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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
JUNE 28, 1996
(DATE OF REPORT -- DATE OF EARLIEST EVENT REPORTED)
COMMISSION FILE NUMBER 0-25812
PSINet Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 16-1353600
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
510 HUNTMAR PARK DRIVE, HERNDON, VA 20170
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(703) 904-4100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On June 28, 1996, PSINet Inc., a New York corporation (the
"Company"), entered into agreements with MindSpring Enterprises, Inc., an
Atlanta-based Internet access provider ("MindSpring"), pursuant to which the
Company agreed to transfer to MindSpring certain of its individual subscriber
accounts and related tangible and intangible assets and rights in connection
with the consumer dial-up Internet access services operated by the Company in
the United States, including, without limitation, the lease for, and certain
assets located at the Company's customer service facility in New Cumberland,
Pennsylvania (collectively, the "Assets"). In connection with the transfer, the
parties also entered into a Network Services Agreement pursuant to which the
Company has agreed to service MindSpring's individual subscribers through local
dial-in points of presence connected to the Company's network. As part of these
agreements, the Company also may, at its option, transfer to MindSpring
individual subscriber accounts generated in the future.
In consideration of the transfer of the Assets, MindSpring has agreed to pay to
the Company an aggregate amount, before expenses, of up to Twenty-two Million
Three Hundred Thousand Dollars ($22,300,000) (subject to adjustment) payable as
follows: (i) cash of One Million Dollars ($1,000,000) and a promissory note in
the amount of Two Million Dollars ($2,000,000) on June 28, 1996 and (ii)
additional promissory notes for the balance of the purchase price (up to $19.3
million) to be issued at scheduled intervals, the last of which is expected to
be no later than January 13, 1997 in connection with the transfer of the balance
of the Assets to MindSpring. The promissory notes provide, among other things,
for conversion, at the option of the Company, into Common Stock of MindSpring if
the notes are not redeemed in full by the first anniversary of the issuance of
such notes. The total amount to be paid is subject to adjustment based upon the
number of subscribers transferred to MindSpring who remain customers of
MindSpring and current in their payments for services at scheduled measurement
dates. Although the amounts of the adjustment and expenses are not presently
ascertainable, based upon information presently available to the Company, the
amount to be paid to the Company in connection with this transaction will not
exceed Twenty Million Dollars ($20,000,000), subject to further adjustment.
The Company anticipates that a decrease in its individual subscriber revenue
will result once these transactions are fully consummated. The decrease is
expected to be partially offset by revenues from the provision of access
services under the Network Services Agreement with MindSpring and ongoing
revenue from continuing sales of individual subscribers. In addition, the
Company's expenses related to customer support and certain of the assets
transferred will decline.
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PSINET INC.
FORM 8-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PSINET INC.
Dated: July 15, 1996 By: /s/ David N. Kunkel
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David N. Kunkel
Vice President, General Counsel
and Secretary
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