<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A1
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended September 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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 or organization) Identification No.)
510 Huntmar Park Drive, Herndon, VA 20170
(Address of principal executive office) (Zip Code)
(703) 904-4100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report date)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
----- -----
Common Stock, $.01 par value - 40,434,933 shares as of October 31, 1997
(Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date)
The Index of Exhibits begins on page 5.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are filed herewith:
Exhibit 2.1 iSTAR Agreement dated as of November 10, 1997 between
iSTAR Internet Inc. and PSINet Inc.
Exhibit 3.1 Certificate of Amendment of Certificate of Incorporation
dated as of November 10, 1997
Exhibit 4.1 Certificate of Amendment of Certificate of Incorporation
dated as of November 10, 1997
Exhibit 10.1 Amendment No. 1 to Deed of 460 Spring Park Technology
Center dated as of June 12, 1997 between JBG/Spring Park
Limited Partnership and PSINet Inc.
Exhibit 10.2 Sublease Agreement dated as of June 2, 1997 between LUCAS
INDUSTRIES, INC. and PSINet Inc. and Office Lease Agreement
between 3B Limited Partnership and Lucas Industries Inc.
dated as of September 12, 1989
Exhibit 10.3 Master Equipment/Software Rental Agreement
dated as of September 11, 1997 between PSINet and Earthlink
Network, Inc. and Change Order Amendment Master
Equipment dated as of September 22 , 1997
Exhibit 10.4 Equipment lease dated as of June 30, 1997 between Royal
Bank of Canada and PSINet Limited
Exhibit 10.5 Employment Agreement dated July 1, 1997 between
the Company and Michael Malesardi
Exhibit 10.6 Employment Agreement dated August 2, 1997, 1997 between
the Company and Tony Aveta
Exhibit 10.7 Employment Agreement dated August 4, 1997 between
the Company and Harry Hobbs
Exhibit 10.8 First Amendment dated as of September, 10,1997 to the
Amended and Restated Credit Agreement between the Company
and Fleet Bank of Massachusetts, N.A.
Exhibit 10.9 Stock Purchase Agreement dated as of November 11, 1997
between PSINet Inc. and the
purchasers of Series B 8% Convertible Preferred Stock
Exhibit 10.10 Registration Rights Agreement dated as of November 11, 1997
between PSINet Inc. and the
purchasers of Series B 8% Convertible Preferred Stock
<PAGE>
Exhibit 11.1 Calculation of Loss per Share and Weighted Average Shares
Used in Calculation for the Three Months Ended
September 30, 1997
Exhibit 11.2 Calculation of Loss per Share and Weighted Average Shares
Used in Calculation for the Nine Months Ended
September 30, 1997
Exhibit 27 Financial Data Schedule **
Exhibit 99.1 Risk Factors
** Not deemed filed for purposes of Section 11 of the Securities Act of
1933, Section 18 of the Securities Exchange Act of 1934 and Section
323 of the Trust Indenture Act of 1939 or otherwise subject to the
liabilities of such sections and not deemed part of any registration
statement to which such exhibit relates.
(b) Reports on Form 8-K
On August 1, 1997, the Company filed a Current Report on Form 8-K, dated
July 31, 1997 relating to its entering into the IRU and Stock Purchase
Agreement dated as of July 22, 1997 with IXC Internet Services, Inc.
("IXC") and a Joint Marketing and Services Agreement dated as of July 22,
1997 with IXC.
On August 21, 1997, the Company filed a Current Report on Form 8-K, dated
August 20, 1997, relating to an amendment to the Company's Shareholder
Rights Plan in connection with the IRU and Stock Purchase Agreement dated
as of July 22, 1997 between the Company and IXC.
3
<PAGE>
PSINET INC.
FORM 10-Q/A1
SEPTEMBER 30, 1997
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 thereunto duly authorized.
PSINet Inc.
December 2, 1997 By: /s/ William L. Schrader
- ---------------- ------------------------------------
Date William L. Schrader
Chairman, President, Chief
Executive Officer and Director
December 2, 1997 By: /s/ Edward D. Postal
- ---------------- ------------------------------------
Date Edward D. Postal
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
4
<PAGE>
EXHIBIT INDEX
Item 6 (a) Exhibits:
Exhibit Exhibit Name Location
- ------- ------------ --------
2.1 iSTAR Agreement dated as of November 10, 1997 between iSTAR
Internet Inc. and PSINet Inc. ............................... ***
3.1 Certificate of Amendment of Certificate of Incorporation
dated as of November 10, 1997 ............................... ***
4.1 Certificate of Amendment of Certificate of Incorporation
dated as of November 10, 1997 ............................... ***
10.1 Amendment No. 1 to Deed of 460 Spring Park Technology
Center dated as of June 12, 1997 between JBG/Spring Park
Limited Partnership and PSINet Inc. ......................... ***
10.2 Sublease Agreement dated as of June 2, 1997 between LUCAS
INDUSTRIES, INC. and PSINet Inc. and Office Lease Agreement
between 3B Limited Partnership and Lucas Industries Inc.
dated as of September 12, 1989 .............................. ***
10.3 Master Equipment/Software Rental Agreement dated as of
September 11, 1997 between PSINet and Earthlink Network,
Inc. and Change Order Amendment Master Equipment
dated as of September 22 , 1997 ............................. ***
10.4 Equipment lease dated as of June 30, 1997 between Royal
Bank of Canada and PSINet Limited ........................... ***
10.5 Employment Agreement dated July 1, 1997 between
the Company and Michael Malesardi ........................... ***
10.6 Employment Agreement dated August 2, 1997, 1997 between
the Company and Tony Aveta .................................. ***
10.7 Employment Agreement dated August 4, 1997 between
the Company and Harry Hobbs ................................. ***
10.8 First Amendment dated as of September, 10,1997 to the
Amended and Restated Credit Agreement between the Company
and Fleet Bank of Massachusetts,
N.A. ......................................... Sequentially numbered
10.9 Stock Purchase Agreement dated as of November 11, 1997
between PSINet Inc. and the purchasers of Series B 8%
Convertible Preferred Stock ................................. ***
10.10 Registration Rights Agreement dated as of November 11,
1997 between PSINet Inc. and the
purchasers of Series B 8% Convertible Preferred Stock ....... ***
5
<PAGE>
Item 6 (a) Exhibits (continued):
Exhibit Exhibit Name Location
- ------- ------------ --------
11.1 Calculation of Loss per Share and Weighted Average Shares
Used in Calculation for the Three Months Ended September 30,
1997 ......................................................... ***
11.2 Calculation of Loss per Share and Weighted Average Shares
Used in Calculation for the Nine Months Ended September 30,
1997 ......................................................... ***
27 Financial Data Schedule ...................................... ***
99.1 Risk Factors ................................................. ***
*** Previously filed with the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997, as filed with the Securities and
Exchange Commission.
6
<PAGE>
Exhibit 10.8
September 30, 1997
Mr. Edward D. Postal
Senior Vice President and Chief Financial Officer
PSINet Inc.
510 Huntmar Park Drive
Herndon, VA 20170
Dear Ed:
Reference is hereby made to the Amended and Restated Credit Agreement, as
amended, (the "Agreement") made as of the 10th day of November, 1995 by and
between PSINet Inc. (f/k/a Performance Systems International, Inc.) ("PSI")
and Fleet National Bank (f/k/a Fleet National Bank of Connecticut, successor
by merger to Fleet Bank of Massachusetts, N.A.) (the "Bank"). PSI has
requested that the Bank amend several financial covenants as follows:
Section 4.22 Quick ratio - For the quarter ending September 30, 1997 a ratio
not to be less than 1.15:1.00; for the quarter ending December 31, 1997 a
ratio not to be less than 1:25:1:00; for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998 a ratio not to be less than .90:1.00;
and thereafter a ratio not to be less than 1.00:1.00.
Section 4.23 Tangible Net Worth - For the quarter ending September 30, 1997
the requirement shall equal or exceed $55,000,000; for quarter ending
December 31, 1997 the requirement shall equal or exceed $67,500,000; for
quarter ending March 31, 1998 the requirement shall equal or exceed
$70,000,000 Each requirement shall be increased by (i) 80% of all positive
net income earned after September 30, 1997 plus (ii) 50% of the net tangible
proceeds received from the sale by PSI of any shares of its capital stock
after September 30, 1997, excluding the shares issued to Brown, Simpson et.al.
Section 4.24 Consolidated EBITDA - For the quarter ending September 30, 1997
the requirement shall be not less than negative $4,000,000; for the quarters
ending December 31, 1997, March 31, 1998, June 30, 1998, and September 30,
1998 the requirement shall be not less than negative $8,000,000, negative
$12,500,000, negative $5,000,000, and positive $4,000,000 respectively.
Section 4.25 Leverage Ratio - For the quarter ending September 30, 1997 a
ratio not to exceed 1.65:1.00; for the quarter ending December 31, 1997 a
ratio not to exceed 1.50:1.00; for the quarters ending March 31, 1998, June
30, 1998 and September 30, 1998, the ratio shall be not greater than
1:75:1:00, 1:75:1:00 and 1:50:1:00 respectively, subject to the following
proviso. Total liabilities as defined under section 4.25 shall exclude any
obligations to deliver additional securities, cash or a combination thereof
(at the option of PSI) pursuant to the bandwidth transaction with IXC
Communications Inc.
7
<PAGE>
Section 4.26 Debt Service Ratio - The ratio of Consolidated EBITDA to Debt
Service shall, as of the last day of each fiscal quarter commencing with the
fiscal quarter ending December 31, 1998 equal or exceed 1.25:1.00. Debt
service as defined under section 4.26 shall exclude any interest accreting as
a result of any obligations to deliver additional securities, cash or a
combination thereof (at the option of PSI) pursuant to the bandwidth
transaction with IXC Communications, Inc. There shall be no debt service
ratio applicable prior to the fiscal quarter ending December 31, 1998.
In addition, PSI requests that the Bank extend the Revolving Credit Maturity
Date until December 31, 1997.
In accordance with the amendments detailed herein PSI shall remit to the Bank
an amendment fee of $25,000, amount not to include $12,500 already paid.
The Bank hereby consents to these changes. Nothing herein shall be deemed to
constitute a waiver, release or amendment of any other terms of the
Agreement. PSI represents and warrants that the execution of this amendment
has been duly authorized by PSI by all necessary corporate and other action
and that the execution will not conflict with, violate the provisions of, or
cause a default or cause an event which, with the passage of time or giving
of notice or both, could cause a default on the part of PSI under its charter
documents or by-laws or under any contract, agreement, law, rule, order,
ordinance, franchise, instrument or other document, or result in the
imposition of any lien or encumbrance on any property or asset of PSI.
PSI further represents that this letter represents legal, valid and binding
obligations of PSI, enforceable against PSI in accordance with their
respective terms. In addition, the statements, representations and warranties
made in the Agreement continue to be correct as of the date hereof, except
for those representations which relate to a specific date which are true and
correct as of such date, and PSI is in compliance with all terms of the
Agreement. Except as expressly affected hereby, the Agreement remains in full
force and effect as heretofore. This amendment supercedes and replaces, in
its entirety, the letter agreement amendment previously executed by the
parties dated September 30, 1997.
Ed, we again look forward to continuing our relationship with PSI. Please
sign below to evidence your acceptance of this amendment, whereupon this
amendment shall be a biding agreement between us.
Yours sincerely, Agreed and Accepted
Fleet National Bank. PSINet Inc.
/s/ Thomas W. Davies /s/ Edward D. Postal
- ---------------------------- -------------------------------
By: Thomas W. Davies By: Edward D. Postal
Title: Senior Vice President Title: Senior Vice President and
Chief Financial Officer
Date: 11/14/97
-------------------------
8
