Exhibit 10.2
INTEREST ESCROW AGREEMENT
Among
WILMINGTON TRUST COMPANY
(as "Escrow Agent" and "Trustee")
and
PSINET Inc.
("Company")
April 13, 1998
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INTEREST ESCROW AGREEMENT
INTEREST ESCROW AGREEMENT ("Agreement"), dated as of April 13,
1998 by and among WILMINGTON TRUST COMPANY, a Delaware banking corporation,
escrow agent (together with any Subcustodian (as defined below), "Escrow Agent")
and as trustee for the benefit of the holders of the Notes (as defined below)
under the Indenture (as defined below) (the "Trustee"), and PSINET INC., a New
York corporation (the "Company").
RECITALS
A. Pursuant to that certain Indenture dated as of
April 13, 1998, by and among the Company and the Trustee (the
"Indenture"), the Company has issued $600,000,000 aggregate
principal amount of its 10% Senior Notes due 2005 (together
with the notes issued in connection with the Exchange Offer,
the "Notes").
B. The parties are entering into this Agreement to
set forth the conditions upon which, and the manner in which,
funds will be disbursed from the Interest Escrow Account to be
established pursuant to this Agreement and released from the
security interest and lien described in Section 6(a) of this
Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Defined Terms. Capitalized terms used herein but not defined herein
shall have the meaning given in the Indenture. In addition to any other defined
terms used herein, the following terms shall constitute defined terms for
purposes of this Agreement and shall have the meanings set forth below:
"Acceptable Replacement Escrow Agent" means a corporation
organized and doing business under the laws of the United States of America or
of any state thereof authorized under such laws to exercise corporate trustee
power, subject to supervision or examination by federal or state authority and
having a combined capital and surplus of at least $100 million as set forth in
its most recent published annual report of condition.
"Affiliates" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Available Funds" means (A) the sum of (i) the Initial Escrow
Amount and (ii) interest and other amounts earned, if any, or dividends paid on
the funds in the Interest Escrow Account (including holdings of U.S. Government
Securities), less (B) the aggregate disbursements previously made pursuant to
this Agreement.
"Collateral" hall have the meaning given in Section 6(a)
hereof.
"Escrow Agent" has the meaning set forth in Section 2(a)
hereof.
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"Escrow Account Statement" shall have the meaning given in
Section 2(g).
"Initial Escrow Amount" means $138.7 million.
"Interest Escrow Account" means the escrow account established
pursuant to Section 2.
"Issue Date" means April 13, 1998.
"Payment Notice and Disbursement Request" means a notice sent
by the Trustee to the Escrow Agent requesting a disbursement of funds from the
Interest Escrow Account, in substantially the form of Exhibit A hereto. Each
Payment Notice and Disbursement Request shall be signed by an officer of the
Trustee.
"U.S. Government Securities" mean securities that are direct
obligations of the United States of America, the payment of which its full faith
and credit is pledged.
2. Interest Escrow Account, Escrow Agent.
(a) Appointment of Escrow Agent. The Trustee and the Company hereby
appoint Wilmington Trust Company, and Wilmington Trust Company hereby accepts
appointment, as escrow agent (the "Escrow Agent") under the terms and conditions
of this Agreement. The term "Escrow Agent" shall be deemed to include any
successor to, or Subcustodian located in the State of New York ("Subcustodian")
appointed by, the Escrow Agent.
(b) Establishment of Interest Escrow Account.
(i) Concurrently with the execution and delivery hereof,
Escrow Agent shall establish the Interest Escrow Account, a non-interest bearing
account, at the office of the Escrow Agent or Subcustodian in New York. Subject
to the security interest granted therein for the benefit of the Trustee, and
subject to the other terms and conditions of this Agreement, all funds accepted
by Escrow Agent pursuant to this Agreement shall be held for the exclusive
benefit of the Trustee, for the ratable benefit of the holders of the Notes. All
such funds shall be held in the Interest Escrow Account until disbursed in
accordance with the terms hereof. The Interest Escrow Account, and the funds and
any U.S. Government Securities and permitted Cash Equivalents and proceeds held
therein by the Escrow Agent, shall be deemed to be under the sole dominion and
control of Escrow Agent for the benefit of the Trustee for the ratable benefit
of the holders of the Notes and all such funds shall be held by the Escrow Agent
separate and apart from all other funds of or held by the Escrow Agent, subject
to Section 5. Concurrently with the execution and delivery hereof, the Company
shall deliver the Initial Escrow Amount to the Escrow Agent for deposit into the
Interest Escrow Account against the Escrow Agent's written acknowledgment and
receipt of the Initial Escrow Amount. The Escrow Agent hereby acknowledges the
security interest in the Collateral in favor of the Trustee as a secured party
for the ratable benefit of the holders of the Notes. The Escrow Agent does not
have any interest in the Collateral except as escrow holder for the benefit of
the Trustee for the ratable benefit of the holders of the Notes. The parties
acknowledge that this Agreement is intended to establish control of the
Collateral in favor of the Escrow Agent for the benefit of Trustee for the
ratable benefit of the holders of the Notes in accordance and for purposes of
Section 8-106 of the Uniform Commercial Code.
The Company shall pay or reimburse the Escrow Agent upon request for
any transfer taxes or other taxes, fees, charges or expenses relating to the
Collateral incurred in connection herewith and shall indemnify and hold harmless
the Escrow Agent from any amounts that it is obligated to pay in the way of such
taxes, fees, charges or expenses. Any payments of income from the Interest
Escrow Account shall
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be subject to withholding regulations then in force with respect to United
States taxes. The parties hereto will provide the Escrow Agent with appropriate
W-9 forms for tax I.D. number certifications, or W-8 forms for non-resident
alien certifications. It is understood that the Escrow Agent shall be
responsible for income reporting only with respect to income earned on
investment of funds which are part of the Collateral and is not responsible for
any other reporting. This paragraph shall survive notwithstanding any
termination of this Escrow Agreement or the resignation of the Escrow Agent.
(c) Escrow Agent Compensation.
(i) Escrow Agent and any Acceptable Replacement Escrow Agent
shall be compensated pursuant to a separate agreement between the Company and
Escrow Agent or such Acceptable Replacement Escrow Agent.
(ii) To the extent not paid by the Company when due, Escrow
Agent shall be entitled to disburse from the Interest Escrow Account all amounts
due to Escrow Agent as compensation for services to be performed by Escrow Agent
under this Agreement (as determined by agreement with the Company or pursuant to
this Section 2(c)(ii)).
(d) Investment of Funds in Interest Escrow Account. Funds deposited
in the Interest Escrow Account shall be invested and reinvested upon the
following terms and conditions:
(iii) Acceptable Investments. Funds deposited in the Interest
Escrow Account (including proceeds of any U.S. Government Securities at maturity
and interest and other earnings paid on any such investments) shall be invested
by the Escrow Agent in U.S. Government Securities or temporarily in Cash
Equivalents of the type referred to in clauses (ii) and (iv) of the definition
of Cash Equivalents in the Indenture, in accordance with the Company's written
instructions to the Escrow Agent accompanied by a certification of the Company
that such investments are in accordance with the terms of this paragraph. The
Company shall so instruct the Escrow Agent in a manner such that the Company in
its sole discretion determines at such time is in accordance with the Indenture
and will generate sufficient funds available without any further deposit by the
Company of funds or securities into the Interest Escrow Account (other than the
reinvestment of funds in U.S. Government Securities, Cash Equivalents permitted
herein and funds held in the form of cash as U.S. Government Securities mature)
to cover all interest due on the outstanding Notes, as such interest becomes
due, for each Interest Payment Date occurring from the Issue Date and ending on
(and including) the fifth such Interest Payment Date. Any U.S. Government
Securities constituting Collateral maintained with the Federal Reserve Bank
shall be transferred to a book-entry account in the name of the Escrow Agent,
for the benefit of the Trustee for the ratable benefit of the holders of the
Notes, (subject to Section 3 and Section 5). The Escrow Agent shall have no
responsibility for determining whether funds held in the Interest Escrow Account
shall have been invested in such a manner so as to comply with the requirements
of the second sentence of this clause (i) or the Indenture, and shall have no
responsibility for, and the Company indemnifies and holds harmless the Escrow
Agent from any liability in connection with, any gain or loss on any investment
made pursuant to this clause (i) or the lack of sufficient funds available in
the Interest Escrow Account to cover all interest or other amounts due on any
Interest Payment Date or otherwise.
(iv) Security Interest in Investments. No investment of funds
in the Interest Escrow Account shall be made unless the Company has certified to
Escrow Agent upon advice of legal counsel that, upon such investment, the
Trustee will have a perfected security interest in the applicable investment
(such advice of legal counsel relating solely to the manner of perfecting a
security interest in a particular type of investment, but not to whether such
perfection has been achieved in the instance). A certificate as to a class of
investments need not be issued with respect to individual investments in
securities in that class if the certificate applicable to the class remains
accurate with respect to such individual investments,
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which continued accuracy the Escrow Agent may conclusively assume. When and if
the Indenture is qualified under the Trust Indenture Act of 1939, as amended
(the "TIA"), to the extent, if any, that Section 314(b) of the TIA is
applicable, on such date and on each annual anniversary of such date until the
date upon which the balance of the Available Funds shall have been reduced to
zero, each of the Trustee and the Escrow Agent shall receive an opinion of
counsel to the Company, dated each such date as applicable, which opinion shall
meet the requirements of Section 314(b) of the TIA.
(v) Interest and Dividends. Subject to the security interest
granted therein for the benefit of the Trustee for the ratable benefit of the
holders of the Notes, and subject to the other terms and conditions of this
Agreement, all interest and other amounts earned and dividends paid on funds
invested in such U.S. Government Securities in accordance with the written
instructions of the Company shall be deposited in the Interest Escrow Account,
and commingled with the funds therein, for the exclusive benefit of the Trustee
for the ratable benefit of the holders of the Notes (subject to Sections 3 and 5
hereof) and shall be reinvested in accordance with the terms hereof at the
Company's written instruction and subject to disbursement as provided herein.
(e) Limitation on Escrow Agent's Responsibilities.
(vi) Escrow Agent's duties and responsibilities shall be
limited to those expressly set forth in this Agreement. Without limiting the
foregoing, the Escrow Agent shall maintain continuous exclusive possession,
dominion and control of cash included in the Collateral and will cause the U.S.
Government Securities to be registered in the book-entry system of and
transferred to an account of the Escrow Agent or a sub-agent of the Escrow Agent
at the Federal Reserve Bank. Escrow Agent shall not be subject to, or obligated
to recognize, any agreement other than this Agreement to which the Company, the
Trustee, or either of them may be a party. References in this Agreement to any
such agreement are for identification and definitional purposes only.
(vii) Escrow Agent shall have no obligation with respect to
the Interest Escrow Account other than to follow faithfully instructions
contained in this Agreement or delivered to Escrow Agent in accordance with this
Agreement. Escrow Agent may rely and act upon any written notice, instruction,
direction, request, waiver, consent, receipt, or other paper or document
("Instructions") which it believes in good faith to be genuine and what it
purports to be. Escrow Agent shall be subject to no liability with respect to
the form, execution, or validity of any such Instruction. The Escrow Agent shall
not be liable for verifying the accuracy of any certifications made by the
Company or the Trustee, including without limitation, in any Payment Notice and
Disbursement Request, pursuant to Section 2(d)(ii) hereof, or otherwise.
(viii) Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good faith, or
for any mistake of fact or law, or for doing anything which, in good faith, it
may do or refrain from doing in connection with the Interest Escrow Account,
except in each case in the event of Escrow Agent's gross negligence or wilful
misconduct.
(f) Substitution of Escrow Agent.
(ix) The Company shall have the right to cause Escrow Agent to
be relieved of its duties hereunder and to select a substitute escrow agent to
serve hereunder (provided such substitute escrow agent is an Acceptable
Replacement Escrow Agent), upon the expiration of thirty (30) days following
delivery of written notice of substitution to Escrow Agent and the Trustee. Upon
selection of such substitute escrow agent, such substitute escrow agent and the
parties hereto other than the substituted escrow agent shall enter into an
agreement substantially identical to this Agreement and, thereafter, Escrow
Agent shall be relieved of its duties and obligations to perform hereunder,
except that Escrow
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Agent shall transfer to the substitute escrow agent upon request therefor all
funds and U.S. Government Securities maintained by Escrow Agent hereunder and
copies of all books, records, plans and other documents in Escrow Agent's
possession relating to such funds or U.S. Government Securities or this
Agreement.
(x) Escrow Agent, or any substitute escrow agent, may at any
time resign and be discharged of its duties and obligations under this Agreement
by giving at least sixty (60) days' notice to the Company and the Trustee. The
Company shall appoint an Acceptable Replacement Escrow Agent or substitute
escrow agent within such sixty day period.
(xi) If the Company fails to appoint a substitute escrow agent
as required under paragraph (ii) above, Escrow Agent shall deliver all assets
held in the Escrow Account to an Acceptable Replacement Escrow Agent of either
its choosing or as appointed by a court upon application therefor, or to a court
as directed.
(xii) Escrow Agent shall be discharged from any further duties
under this Agreement upon its transfer of the assets held in the Escrow Account
to an Acceptable Replacement Escrow Agent.
(g) Interest Escrow Account Statement. The Escrow Agent shall deliver
to the Company and the Trustee a monthly statement setting forth with reasonable
particularity the Collateral then held by the Escrow Agent, and the manner in
which such funds are invested (the "Escrow Account Statement"). The books and
records of the Escrow Agent with respect to the Interest Escrow Account shall be
open to inspection and audit at reasonable times during reasonable business
hours by the Trustee and the Company or their respective representatives. The
parties hereto irrevocably instruct Escrow Agent that on the first date upon
which the balance in the Interest Escrow Account (including the holdings of all
U.S. Government Securities) is reduced to zero, Escrow Agent shall deliver to
the Company and to the Trustee a notice that the balance in the Interest Escrow
Account has been reduced to zero.
(h) Other Powers of Escrow Agent.
(xiii) Escrow Agent may register any investments held by the
Interest Escrow Account in its nominee name without increase or decrease of
liability.
(xiv) Escrow Agent may consult with and obtain advice from
legal counsel in the event of any dispute or question as to the construction of
any of the provisions of this Agreement or any of Escrow Agent's duties under
this Agreement, and Escrow Agent shall incur no liability in acting in good
faith in accordance with the advice of such counsel. The fees for consultation
with such counsel shall be a proper expense chargeable to the Interest Escrow
Account without a Payment Notice and Disbursement Request, provided that Escrow
Agent provides the Company with prior written notice of any such charge.
(i) Incumbency Certificate. The Company and the Trustee each shall
provide a certificate to Escrow Agent as to the incumbency and signatures of
those individuals authorized to provide from time to time instructions relating
to the Interest Escrow Account or to execute documents to be provided to Escrow
Agent. The Company and the Trustee also shall promptly notify Escrow Agent of
any changes to such a certificate. Escrow Agent may rely on the accuracy and
completeness of any such certificate unless and until it has received an
acceptable replacement certificate. All certificates provided under this Section
2(i) shall be executed by the applicable party's corporate secretary or
assistant secretary or, if the party does not have a corporate secretary or
assistant secretary, by an authorized officer.
3. Disbursements.
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(a) Disbursements. At least five (5) Business Days prior to each
Interest Payment Date described in Section 2(d)(i), the Trustee shall submit to
the Escrow Agent a completed Payment Notice and Disbursement Request
substantially in the form of Exhibit A hereto and the Escrow Agent shall, upon
acceptance of such Payment Notice and Disbursement Request, and provided that
there are sufficient funds in the Interest Escrow Account, disburse the funds
requested to the Trustee for payment to the Holders of the Notes at or before
11:00 a.m. New York City time on the Interest Payment Date for which the
completed Payment Notice and Disbursement Request was submitted. The Escrow
Agent shall notify the Trustee and the Company as soon as reasonably possible
(but not later than two (2) Business Days from the date of receipt of the
Payment Notice and Disbursement Request) if any Payment Notice and Disbursement
Request is rejected or not conforming with the requirements of this Agreement
and the reason(s) therefor. Escrow Agent shall have no obligation to make any
payment or disbursement in connection with any Payment Notice and Disbursement
Request to the extent, if any, which there are insufficient funds in the
Interest Escrow Account. The Escrow Agent and the Trustee will communicate
expeditiously and use their best effort to cure any defect therein.
(b) Retired Notes. In the event a portion of the Notes has been
retired by the Company and submitted to the Trustee for cancellation and there
is no Event of Default under the Indenture, funds representing the excess over
the amount sufficient to pay interest through and including the fifth Interest
Payment Date on the Notes not so retired and any amounts due to the Escrow Agent
shall, upon written request of the Trustee to the Escrow Agent, be paid to the
Company. The Trustee shall provide such notice to the Escrow Agent (i) upon
receipt of notice of similar effect from, and certification of such retirement
by, the Company, which notice and certification shall be provided to the Escrow
Agent and (ii) upon the Company's compliance with the release of collateral
provisions of the TIA to the extent applicable.
(c) Excess Amounts. Notwithstanding anything in this Agreement to the
contrary, so long as no Event of Default shall have occurred and being
continuing, at such time as all interest due on the Notes through and including
the fifth Interest Payment Date on the Notes has been paid to the Holders
thereof pursuant to the Indenture and in accordance herewith, and all other
amounts due and owing under this Agreement and the Indenture, including but not
limited to the compensation, expenses, disbursements and advances of the Escrow
Agent and the Trustee or their agents or counsel, upon the written request of
the Trustee, the Escrow Agent shall disburse all remaining funds and U.S.
Government Securities and permitted Cash Equivalents in the Interest Escrow
Account to the Company and pending such disbursement shall hold such funds or
securities for the Company, except that no such disbursement shall be made
unless the Company has certified to the Escrow Agent that all interest due and
payable on the Notes from time to time outstanding through and including the
fifth Interest Payment Date has been paid to the Holders thereof pursuant to the
Indenture and in accordance with this Agreement and the Company has indemnified
the Escrow Agent, its officers, directors, employees and agents, for any
liability, loss or expense in connection therewith.
(d) Acceleration. Upon the acceleration of the maturity of the Notes
prior to the payment in full of the first five scheduled interest payments, the
Escrow Agent shall, upon the receipt of written notice from the Trustee, as
agent for the Trustee, foreclose upon the Collateral and shall apply the
proceeds of such foreclosure in accordance with Section 5.06 of the Indenture.
The Escrow Agent shall be entitled to reimbursement of all expenses,
disbursements and advances incurred or made by it in connection with such
foreclosure and application of proceeds.
4. Escrow Agent. The Escrow Agent's responsibility and liability
under this Agreement shall be limited as follows: (i) the Escrow Agent does not
represent, warrant or guaranty to the holders of the Notes from time to time the
performance of the Company or the Trustee; (ii) the Escrow Agent shall have no
responsibility to the Company or the holders of the Notes or the Trustee from
time to time as a
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consequence of performance or nonperformance by the Escrow Agent hereunder,
except for any gross negligence or willful misconduct of the Escrow Agent; (iii)
the Company shall remain solely responsible for all aspects of the Company's
business and conduct; and (iv) the Escrow Agent is not obligated to supervise,
inspect or inform the Company or any third party of any matter referred to
above.
No implied covenants or obligations shall be inferred from
this Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by
the provisions of any agreement beyond the specific terms hereof. Specifically
and without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or U.S.
Government Securities held by it hereunder, including, without limitation any
liability for any delay not resulting from gross negligence or wilful misconduct
in such investment, reinvestment or liquidation, or for any loss of principal or
income incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial
order or judgment, upon any written opinion of counsel or upon any
certification, instruction, notice, or other writing delivered to it by the
Company or the Trustee in compliance with the provisions of this Agreement
without being required to determine the authenticity or the correctness of any
fact stated therein or the propriety or validity of service thereof. The Escrow
Agent may act in reliance upon any instrument comporting with the provisions of
this Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
The Escrow Agent may act pursuant to the written advice of
counsel chosen by it with respect to any matter relating to this Agreement and
(subject to Section 4(a)(ii)) shall not be liable for any action taken or
omitted in accordance with such advice.
The Escrow Agent shall not be called upon to advise any party
as to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder. The Escrow
Agent shall not be responsible for or incur any liability in connection with the
performance of any investment made at the discretion of the Company, for any
other loss or gain in the Interest Escrow Account, or for the sufficiency of
funds in the Interest Escrow Account to cover interest payments on the Notes.
In the event the Escrow Agent in good faith is in doubt as to
what action to take under this Agreement with respect to any funds or property
deposited hereunder, the Escrow Agent shall be entitled to refuse to comply with
any and all claims, demands or instructions with respect to such funds or
property, and the Escrow Agent shall not be or become liable for its failure or
refusal to comply with conflicting claims, demands or instructions. The Escrow
Agent shall be entitled to refuse to act until either any conflicting or adverse
claims or demands shall have been finally determined by a court of competent
jurisdiction or settled by agreement between the conflicting claimants
(including the Company) directing the payment or delivery of funds or property.
The Escrow Agent may in addition elect in its sole option to commence an
interpleader action or seek other judicial relief or orders as the Escrow Agent
may deem necessary.
No provision of this Agreement shall require the Escrow Agent
to expend or risk its own funds or otherwise incur any liability .
5. Indemnity. The Company shall indemnify, hold harmless and defend
Escrow Agent and the Trustee, and their respective directors, officers, agents
and employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including defense costs, investigative fees and costs,
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legal fees, and claims for damages, arising from Escrow Agent's and the
Trustee's respective performance under this Agreement, except to the extent that
such liability, expense or claim is directly attributable to the gross
negligence or wilful misconduct of such indemnified person. In connection with
any claim, action, obligation, liability or expense for which indemnification is
sought by the Escrow Agent hereunder, the Escrow Agent shall be entitled to
recover its costs and expenses as incurred from funds available in the Interest
Escrow Account.
Grant of Security Interest; Instructions to Escrow Agent.
(e) The Company hereby irrevocably grants a first priority security
interest in, pledges, assigns and sets over to the Trustee all of the Company's
right, title and interest in the Initial Escrow Amount, the Interest Escrow
Account, all funds held therein and all U.S. Government Securities and permitted
Cash Equivalents and replacements thereof and proceeds of each of the foregoing
held by or on behalf of the Escrow Agent including, without limitation, any of
the foregoing which is a certificated or uncertificated security, a security
entitlement, a securities account, investment property, a financial asset, a
Treasury security (including any Treasury STRIPS (Separate Trading of Registered
Interest and Principal of Securities) (collectively, the "Collateral"), to
secure all obligations and indebtedness of the Company under the Notes and any
other obligation now or hereafter arising, of every kind and nature, owed by the
Company under the Indenture to the Holders of the Notes or the Trustee.
(f) The Company and the Trustee hereby irrevocably instruct the
Escrow Agent to and the Escrow Agent will: (i)(A) maintain sole and exclusive
possession, dominion and control over funds in the Interest Escrow Account for
the benefit of the Trustee for the ratable benefit of the holders of the Notes
as required herein and (B) take all applicable steps set forth in Section
2(d)(i) and 2(d)(ii); (ii) maintain all of the Collateral free and clear of all
liens, security interests, safekeeping or other charges, demands and claims
against Escrow Agent of any nature whatsoever now or hereafter existing, in
favor of anyone other than the Escrow Agent and the Trustee; (iii) promptly
notify the Trustee if Escrow Agent becomes aware that any person other than the
Trustee has a lien or security interest upon any portion of the Collateral
(other than any claim which Escrow Agent may have against the Interest Escrow
Account for unpaid fees and expenses); and (iv) immediately disburse all funds
held in the Interest Escrow Account to the Trustee and transfer title to all
U.S. Government Securities held by Escrow Agent hereunder to the Trustee upon
written notice by the Trustee to Escrow Agent (without any consent from the
Company) that as a result of an Event of Default under the Indenture, the
indebtedness represented by the Notes has been accelerated and has become due
and payable.
(g) Any money and U.S. Government Securities collected by the Trustee
pursuant to Section 6(b)(iii) of the Indenture shall be applied as provided in
Section 5.06 of the Indenture.
(h) Upon demand, the Company will execute and deliver to the Trustee
such instruments and documents as the Trustee may reasonably deem necessary or
advisable to confirm or perfect the rights of the Trustee under this Agreement
and the Trustee's interest in the Collateral.
(i) The Company hereby appoints the Trustee as its attorney-in-fact
effective upon and during the continuance of a Default or an Event of Default
under the Indenture with full power of substitution to do any act which the
Company is obligated hereunder to do, and the Trustee may exercise such rights
as the Company might exercise with respect to the Collateral and take any action
in the Company's name to protect the Trustee's security interest hereunder.
6. Termination. This Agreement shall terminate automatically ten(10)
days following disbursement of all funds remaining in the Interest Escrow
Account (including the proceeds of any U.S. Government Securities), unless
sooner terminated by agreement of the parties hereto (in accordance with
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the terms hereof, not in violation of the Indenture), provided, however, that
the obligations of the Company under Section 5 of this Agreement shall survive
termination of this Agreement or the resignation or removal of the Escrow Agent;
provided, further, however, that until such tenth day, this Agreement (or any
permitted successor agreement) will remain in effect and the Company will use
its reasonable best efforts to cause there to be an escrow agent (including any
permitted successor thereto) acting hereunder (or under any such permitted
successor agreement).
7. Miscellaneous.
(j) Waiver. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
(k) Invalidity. If, for any reason whatsoever, any one or more of
the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(l) Assignment. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of the other parties, provided however, that the
Escrow Agent may , in accordance with the terms of Agreement, appoint a
Subcustodian hereunder. In any event, this Agreement shall inure to and be
binding upon the parties and their successors and permitted assigns.
(m) Benefit. The parties hereto, the holders of the Notes and their
permitted assigns, but no others, shall be bound hereby and entitled to the
benefits hereof.
(n) Time. Time is of the essence in each provision of this Agreement
of which time is an element.
(o) Choice of Law. The existence, validity, construction, operation
and effect of any and all terms and provisions of this Agreement (including the
security interest created hereby and perfection thereof) shall be determined in
accordance with and governed by the laws of the State of New York, without
giving effect to conflict of law principles thereof.
(p) Entire Agreement; Amendments. This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, understandings and commitments, whether
oral or written. This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties.
(q) Notices. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received, regardless of when and whether
received, either: (a) on the day of hand delivery; (b) three business days
following the day sent, when sent by United States certified mail, postage and
certification fee prepaid, return receipt requested, or (c) the next business
day following the day timely delivered to a recognized next-day air courier,
addressed as follows:
To Escrow Agent:
Page 157 of 162
Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
To the Trustee:
Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
To the Company:
PSINet Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Nixon, Hargrave, Devans & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
or at such other address as the specified entity most recently may have
designated in writing in accordance with this section to the others; or (d) by
facsimile transmission to the Escrow Agent at (▇▇▇) ▇▇▇-▇▇▇▇, to the Trustee at
(▇▇▇) ▇▇▇-▇▇▇▇, and to the Company at (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇.
(r) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(s) Captions. Captions in this Agreement are for convenience only and
shall not be considered or referred to in resolving questions of interpretation
of this Agreement.
(t) Authority of the Company; Valid and Binding Agreement. The
Company hereby represents and warrants that this Agreement has been duly
authorized, executed and delivered on its behalf and constitutes the legal,
valid and binding obligation of the Company. The execution, delivery and
performance of this Agreement by the Company does not violate any applicable law
or regulation to which the Company is subject and does not require the consent
of any governmental or other regulatory body to which the Company is subject,
except for such consents and approvals as have been obtained and are in full
force and effect.
(u) Authority of the Escrow Agent and the Trustee; Valid and Binding
Agreement. Each of the Escrow Agent and the Trustee hereby represents and
warrants and this Agreement has been duly authorized, executed and delivered on
its behalf and constitutes its legal, valid and binding obligation.
Page 158 of 162
[SIGNATURE PAGE FOLLOWS]
Page 159 of 162
IN WITNESS WHEREOF, the parties have executed and delivered
this Interest Escrow Agreement as of the date first above written.
ESCROW AGENT: WILMINGTON TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. Laskarsis
Name: ▇▇▇▇▇▇ ▇. Laskarsis
Title: Vice President
TRUSTEE: WILMINGTON TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. Laskarsis
Name: ▇▇▇▇▇▇ ▇. Laskarsis
Title: Vice President
COMPANY: PSINET INC.
By: /s/ ▇▇▇▇▇▇ ▇. Postal
Name: ▇▇▇▇▇▇ ▇. Postal
Title: Senior Vice President
and Chief Financial Officer
Page 160 of 162
Exhibit A
Form of Payment Notice and Disbursement Request
[Letterhead of the Trustee]
[Date]
Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Re: Disbursement Request No. ___
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Interest Escrow Agreement ("Escrow Agreement")
dated as of April 13, 1998 by and among Wilmington Trust Company, as Trustee and
Escrow Agent, and PSINET Inc., a New York corporation (the "Company"). Unless
otherwise specified, capitalized terms used herein shall have the meaning given
in the Escrow Agreement.
This letter constitutes a Payment Notice and Disbursement
Request under the Escrow Agreement.
[Choose one of the following, as applicable]
[The undersigned hereby notifies you that a scheduled interest
payment in the amount of $_________ will become due on ___________, ____ and
requests a disbursement of funds contained in the Interest Escrow Account in
such amount to the Holders of the Notes pursuant to Section 3(a) of the Escrow
Agreement.]
[The undersigned hereby notifies you that Notes equaling
$_________ in aggregate principal amount have been retired and authorizes you to
release $________ of funds in the Interest Escrow Account to the Company (to an
account designated by the Company in writing), which amount represents the
amount permitted to be released in accordance with Section 3(b) of the Escrow
Agreement.]
[The undersigned hereby notifies you that all amounts due on
the Notes up to and through _____________ have been paid from the Interest
Escrow Account in accordance with the Indenture (as defined in the Escrow
Agreement) and authorizes you to release to the Company all remaining funds
contained in the Interest Escrow Account.]
[In accordance with Section 6(b)(iv) of the Escrow Agreement,
the undersigned hereby notifies you that there has been an acceleration of the
maturity of the Notes. Accordingly, you are hereby requested to disburse all
remaining funds contained in the Interest Escrow Account to the Trustee such
that the balance in the Interest Escrow Account is reduced to zero.]
In connection with the requested disbursement, the undersigned
hereby notifies you that:
1. [The Notes have not, as a result of an Event of
Default (as defined in the Indenture), been accelerated and
become due and payable.]
Page 161 of 162
2. All prior disbursements to the Trustee from the
Interest Escrow Account have been applied.
3. [Add wire instructions for payment to Trustee.]
The Escrow Agent is entitled to rely on the foregoing in
disbursing funds relating to this Payment Notice and Disbursement Request.
WILMINGTON TRUST COMPANY
as Trustee
By:_________________________________________
Name:
Title:
Page 162 of 162
