees
with the Deposit Agent as follows:
(a) The Deposit Agent shall not in any way be bound or affected by
any amendment, modification or cancellation of this Deposit Agreement, unless
the same shall have been agreed to in writing by the Deposit Agent.
(b) The Deposit Agent shall be entitled conclusively to rely, and
shall be protected in acting in reliance upon, any Direction Notice or other
notice, letter, statement, list, instruction or direction or any signature
furnished to the Deposit Agent pursuant to this Deposit Agreement and shall be
entitled to treat as genuine, and as the document it purports to be, any letter,
notice, statement, list, instruction, direction or other document or instrument
and any signature delivered to the Deposit Agent hereunder and believed by the
Deposit Agent to be genuine and to have been presented by the proper party or
parties, without being required to determine (and the Deposit Agent shall be
permitted to so assume) the authenticity or correctness thereof and of any fact
stated therein, the propriety or validity thereof, or the authority or
authorization of the party or parties making and/or delivering the same.
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(c) This Agreement sets forth exclusively the duties and obligations
of the Deposit Agent with respect to any and all matters pertinent to its acting
as deposit agent under this Agreement.
(d) The Deposit Agent undertakes to perform only such duties as are
expressly set forth in this Deposit Agreement, and no implied duties or implied
obligations shall be read into this Deposit Agreement against the Deposit Agent.
Neither the Deposit Agent nor any of its directors, officers, employees or
agents shall be in any manner liable or responsible to the Company or any Holder
or any other person or entity for or in respect of any loss, claim, damage or
liability (collectively, "LOSS") resulting from, or arising out of, any action
or failure or omission to act hereunder or for any mistake of fact or error of
judgment, including, but not limited to, any Loss that may occur by reason of
the exercise of the Deposit Agent's discretion in connection with to the Deposit
Agreement or Deposit Account in any particular matter or for any other reason,
except for any Loss which is the result of gross negligence or willful
misconduct on the part of the Deposit Agent or such director, officer, employee
or agent.
(e) The Company covenants and agrees to indemnify and hold the
Deposit Agent and each of its directors, officers, employees and agents (the
Deposit Agent and any such person or entity seeking indemnification hereunder
being hereinafter referred to as an "INDEMNIFIED PARTY") harmless from and
against, and upon demand reimburse each Indemnified Party for, any and all
losses, claims, damages, liabilities, costs and expenses, actions, suits or
proceedings at law or in equity, and any other expenses, fees or charges of any
character or nature (including reasonable costs of investigation and fees and
disbursements of its legal counsel) (collectively, "INDEMNIFIED LOSSES"), which
may be paid, incurred or suffered by such Indemnified Party or to which such
Indemnified Party may become subject by reason of or in connection with its
acting as deposit agent hereunder or arising out of the Deposit Account
(including, but not limited to, any action taken or omitted by the Deposit Agent
in connection with this Agreement or any action allegedly so taken or omitted)
or by reason of, or as a result of, the Deposit Agent's compliance with the
instructions set forth herein or with any instructions delivered to the Deposit
Agent pursuant hereto, except with respect to Indemnified Losses which shall be
the result of gross negligence or willful misconduct on the part of such
Indemnified Party. The terms of this Section 6(e) shall survive the termination
of this Deposit Agreement.
(f) In the event of any controversy or dispute hereunder, or with
respect to any question as to the construction of this Agreement or any action
to be taken by it hereunder, the Deposit Agent may, in its discretion, obtain
the advice of counsel reasonably satisfactory to it and shall incur no liability
for, and shall be fully protected in, acting in accordance with the advice or
opinion of such counsel.
(g) If any part of the Deposit Fund is at any time attached,
garnished or levied upon or under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any of the Deposit Fund shall be
stayed or enjoined by any court order, or in case any order, writ, judgment or
decree shall be made or entered by any court affecting the Deposit Fund or any
part thereof, then and in any of such events, the Deposit Agent is authorized,
in its sole discretion, to rely upon and comply with any such order, writ,
judgment or decree. The Deposit
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Agent shall not be liable to any of the parties hereto, to any Holder or to any
other person, firm or corporation by reason of such compliance even though such
order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside, vacated, found to have been entered without jurisdiction,
or found to be in violation of or beyond the scope of a constitution or a law.
(h) Notwithstanding anything to the contrary contained herein, if the
Deposit Agent shall be uncertain as to its duties or rights hereunder, shall
receive any notice, advice, direction, or other document from the Company with
respect to the Deposit Fund which, in its opinion, is in conflict with any of
the provisions of this Agreement, should be advised that a dispute has arisen
with respect to the payment, ownership, or right of possession of the Deposit
Fund or any part thereof (or as to the delivery, non-delivery, or content of any
notice, advice, direction, or other document) or if any obligation of the
Deposit Agent under this Agreement shall, in the opinion of the Deposit Agent,
expose the Deposit Agent to liability due to actual or potential conflicting
claims to the Deposit Account, the Deposit Agent shall be entitled (but not
obligated), without liability to anyone, to refrain from taking any action other
than to hold the Deposit Fund in accordance with this Agreement until such
uncertainty, conflict, dispute or obligation is resolved to the reasonable
satisfaction of the Deposit Agent, including by (and, notwithstanding anything
to the contrary, it shall be reasonable for the Deposit Agent not to act until
it has received) an order, decree or judgment of a court of competent
jurisdiction which has been finally affirmed on appeal or which by lapse of time
or otherwise is no longer subject to appeal, but the Deposit Agent shall be
under no duty to institute or to defend any proceeding, although it may
institute or defend such proceedings.
(i) The Company shall have the right to cause the Deposit Agent to be
relieved of its duties hereunder and to select a substitute deposit agent, upon
the expiration of 30 days following delivery of written notice of substitution
to the Deposit Agent. Upon selection of such substitute deposit agent, such
substitute deposit agent and the Company shall enter into an agreement
substantially identical to this Agreement and, thereafter, the replaced deposit
agent shall be relieved of its duties and obligations to perform hereunder,
except that the replaced deposit agent shall transfer to the substitute deposit
agent upon request therefor the Deposit Funds and copies of all books, records,
plans and other documents in the replaced deposit agent's possession relating to
such funds or this Agreement.
(j) Upon not less than 30 days' written notice to the Company and the
Holders of its intention to resign under this Agreement, the Deposit Agent may
resign as deposit agent hereunder by selecting, as a successor deposit agent,
any other deposit agent as directed or approved by the Company (which approval
shall not be unreasonably withheld). Such resignation shall take effect upon
delivery by the resigning Deposit Agent of the Deposit Fund to such successor
deposit agent; the resigning Deposit Agent shall thereupon be discharged of all
its duties and obligations hereunder. In addition, the Deposit Agent shall be
discharged of all of its duties and obligations hereunder upon its deposit of
the Deposit Fund with a court of competent jurisdiction. The Company and the
Holders each hereby irrevocably consents and submits to the jurisdiction of such
court in any such action and waives all rights to contest the jurisdiction of
such court.
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(k) The Company hereby authorizes the Deposit Agent, (i) to institute
a xxxx of interpleader in any court of competent jurisdiction to determine the
rights of any person (including the Initial Holders, the Holders, the Company
and any other person) to the Deposit Account and the Company shall pay all
reasonable costs, expenses and disbursements of the Deposit Agent in connection
therewith, including reasonable attorney's fees and (ii) to deposit the Deposit
Account with the clerk of that court.
(l) The Deposit Agent's duties, obligations and liabilities
hereunder, except as a result of the Deposit Agent's gross negligence or willful
misconduct, will terminate upon its delivery of all of the Deposit Fund under
any provision of this Agreement. The provisions of this Section 6(l) shall
survive any such termination.
7. Specific Performance. In the event of the failure by a party
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hereto to give any notice required under the terms of this Agreement, the other
parties hereto shall be entitled to specific performance by such non-performing
party.
8. Miscellaneous.
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(a) Continuance of Agreement. This Agreement shall be binding upon
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the parties hereto and their respective heirs, personal representatives,
successors and assigns.
(b) Counterparts. This Agreement may be executed in any number of
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counterparts all of which, taken together shall constitute the same agreement.
(c) No Amendments. This Agreement may not be modified or amended, nor
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may any provision hereof be waived, except (i) by a writing duly executed by the
Deposit Agent, the Company and by a majority of the Holders or (ii) as provided
in Section 1(b).
(d) Governing Law. This Agreement shall be governed and construed in
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accordance with the laws of the State of New York without reference to its
principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and the year first above written.
PSINET INC.
/s/ Xxxxxx X. Postal
By:__________________________________________
Name: Xxxxxx X. Postal
Title: Senior vice President and Chief
Financial Officer
WILMINGTON TRUST COMPANY
/s/ Xxxxx X. Xxxxxx
By:__________________________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
EXHIBIT A
DEPOSIT AGENT'S CROSS-RECEIPT
THE UNDERSIGNED hereby acknowledges receipt of [_________________]
Dollars [($_________)] (the "INITIAL DEPOSIT").
The undersigned, as deposit agent (the "DEPOSIT AGENT") pursuant to
that certain Deposit Agreement, dated May 4, 1999 among the Company and the
Deposit Agent, as deposit agent (the "DEPOSIT AGREEMENT"), has deposited the
Initial Deposit in the Deposit Account (as such term is defined in the Deposit
Agreement).
WILMINGTON TRUST COMPANY
By: _____________________________
Name:
Title:
Date: May __, 1999
EXHIBIT B
INVESTMENTS
The funds that the purchasers of the 6 3/4% Series C Cumulative
Convertible Preferred Stock deposit in the Deposit Account will be invested in
U.S. government obligations or U.S. government guaranteed obligations as
provided on the attachment hereto.
This Exhibit B shall be amended in the event of any issuance of the
Over-Allotment Shares.
In the event that investments made pursuant to this Exhibit B shall
mature or otherwise require reinvestment, the Deposit Agent shall make overnight
(or, if requested in writing by the Company, other) investment of available
funds in U.S. government obligations or U.S. government guaranteed obligations
which shall mature as required to make payments required under the Deposit
Agreement.
EXHIBIT C
FORM OF DIRECTION NOTICE
[LETTERHEAD OF THE COMPANY]
[DATE]
[DEPOSIT AGENT]
Re: Direction Notice No. [___]
Ladies and Gentlemen:
We refer to the Deposit Agreement (the "DEPOSIT AGREEMENT") dated as
of the [__]th day of [_], 1999 between you, as Deposit Agent, and PSINet Inc., a
New York corporation (the "COMPANY"). Unless otherwise specified, capitalized
terms used herein shall have the meaning given in the Deposit Agreement. This
letter constitutes a Direction Notice under the Deposit Agreement.
[The undersigned hereby notifies you that you are directed, pursuant
to SECTION 2(B) of the Deposit Agreement, to purchase from the Company, for
delivery to each Holder of Record of Preferred Stock in lieu of the Quarterly
Return Amount on the next Deposit Payment Date or the Deposit Expiration Date,
as applicable, ___ shares of Common Stock for $____ of Quarterly Return Amount.]
[The undersigned hereby notifies you of the conversion of [_________]
shares of Preferred Stock by certain holders, and that you are directed,
pursuant to SECTION 2(C) of the Deposit Agreement, to pay to the Company any
funds remaining in the Deposit Account allocable to the shares of Preferred
Stock so converted.]
[The undersigned hereby notifies you of the redemption of [____]
shares of Preferred Stock by certain holders, and that you are directed,
pursuant to SECTION 2(D) of the Deposit Agreement, to pay $[_____] to the
Company, representing funds remaining in the Deposit Account allocable to the
shares of Preferred Stock so redeemed.]
[The undersigned hereby notifies you that you are directed, pursuant
to SECTION 2(E) of the Deposit Agreement, to purchase from the Company for
delivery to holders who are entitled to the proceeds from the Deposit Account,
___ shares of Common Stock for $____ of Quarterly Return Amount.]
In connection with the requested disbursement, the undersigned hereby
notifies you that: (i) you may elect to have the Company deliver, for and on
your behalf, the shares of Common Stock acquired by you directly to the holders
of the Preferred Stock and (ii) your obligation to purchase shares of Common
Stock is secured by the funds in the Deposit Account. The Deposit Agent is
entitled to rely on the foregoing in disbursing funds relating to this Deposit
Notice.
PSINET INC.
By:__________________________________________
Name:
Title:
