SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A/A
AMENDMENT NO. 3
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PSINet Inc.
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(Exact name of registrant as specified in its charter)
New York 16-1353600
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(State of incorporation (I.R.S. employer
or organization) identification no.)
510 Huntmar Park Drive
Herndon, Virginia 20170
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(Address of principal (zip code)
executive offices)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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Title of Each Class Name of Each Exchange on which
to be registered Each Class is to be Registered
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None None
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
(Title of Class)
Preferred Stock Purchase Rights
(Title of Class)
Exhibit Index Appears on Sequentially Numbered Page 10
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The response to Item 1 of PSINet Inc.'s Registration Statement on Form
8-A, dated June 3, 1996, as amended and restated by Amendment No. 1 thereto on
Form 8-A/A, dated as of July 21, 1997, and by Amendment No. 2 thereto on Form
8-A/A, dated as of July 31, 1997, is hereby further amended and restated in its
entirety to read as follows:
On May 8, 1996, the Board of Directors of PSINet Inc. (the "Company")
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.01 per share, of the Company (the
"Common Stock"). The dividend was paid on June 5, 1996 (the "Record Date"), or
as soon as reasonably practicable thereafter, to the shareholders of record on
June 5, 1996. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Class A
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the
Company at a price of $275.00 per one one-thousandth of a share of Preferred
Stock (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in the Rights Agreement, dated as of May 8, 1996
(the "Rights Agreement"), between the Company and First Chicago Trust Company of
New York, as Rights Agent (the "Rights Agent"), in Amendment No. 1 to Rights
Agreement, dated as of July 21, 1997, between the Company and the Rights Agent
("Amendment No. 1"), in Amendment No. 2 to Rights Agreement, dated as of July
31, 1997, between the Company and the Rights Agent ("Amendment No. 2"), and in
Amendment No. 3 to Rights Agreement, dated as of November 5, 1999, between the
Company and the Rights Agent ("Amendment No. 3"), and as the Rights Agreement
may be further amended from time to time.
Until the earlier to occur of (i) 10 days following the first date of a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") have acquired beneficial ownership of 20.50% or more of
the outstanding shares of Common Stock (except pursuant to a Permitted Offer, as
hereinafter defined) or such earlier date as a majority of the Board of
Directors shall have become aware of the existence of an Acquiring Person, or
(ii) 10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20.50% or more of the outstanding shares of Common Stock (the earlier
of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock certificates outstanding as
of the Record Date, by such Common Stock certificate together with a copy of
this Summary of Rights.
An Acquiring Person does not include (i) a person who acquires shares
of Common Stock pursuant to a tender offer or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms which the Board of
Directors determines to be adequate and otherwise in the best interests of the
Company and its shareholders (other than the person on whose basis the offer is
being made and its affiliates and associates) taking into account all factors
that such directors may deem relevant (a "Permitted Offer"), or (ii) a person
who acquires 20.50% or more of the outstanding shares of Common Stock directly
from the Company, a Grandfathered Person (as hereinafter defined) and certain
other persons or entities affiliated with the Company. In addition, in no event
shall (a) IXC Communications, Inc. ("IXC") or any of its controlled affiliates
become an Acquiring Person solely by reason of the acquisition by IXC or any of
its
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controlled affiliates of shares of Common Stock pursuant to Section 3.5 of the
IRU and Stock Purchase Agreement, dated as of July 22, 1997 (the "IRU
Agreement"), between the Company and IXC Internet Services, Inc., an indirect
subsidiary of IXC ("IXC Services"), or (b) Ralph J. Swett, Chairman, President
and Chief Executive Officer of IXC, become an Acquiring Person solely by reason
of the issuance or exercise of options, if any, granted to Ralph J. Swett in his
capacity as a director of the Company; provided, however, that, in the case of
either clause (a) or (b) of this sentence, any subsequent change in any such
person's beneficial ownership of Common Stock may cause such person to become an
Acquiring Person.
A "Grandfathered Person" means any one or more of the following
persons, either in his or its individual capacity or collectively with other of
the following persons: (i) William L. Schrader, Chairman of the Board of
Directors and Chief Executive Officer of the Company, who at May 8, 1996 owned
approximately 14% of the outstanding shares of Common Stock, any descendant of
William L. Schrader, or any spouse, widow or widower of William L. Schrader, or
any such descendant (William L. Schrader, and any such descendants, spouses,
widows and widowers collectively defined as the "Schrader Family Members"); (ii)
any trust (including any voting trust) which is in existence on the date of the
Rights Agreement and which has been established by one or more Schrader Family
Members, any estate of, or the executor or administrator of any estate of, or
any guardian or custodian for, a Schrader Family Member who died on or before
the date of the Rights Agreement (such trusts, estates, executors,
administrators or guardians or custodians collectively defined as the "Schrader
Family Entities"); (iii) any estate of, or the executor or administrator of any
estate of, or any guardian or custodian for, a Schrader Family Member, or any
trust established after the date of the Rights Agreement by one or more Schrader
Family Members or Schrader Family Entities, provided that one or more Schrader
Family Members or Schrader Family Entities, collectively, are the beneficiaries
of at least 50% of the actuarially-determined beneficial interests in such
estate or trust; (iv) any charitable organization which qualifies as an exempt
organization under Section 501(c) of the Internal Revenue Code of 1986, as
amended ("Charitable Organization"), which is established by one or more
Schrader Family Members or Schrader Family Entities (a "Schrader Family
Charitable Organization"); (v) any corporation of which a majority of the voting
power and a majority of the equity interest is held, directly or indirectly, by
or for the benefit of one or more Schrader Family Members, Schrader Family
Entities, estates, executors, administrators, guardians or custodians or trusts
described in clause (iii) above or Schrader Family Charitable Organizations; and
(vi) any general partnership, limited partnership, organization or other entity
or arrangement of which a majority of the voting interest and a majority of the
economic interest is held, directly or indirectly, by or for the benefit of one
or more Grandfathered Persons; provided, however, that William L. Schrader and
each of the other Persons contemplated by this paragraph shall not be a
Grandfathered Person if William L. Schrader or any of such Persons makes an
acquisition of shares of Common Stock that would increase the aggregate
beneficial ownership of all Grandfathered Persons to 50% or more of the
outstanding shares of Common Stock. Notwithstanding the foregoing, William L.
Schrader and each of the other Persons contemplated by this paragraph shall not
cease to be a Grandfathered Person either (x) as a result of the acquisition of
shares of Common Stock by the Company which, by reducing the number of shares of
Common Stock outstanding, increases the proportional number of shares
beneficially owned by William L. Schrader or such other Persons, together with
all Affiliates and Associates thereof, unless (i) William L. Schrader and each
of such other Persons would cease to be a Grandfathered Person (but for the
operation of this subclause (x)) as a result of the acquisition of shares of
Common Stock by the Company and (ii) after such share acquisition by the
Company, William L. Schrader or any such other Person, or an Affiliate or
Associate thereof, becomes the
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beneficial owner of any additional shares of Common Stock or (y) if within ten
(10) Business Days after William L. Schrader and such other Persons would
otherwise have ceased to be Grandfathered Persons (but for the operation of this
subclause (y)) William L. Schrader or any such other Person notifies the Board
of Directors that the Grandfathered Persons, together with all Affiliates and
Associates thereof, are the beneficial owners in the aggregate of less than 50%
of the outstanding shares of Common Stock.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date (including, without limitation, upon transfer or new
issuances of Common Stock) will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights, will also constitute (except as
otherwise provided in the Rights Agreement) the transfer of the Rights
associated with the shares of Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 5, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preferred
Stock, Common Stock or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when, as and
if declared, to an aggregate dividend of 1,000 times the dividend declared per
share of Common Stock. No dividend may be declared on the Common Stock without
the concurrent declaration of a dividend on the Preferred Stock. In the event of
liquidation, the holders of the Preferred Stock
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will be entitled to a minimum preferential liquidation payment of $1,000 per
share (plus any accrued but unpaid dividends) but will be entitled to an
aggregate payment of 1,000 times the payment made per share of Common Stock;
thereafter, the holders of the Preferred Stock and the holders of the Common
Stock will share pari passu per share in the remaining assets of the Company.
Each share of Preferred Stock will have 1,000 votes, voting together with the
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are converted or exchanged, each
share of Preferred Stock will be entitled to receive 1,000 times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (except pursuant to a Permitted Offer), each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereupon become void), will thereafter have the right (the "Flip-In
Right") to receive, upon exercise of a Right at the then current exercise price
of the Right, that number of one one-thousandths of a share of Preferred Stock
or, in the discretion of the Board of Directors, that number of shares of Common
Stock (or, in certain circumstances, other securities of the Company), having a
market value of two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring
Person, (i) the Company is acquired in a merger or other business combination
transaction or (ii) 50% or more of its consolidated assets or earning power are
sold or transferred, in either case with or to any person, proper provision will
be made so that each holder of a Right (other than Rights beneficially owned by
an Acquiring Person which will have become void) will thereafter have the right
(the "Flip-Over Right") to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the person with which the Company has engaged in the foregoing transaction (or
its parent), which number of shares at the time of such transaction will have a
market value of two times the exercise price of the Right. The holder of a Right
will continue to have the Flip-Over Right whether or not such holder exercises
or surrenders the Flip-In Right. The Flip-Over Right provisions do not apply to
a merger or other business combination with a person who has acquired shares of
Common Stock pursuant to a Permitted Offer in which the price per share is at
least as great as the price (and is the same form of consideration) paid in the
Permitted Offer.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-thousandth of a share of Preferred Stock (or of a share
of a class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. At the discretion of the Company, fractional shares of
Preferred Stock may not be issued (other than
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fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts) and, if the Company elects not to issue fractional shares,
an adjustment in cash will be made in lieu thereof based on the market price of
the Preferred Stock on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors. The Company may, at its
option, pay the Redemption Price in shares of Common Stock. Additionally, after
the date that a person becomes an Acquiring Person, the Company may redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price,
provided that such redemption is in connection with a merger or other business
combination transaction or series of transactions involving the Company in which
all holders of shares of Common Stock are treated alike and not involving an
Interested Shareholder (as hereinafter defined) or if and for so long as the
Acquiring Person's share in the Company is not 20.50% or more and at the time of
the redemption there are no other Acquiring Persons. Interested Shareholder
means any Acquiring Person (including affiliates and associates thereof) or any
person in which any such Acquiring Person, affiliate or associate has an
interest, or any other person acting on behalf of or in concert with any
Acquiring Person, affiliate or associate.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner; provided,
however, that the Company may not, without the prior written consent of IXC,
effect any such amendment that materially adversely affects the interests of IXC
and/or any of its controlled affiliates, provided that the foregoing shall not
alter or impair the right of the Company to amend any provision of the Rights
Agreement insofar as it may relate to the approval by the Company of any
transaction with a person other than IXC or its controlled affiliates regardless
of whether such transaction or matter could result in a Permitted Offer, change
of ownership or control of any of the Company's businesses or operations or any
of its controlled affiliates, change in the composition of the Board of
Directors of the Company, change of relative beneficial ownership of Common
Stock of the Company then outstanding, or other similar fundamental corporate
change involving the Company or any of its controlled affiliates. After the
Rights are no longer redeemable, the Company may, except with respect to the
redemption price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividend. While the distribution of the Rights will not be
taxable to shareholders of the Company, shareholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on (i) the Rights being redeemed, (ii) a
substantial number of Rights being acquired or (iii) the offer being deemed a
"Permitted Offer" under the Rights Agreement. However, the Rights should not
interfere with any merger or other business combination in connection with a
Permitted Offer or that is approved by the Company because the Rights are
redeemable under certain circumstances.
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On July 22, 1997, the Company entered into the IRU Agreement with IXC
Services to acquire noncancellable, indefeasible rights of use in up to 10,000
equivalent route miles of OC-48 bandwidth in portions of IXC's fiber optic
telecommunications system in exchange for shares of the Company's Common Stock
equal to 19.99999% of the issued and outstanding Common Stock of the Company as
of the closing of the transactions contemplated by the IRU Agreement (the
"Closing"), after giving effect to the shares to be issued to IXC Services and
to shares issuable upon exercise of outstanding warrants and as adjusted for
post-issuance stock splits, stock dividends, recapitalizations or similar
events. In addition, the Company has agreed pursuant to the IRU Agreement to
issue to IXC Services under certain circumstances certain additional shares of
its Common Stock and/or, at the Company's option, cash. In connection with the
IRU Agreement, as of July 21, 1997, the Company entered into Amendment No. 1 to
the Rights Agreement. Amendment No. 1 provides that IXC and/or any of its
affiliates and/or associates will not be deemed to be the "Beneficial Owner" of,
to have "Beneficial Ownership" of or to "beneficially own" (as such terms are
defined in the Rights Agreement) for purposes of the Rights Agreement any shares
of Common Stock that may be acquired by IXC or any of its affiliates or
associates pursuant to the IRU Agreement until such time, if any, as such shares
of Common Stock are actually issued to IXC and/or any of its affiliates and
associates pursuant to the IRU Agreement.
In addition, as of July 31, 1997, the Company, pursuant to the IRU
Agreement, entered into Amendment No. 2 to the Rights Agreement. Amendment No. 2
provides, among other things, that (i) no person will be deemed to be an
"Affiliate" or "Associate" (as such terms are defined in the Rights Agreement)
of IXC, IXC Services or any of their controlled affiliates (collectively, the
"IXC Parties") (except for other IXC Parties) and (ii) none of the IXC Parties
will be deemed to be an "Affiliate" or "Associate" of any other person for
purposes of the Rights Agreement, unless, in any such case, such person or any
IXC Party is a member of a "group" within the meaning of Rule 13d-5 under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), for or in
furtherance of the purpose of (x) acquiring, holding, voting or disposing of
securities of the Company, (y) seeking to control the management, Board of
Directors or policies of the Company, or (z) effecting or seeking to effect any
action, transaction, change or matter referred to in any one or more of clauses
(a) through (j) of Item 4 of Securities and Exchange Commission Schedule 13D
under the 1934 Act, or otherwise is or shall be deemed to be acting in concert
with any IXC Party or such person, as applicable, for or in furtherance of any
such purpose.
As of November 5, 1999, the Company entered into Amendment No. 3 to the
Rights Agreement. Amendment No. 3 provides for (i) the increase of the Purchase
Price of the Rights under the Rights Agreement to $275.00 from $75.00 and (ii)
the extension of the Final Expiration Date of the Rights under the Rights
Agreement to November 5, 2009 from June 5, 2006.
A copy of the Rights Agreement, dated as of May 8, 1996, between the
Company and First Chicago Trust Company of New York, as Rights Agent, listed as
Exhibit 1 hereto and specifying the terms of the Rights, and the exhibits
thereto, as follows: Exhibit A -- Certificate of Amendment; Exhibit B -- Form of
Rights Certificate; and Exhibit C -- Summary of Rights to Purchase Shares of
Preferred Stock, has been filed as an Exhibit to the Company's Registration
Statement on Form 8-A filed on June 3, 1996 and is incorporated herein by
reference. A copy of Amendment No. 1 to the Rights Agreement has been filed as
Exhibit 2 to the Company's Registration Statement on Form 8-A/A filed on August
1, 1997 and is incorporated herein by
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reference. A copy of Amendment No. 2 to the Rights Agreement has been filed as
Exhibit 3 to the Company's Registration Statement on Form 8-A/A filed on August
20, 1997 and is incorporated herein by reference. Attached hereto as Exhibit 4
and incorporated herein by reference is a copy of Amendment No. 3 to the Rights
Agreement. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
and the exhibits thereto, Amendment No. 1, Amendment No. 2 and Amendment No. 3.
A copy of the Rights Agreement, as amended, is available free of charge upon
written request to the Company at Office of Secretary, PSINet Inc., 510 Huntmar
Park Drive, Herndon, Virginia 20170.
ITEM 2. EXHIBITS.
1. Form of Rights Agreement, dated as of May 8, 1996, between PSINet Inc.
and First Chicago Trust Company of New York, as Rights Agent, which
includes as Exhibit A -- Certificate of Amendment; Exhibit B -- Form of
Rights Certificate; and Exhibit C -- Summary of Rights to Purchase
Shares of Preferred Stock (filed as Exhibit 1 to the Company's
Registration Statement on Form 8-A filed on June 3, 1996).
2. Amendment No. 1 to Rights Agreement, dated as of July 21, 1997, between
PSINet Inc. and First Chicago Trust Company of New York (filed as
Exhibit 2 to the Company's Registration Statement on Form 8-A/A filed
on August 1, 1997).
3. Amendment No. 2 to Rights Agreement, dated as of July 31, 1997, between
PSINet Inc. and First Chicago Trust Company of New York (filed as
Exhibit 3 to the Company's Registration Statement on Form 8-A/A filed
on August 20, 1997).
4. Amendment No. 3 to Rights Agreement, dated as of November 5, 1999,
between PSINet Inc. and First Chicago Trust Company of New York (filed
herewith).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: November 5, 1999 PSINet Inc.
By: /s/ Kathleen B. Horne
Kathleen B. Horne
Senior Vice President and
General Counsel
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EXHIBIT INDEX
Exhibit
Number Sequentially Exhibit Numbered Page
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1. Form of Rights Agreement, dated as Filed as Exhibit 1 to the
of May 8, 1996, between PSINet Inc. Company's Registration
and First Chicago Trust Company of Statement on Form 8-A filed
New York, as Rights Agent, which on June 3, 1996
includes as Exhibit A -- Certificate
of Amendment; Exhibit B - Form of
Rights Certificate; and Exhibit
C - Summary of Rights to Purchase
Shares of Preferred Stock.
2. Amendment No. 1 to Rights Agreement, Filed as Exhibit 2 to the
dated as of July 21, 1997, between Company's Registration
PSINet Inc. and First Chicago Trust Statement on Form 8-A/A
Company of New York. filed on August 1, 1997
3. Amendment No. 2 to Rights Agreement, Filed as Exhibit 3 to the
dated as of July 31, 1997, of Company's Registration
between PSINet Inc. and First Statement on Form 8-A/A
Chicago Trust Company New York. filed on August 20, 1997
4. Amendment No. 3 to Rights Agreement, 11
dated as of November 5, 1999,
between PSINet Inc. and First
Chicago Trust Company of New York.
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Exhibit 4
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
This Amendment No. 3 to Rights Agreement (the "Amendment No. 3
Agreement") is entered into as of November 5, 1999 between PSINET INC., a New
York corporation (the "Company"), and FIRST CHICAGO TRUST COMPANY OF NEW YORK, a
New York corporation (the "Rights Agent").
PREAMBLE
The Company and the Rights Agent are parties to that certain Rights
Agreement dated as of May 8, 1996, as amended by Amendment No. 1 thereto dated
as of July 21, 1997 and Amendment No. 2 thereto dated as of July 31, 1997 (the
"Rights Agreement"), pursuant to which the Company authorized and declared a
dividend of one preferred share purchase right for each outstanding share of the
Company's Common Stock entitling the holders thereof to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock of the Company in connection with certain corporate transactions.
The Board of Directors of the Company has deemed it advisable to
further amend certain provisions of the Rights Agreement pursuant to Section 27
of the Rights Agreement.
Capitalized terms used in this Amendment No. 3 Agreement but not
otherwise defined herein shall have the respective meanings ascribed to them in
the Rights Agreement.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties, intending to be legally
bound, hereby agree as follows:
1. Section 7(a) of the Rights Agreement is hereby amended by
deleting the reference to "June 5, 2006" contained in clause (i) thereof and by
inserting in its place "November 5, 2009."
2. Section 7(b) of the Rights Agreement is hereby amended by
deleting the reference to "$75.00" contained in the first sentence thereof and
by inserting in its place "$275.00."
3. Exhibit B to the Rights Agreement (Form of Right Certificate)
is hereby amended as follows:
(i) By deleting the references to "June 5, 2006" contained in
the legend imprinted at the top thereof and in the first
paragraph thereof and by inserting in each of their respective
places "November 5, 2009";
(ii) By deleting the reference to "$75.00" contained in the
first sentence of the first paragraph thereof and by inserting
in its place "$275.00"; and
(iii) By deleting the second sentence of the first paragraph
thereof and by inserting in its place the following sentence:
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The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandths of
a share of Preferred Stock which may be purchased
upon exercise hereof) set forth above is the number
as of May 8, 1996, based on the Preferred Stock as
constituted at such date, and the Purchase Price set
forth above is the Purchase Price as of November 5,
1999.
4. Exhibit C to the Rights Agreement (Summary of Rights to
Purchase Shares of Preferred Stock) is hereby amended and restated in its
entirety as set forth in Annex A to this Amendment No. 3 Agreement.
5. Except as herein specifically amended, the terms of the Rights
Agreement shall remain unmodified, and the Rights Agreement, as amended by this
Amendment No. 3 Agreement, shall remain in full force and effect.
6. This Amendment No. 3 Agreement shall be deemed effective of
the date hereof.
7. This Amendment No. 3 Agreement shall be deemed to be a
contract made under the laws of the State of New York and for all purposes will
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
8. This Amendment No. 3 Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3
Agreement to be duly executed and attested, all as of the day and year first
above written.
PSINET INC.
By: /s/ Edward D. Postal
-------------------------
Name: Edward D. Postal
Title: Executive Vice President and Chief
Financial Officer
Attest:
By: /s/ Kathleen B. Horne
Name: Kathleen B. Horne
Title: Senior Vice President
and General Counsel
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: /s/ Michael S. Duncan
Name: Michael S. Duncan
Title: Director, Corporate Actions
Attest:
By: /s/ Joseph Sommer
Name: Joseph Sommer
Title: Director, Corporate Actions
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Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT
REFERRED TO BELOW, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PREFERRED STOCK
On May 8, 1996, the Board of Directors of PSINet Inc. (the "Company")
declared a dividend of one preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.01 per share, of the Company (the
"Common Stock"). The dividend was paid on June 5, 1996 (the "Record Date"), or
as soon as reasonably practicable thereafter, to the shareholders of record on
June 5, 1996. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Class A
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the
Company at a price of $275.00 per one one-thousandth of a share of Preferred
Stock (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in the Rights Agreement, dated as of May 8, 1996
(the "Rights Agreement"), between the Company and First Chicago Trust Company of
New York, as Rights Agent (the "Rights Agent"), in Amendment No. 1 to Rights
Agreement, dated as of July 21, 1997, between the Company and the Rights Agent
("Amendment No. 1"), in Amendment No. 2 to Rights Agreement, dated as of July
31, 1997, between the Company and the Rights Agent ("Amendment No. 2"), and in
Amendment No. 3 to Rights Agreement, dated as of November 5, 1999, between the
Company and the Rights Agent ("Amendment No. 3"), and as the Rights Agreement
may be further amended from time to time.
Until the earlier to occur of (i) 10 days following the first date of a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") have acquired beneficial ownership of 20.50% or more of
the outstanding shares of Common Stock (except pursuant to a Permitted Offer, as
hereinafter defined) or such earlier date as a majority of the Board of
Directors shall have become aware of the existence of an Acquiring Person, or
(ii) 10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20.50% or more of the outstanding shares of Common Stock (the earlier
of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock certificates outstanding as
of the Record Date, by such Common Stock certificate together with a copy of
this Summary of Rights.
An Acquiring Person does not include (i) a person who acquires shares
of Common Stock pursuant to a tender offer or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms which the Board of
Directors determines to be adequate and otherwise in the best interests of the
Company and its shareholders (other than the person on whose basis the
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offer is being made and its affiliates and associates) taking into account all
factors that such directors may deem relevant (a "Permitted Offer"), or (ii) a
person who acquires 20.50% or more of the outstanding shares of Common Stock
directly from the Company, a Grandfathered Person (as hereinafter defined) and
certain other persons or entities affiliated with the Company. In addition, in
no event shall (a) IXC Communications, Inc. ("IXC") or any of its controlled
affiliates become an Acquiring Person solely by reason of the acquisition by IXC
or any of its controlled affiliates of shares of Common Stock pursuant to
Section 3.5 of the IRU and Stock Purchase Agreement, dated as of July 22, 1997
(the "IRU Agreement"), between the Company and IXC Internet Services, Inc., an
indirect subsidiary of IXC ("IXC Services"), or (b) Ralph J. Swett, Chairman,
President and Chief Executive Officer of IXC, become an Acquiring Person solely
by reason of the issuance or exercise of options, if any, granted to Ralph J.
Swett in his capacity as a director of the Company; provided, however, that, in
the case of either clause (a) or (b) of this sentence, any subsequent change in
any such person's beneficial ownership of Common Stock may cause such person to
become an Acquiring Person.
A "Grandfathered Person" means any one or more of the following
persons, either in his or its individual capacity or collectively with other of
the following persons: (i) William L. Schrader, Chairman of the Board of
Directors and Chief Executive Officer of the Company, who at May 8, 1996 owned
approximately 14% of the outstanding shares of Common Stock, any descendant of
William L. Schrader, or any spouse, widow or widower of William L. Schrader, or
any such descendant (William L. Schrader, and any such descendants, spouses,
widows and widowers collectively defined as the "Schrader Family Members"); (ii)
any trust (including any voting trust) which is in existence on the date of the
Rights Agreement and which has been established by one or more Schrader Family
Members, any estate of, or the executor or administrator of any estate of, or
any guardian or custodian for, a Schrader Family Member who died on or before
the date of the Rights Agreement (such trusts, estates, executors,
administrators or guardians or custodians collectively defined as the "Schrader
Family Entities"); (iii) any estate of, or the executor or administrator of any
estate of, or any guardian or custodian for, a Schrader Family Member, or any
trust established after the date of the Rights Agreement by one or more Schrader
Family Members or Schrader Family Entities, provided that one or more Schrader
Family Members or Schrader Family Entities, collectively, are the beneficiaries
of at least 50% of the actuarially-determined beneficial interests in such
estate or trust; (iv) any charitable organization which qualifies as an exempt
organization under Section 501(c) of the Internal Revenue Code of 1986, as
amended ("Charitable Organization"), which is established by one or more
Schrader Family Members or Schrader Family Entities (a "Schrader Family
Charitable Organization"); (v) any corporation of which a majority of the voting
power and a majority of the equity interest is held, directly or indirectly, by
or for the benefit of one or more Schrader Family Members, Schrader Family
Entities, estates, executors, administrators, guardians or custodians or trusts
described in clause (iii) above or Schrader Family Charitable Organizations; and
(vi) any general partnership, limited partnership, organization or other entity
or arrangement of which a majority of the voting interest and a majority of the
economic interest is held, directly or indirectly, by or for the benefit of one
or more Grandfathered Persons; provided, however, that William L. Schrader and
each of the other Persons contemplated by this paragraph shall not be a
Grandfathered Person if William L. Schrader or any of such Persons makes an
acquisition of shares of Common Stock that would increase the aggregate
beneficial ownership of all Grandfathered Persons to 50% or more of the
outstanding shares of Common Stock. Notwithstanding the foregoing, William L.
Schrader and each of the other Persons contemplated
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by this paragraph shall not cease to be a Grandfathered Person either (x) as a
result of the acquisition of shares of Common Stock by the Company which, by
reducing the number of shares of Common Stock outstanding, increases the
proportional number of shares beneficially owned by William L. Schrader or such
other Persons, together with all Affiliates and Associates thereof, unless (i)
William L. Schrader and each of such other Persons would cease to be a
Grandfathered Person (but for the operation of this subclause (x)) as a result
of the acquisition of shares of Common Stock by the Company and (ii) after such
share acquisition by the Company, William L. Schrader or any such other Person,
or an Affiliate or Associate thereof, becomes the beneficial owner of any
additional shares of Common Stock or (y) if within ten (10) Business Days after
William L. Schrader and such other Persons would otherwise have ceased to be
Grandfathered Persons (but for the operation of this subclause (y)) William L.
Schrader or any such other Person notifies the Board of Directors that the
Grandfathered Persons, together with all Affiliates and Associates thereof, are
the beneficial owners in the aggregate of less than 50% of the outstanding
shares of Common Stock.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date (including, without limitation, upon transfer or new
issuances of Common Stock) will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common Stock outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights, will also constitute (except as
otherwise provided in the Rights Agreement) the transfer of the Rights
associated with the shares of Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 5, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preferred
Stock, Common Stock or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
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The number of outstanding Rights and the number of one one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled, when, as and
if declared, to an aggregate dividend of 1,000 times the dividend declared per
share of Common Stock. No dividend may be declared on the Common Stock without
the concurrent declaration of a dividend on the Preferred Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to a minimum
preferential liquidation payment of $1,000 per share (plus any accrued but
unpaid dividends) but will be entitled to an aggregate payment of 1,000 times
the payment made per share of Common Stock; thereafter, the holders of the
Preferred Stock and the holders of the Common Stock will share pari passu per
share in the remaining assets of the Company. Each share of Preferred Stock will
have 1,000 votes, voting together with the Common Stock. Finally, in the event
of any merger, consolidation or other transaction in which shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be entitled
to receive 1,000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (except pursuant to a Permitted Offer), each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereupon become void), will thereafter have the right (the "Flip-In
Right") to receive, upon exercise of a Right at the then current exercise price
of the Right, that number of one one-thousandths of a share of Preferred Stock
or, in the discretion of the Board of Directors, that number of shares of Common
Stock (or, in certain circumstances, other securities of the Company), having a
market value of two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring
Person, (i) the Company is acquired in a merger or other business combination
transaction or (ii) 50% or more of its consolidated assets or earning power are
sold or transferred, in either case with or to any person, proper provision will
be made so that each holder of a Right (other than Rights beneficially owned by
an Acquiring Person which will have become void) will thereafter have the right
(the "Flip-Over Right") to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the person with which the Company has engaged in the foregoing transaction (or
its parent), which number of shares at the time of such transaction will have a
market value of two times the exercise price of the Right. The holder of a Right
will continue to have the Flip-Over Right whether or not such holder exercises
or surrenders the Flip-In Right. The Flip-Over Right provisions do not apply to
a merger or other business combination with a person who has acquired shares of
Common Stock
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pursuant to a Permitted Offer in which the price per share is at least as great
as the price (and is the same form of consideration) paid in the Permitted
Offer.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-thousandth of a share of Preferred Stock (or of a share
of a class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. At the discretion of the Company, fractional shares of
Preferred Stock may not be issued (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts) and, if the
Company elects not to issue fractional shares, an adjustment in cash will be
made in lieu thereof based on the market price of the Preferred Stock on the
last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors. The Company may, at its
option, pay the Redemption Price in shares of Common Stock. Additionally, after
the date that a person becomes an Acquiring Person, the Company may redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price,
provided that such redemption is in connection with a merger or other business
combination transaction or series of transactions involving the Company in which
all holders of shares of Common Stock are treated alike and not involving an
Interested Shareholder (as hereinafter defined) or if and for so long as the
Acquiring Person's share in the Company is not 20.50% or more and at the time of
the redemption there are no other Acquiring Persons. Interested Shareholder
means any Acquiring Person (including affiliates and associates thereof) or any
person in which any such Acquiring Person, affiliate or associate has an
interest, or any other person acting on behalf of or in concert with any
Acquiring Person, affiliate or associate.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner; provided,
however, that the Company may not, without the prior written consent of IXC,
effect any such amendment that materially adversely affects the interests of IXC
and/or any of its controlled affiliates, provided that the foregoing shall not
alter or impair the right of the Company to amend any provision of the Rights
Agreement insofar as it may relate to the approval by the Company of any
transaction with a person other than IXC or its controlled affiliates regardless
of whether such transaction or matter could result in a Permitted Offer, change
of ownership or control of any of the Company's businesses or operations or any
of its controlled affiliates, change in the composition of the Board of
Directors of the Company, change of relative beneficial ownership of Common
Stock of the Company then outstanding, or other similar fundamental corporate
change involving the Company or any of its controlled affiliates. After the
Rights are no longer redeemable, the
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Company may, except with respect to the redemption price, amend the Rights in
any manner that does not adversely affect the interests of holders of the
Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividend. While the distribution of the Rights will not be
taxable to shareholders of the Company, shareholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on (i) the Rights being redeemed, (ii) a
substantial number of Rights being acquired or (iii) the offer being deemed a
"Permitted Offer" under the Rights Agreement. However, the Rights should not
interfere with any merger or other business combination in connection with a
Permitted Offer or that is approved by the Company because the Rights are
redeemable under certain circumstances.
On July 22, 1997, the Company entered into the IRU Agreement with IXC
Services to acquire noncancellable, indefeasible rights of use in up to 10,000
equivalent route miles of OC-48 bandwidth in portions of IXC's fiber optic
telecommunications system in exchange for shares of the Company's Common Stock
equal to 19.99999% of the issued and outstanding Common Stock of the Company as
of the closing of the transactions contemplated by the IRU Agreement (the
"Closing"), after giving effect to the shares to be issued to IXC Services and
to shares issuable upon exercise of outstanding warrants and as adjusted for
post-issuance stock splits, stock dividends, recapitalizations or similar
events. In addition, the Company has agreed pursuant to the IRU Agreement to
issue to IXC Services under certain circumstances certain additional shares of
its Common Stock and/or, at the Company's option, cash. In connection with the
IRU Agreement, as of July 21, 1997, the Company entered into Amendment No. 1 to
the Rights Agreement. Amendment No. 1 provides that IXC and/or any of its
affiliates and/or associates will not be deemed to be the "Beneficial Owner" of,
to have "Beneficial Ownership" of or to "beneficially own" (as such terms are
defined in the Rights Agreement) for purposes of the Rights Agreement any shares
of Common Stock that may be acquired by IXC or any of its affiliates or
associates pursuant to the IRU Agreement until such time, if any, as such shares
of Common Stock are actually issued to IXC and/or any of its affiliates and
associates pursuant to the IRU Agreement.
In addition, as of July 31, 1997, the Company, pursuant to the IRU
Agreement, entered into Amendment No. 2 to the Rights Agreement. Amendment No. 2
provides, among other things, that (i) no person will be deemed to be an
"Affiliate" or "Associate" (as such terms are defined in the Rights Agreement)
of IXC, IXC Services or any of their controlled affiliates (collectively, the
"IXC Parties") (except for other IXC Parties) and (ii) none of the IXC Parties
will be deemed to be an "Affiliate" or "Associate" of any other person for
purposes of the Rights Agreement, unless, in any such case, such person or any
IXC Party is a member of a "group" within the meaning of Rule 13d-5 under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), for or in
furtherance of the purpose of (x) acquiring, holding, voting or disposing of
securities of the Company, (y) seeking to control the management, Board of
Directors or policies of the Company, or (z) effecting or seeking to effect any
action, transaction, change or matter referred to in any one or more of clauses
(a) through (j) of Item 4 of Securities and Exchange
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Commission Schedule 13D under the 1934 Act, or otherwise is or shall be deemed
to be acting in concert with any IXC Party or such person, as applicable, for or
in furtherance of any such purpose.
As of November 5, 1999, the Company entered into Amendment No. 3 to the
Rights Agreement. Amendment No. 3 provides for (i) the increase of the Purchase
Price of the Rights under the Rights Agreement to $275.00 from $75.00 and (ii)
the extension of the Final Expiration Date of the Rights under the Rights
Agreement to November 5, 2009 from June 5, 2006.
A copy of the Rights Agreement, dated as of May 8, 1996, between the
Company and First Chicago Trust Company of New York, as Rights Agent, specifying
the terms of the Rights, and the exhibits thereto, as follows: Exhibit A --
Certificate of Amendment; Exhibit B -- Form of Right Certificate; and Exhibit C
- -- Summary of Rights to Purchase Shares of Preferred Stock, has been filed as an
Exhibit to the Company's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission (the "Commission") on June 3, 1996 and is
incorporated herein by reference. A copy of Amendment No. 1 to the Rights
Agreement has been filed as an Exhibit to the Company's Registration Statement
on Form 8-A/A filed with the Commission on August 1, 1997 and is incorporated
herein by reference. A copy of Amendment No. 2 to the Rights Agreement has been
filed as an Exhibit to the Company's Registration Statement on Form 8-A/A filed
with the Commission on August 20, 1997 and is incorporated herein by reference.
A copy of Amendment No. 3 to the Rights Agreement has been filed as an Exhibit
to the Company's Registration Statement on Form 8-A/A filed with the Commission
on or about November 5, 1999 and is incorporated herein by reference. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement and the exhibits
thereto, Amendment No. 1, Amendment No. 2 and Amendment No. 3 thereto. A copy of
the Rights Agreement, as amended, is available free of charge upon written
request to the Company at Office of Secretary, PSINet Inc., 510 Huntmar Park
Drive, Herndon, Virginia 20170.
