Exhibit 4.1
PSINET INC.
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT, dated as of February 1, 2000, 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 7% Series D 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 to provide for a quarterly cash payment to the Holders in
an amount equal to $0.875 per share of Preferred Stock (the "Quarterly Return
Amount") for each full quarterly period (provided, however, that the Quarterly
-------- -------
Return Amount shall equal $1.0208 per share for the May 15, 2000 Deposit Payment
Date) in the manner hereinafter provided.
NOW, THEREFORE, the parties hereto agrees as follows:
1. Establishment of Deposit Account.
--------------------------------
(a) The Deposit Account shall be established in connection with the
offering (the "Offering"), of 14,000,000 shares of Preferred Stock and 2,500,000
additional shares of Preferred Stock (the "Over-Allotment Shares") subject to
acquisition in connection with the Offering, and shall be held subject to the
terms and conditions of this Agreement.
(b) Simultaneously with each closing in respect of the Offering, the
Initial Purchasers 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 7.25% of the purchase price of the Preferred Stock (or
approximately $3.65 of the $48.375 purchase price) payable by the Initial
Purchasers pursuant to that certain Purchase Agreement, dated January 26, 2000
in respect of the Offering (the "Purchase Agreement"), plus a ratable amount to
be deposited in respect of any Over-Allotment Shares purchased by the Initial
Purchasers, 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). This Agreement may be amended in
connection with the deposit of additional monies in respect of the purchase of
Over-Allotment Shares.
2. Distribution, Reduction and Termination of Deposit Account.
----------------------------------------------------------
(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 February 15, May 15,
August 15 and November 15 of each year (each such date being a "Deposit Payment
Date"), commencing May 15, 2000 and continuing until the earlier of (i) February
15, 2001 (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 (a) if on the date of such payment a registration statement
covering the shares of Common Stock so issued is effective, 97% of the Market
Value of the Common Stock on the record date, and (b) if on the date of such
payment a registration statement covering the shares of Common Stock so issued
is not effective, 93% of the Market Value of the Common Stock on the record
date. "Market Value" shall have the meaning set forth in Section 2(h). 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
-2-
to, the funds in the Deposit Account, and the Deposit Agent shall have no
liability to the Company, the Holders (or any other holder of Preferred Stock)
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 Stock prior to the Deposit Expiration Date, and provided 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 the Holders of Record of shares that 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 registered in the name
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 to the Deposit Agent 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 (a) if on the date of such payment a registration
statement covering the shares of Common Stock so issued is effective, 97% of the
Market Value of the Common Stock on the record date, and (b) if on the date of
such payment a registration statement covering the shares of Common Stock so
issued is not effective, 93% of the Market Value of the Common Stock on the
record date. "Market Value" shall have the meaning set forth in Section 2(h).
-3-
(f) Notwithstanding any 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 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 to 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
-----------
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 ("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-
4. Expenses. The Deposit Agent shall be entitled to customary fees
--------
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 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
-------
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, and to Paul, Hastings, Xxxxxxxx & Xxxxxx LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxx X. Xxxxxx, Esq.;
(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 Xxxxx Xxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, Xx., Esq.; and
(c) if to the 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
----------------------------
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,
-5-
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.
(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, any holder
(or any other holder of Preferred Stock) 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,
-6-
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 Agent shall not be liable to any of the parties
hereto, to any Holder or to any holder of Preferred Stock, 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.
-7-
(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, the
Holders (and any other holder of Preferred Stock) 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.
(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 (and any other
holder of Preferred Stock), 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
--------------------
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.
-------------
(a) Continuance of Agreement. This Agreement shall be binding upon
------------------------
the parties hereto and their respective heirs, personal representatives,
successors and assigns.
(b) Counterparts. This Agreement may be executed in any number of
------------
counterparts all of which, taken together shall constitute the same agreement.
(c) No Amendments. This Agreement may not be modified or amended, nor
-------------
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
-------------
accordance with the laws of the State of New York without reference to its
principles of conflicts of law.
-8-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and the year first above written.
PSINET INC.
By: /s/ Xxxxxx X. Postal
-----------------------------------
Name: Xxxxxx X. Postal
Title: Executive Vice President and
Chief Financial Officer
WILMINGTON TRUST COMPANY
By: /s/ Xxxxx X. XxXxxxxx
-----------------------------------
Name: Xxxxx X. XxXxxxxx
Title: Authorized Xxxxxx
Exhibit A
RECEIPT
The undersigned Initial Purchasers, as defined in Schedule I to that
certain Purchase Agreement dated as of January 26, 2000 on behalf of themselves,
hereby deliver, at the request of the Holders of the 7% Series D Cumulative
Convertible Preferred Stock, $.01 par value, of the Company, to Wilmington Trust
Company, a Delaware banking corporation (the "Deposit Agent"), as deposit agent
under the Deposit Agreement (the "Deposit Agreement") dated as of February 1,
2000 by and between the Deposit Agent and the Company, in immediately available
funds paid by wire transfer, the amount of $49,081,517.02 to the Deposit Account
(as defined in the Deposit Agreement) in accordance with the provisions of the
Deposit Agreement.
[Remainder of the Page Intentionally Left Blank]
Date: February 1, 2000
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXXXX XXXXX & CO.
XXXXXXX XXXXX, XXXXXX XXXXXX & XXXXX
INCORPORATED
XXXXXX XXXXXXX & CO. INCORPORATED
BEAR, XXXXXXX & CO. INC.
CHASE SECURITIES INC.
BANCBOSTON XXXXXXXXX XXXXXXXX INC.
By: XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
Receipt and deposit in the Deposit
Account of the above-mentioned wire
transfer is hereby acknowledged
WILMINGTON TRUST COMPANY,
as Deposit Agent
By: /s/ Xxxxx X. XxXxxxxx
---------------------------------
Name: Xxxxx X. XxXxxxxx
Title: Authorized Xxxxxx
Exhibit B
Investments
The funds that the purchasers of the 7% Series D 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.
PSINet Inc.
DEPOSIT ACCOUNT PURCHASES
Amendment
Trade Settlement Date: 02/01/00
CUSIP # FACE VALUE ISSUE PRICE COST
--------------------------------------------------------------------------------
000000XX0 $14,156,000.00 U.S. TREASURY STRIP 0.98398 $13,929,220.88
DUE 5/15/00
000000XX0 $12,250,000.00 U.S. TREASURY STRIP 0.96934 $11,874,415.00
DUE 8/15/00
000000XX0 $12,250,000.00 U.S. TREASURY STRIP 0.95287 $11,672,657.50
DUE 11/15/00
000000XX0 $12,250,000.00 U.S. TREASURY STRIP 0.93670 $11,474,575.00
DUE 2/15/01
Total Value $50,906,000.00 $48,950,868.38
============= =============
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 1st day of February, 2000 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 each Holder of Record of Preferred Stock in lieu of the Quarterly
Return Amount on the Deposit Expiration Date ___ 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
appropriate 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:
