Document:

<PAGE>

                                                                     Exhibit 4.2
                                  PSINET INC.

                               FIRST AMENDMENT TO
                               DEPOSIT AGREEMENT

     THIS FIRST AMENDMENT TO DEPOSIT AGREEMENT, dated as of February 7, 2000
(this "First Amendment"), 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 Holders of the 7% Series D Cumulative Convertible
Preferred Stock (the "Preferred Stock").

                             W I T N E S S E T H :
                             -------------------

     WHEREAS, the Company and the Deposit Agent are parties to that certain
Deposit Agreement, dated as of February 1, 2000 (the "Deposit Agreement");

     WHEREAS, the Company and the Deposit Agent desire to amend the Deposit
Agreement in the manner set forth in this First Amendment;

     WHEREAS, on February 2, 2000, the purchasers exercised their option under
the Purchase Agreement in respect of the purchase of the Over-Allotment Shares
(the "Over-Allotment Offering"); and

     WHEREAS, all capitalized terms not defined herein have the meanings
ascribed to them in the Deposit Agreement.

     NOW, THEREFORE, in consideration of the above premises and such other good
and valuable consideration the sufficiency of which is hereby acknowledged, each
party agrees for the benefit of the other, as follows:
<PAGE>

                                   ARTICLE 1

                                   AMENDMENT
                                   ---------

     Section 1.1  Exhibit B Amendment.  The Deposit Agreement is hereby amended
                  -------------------
to modify Exhibit B thereto to add thereto the list of Treasury strips in the
form attached hereto as Schedule A, which Treasury strips shall be purchased for
purposes of investing the funds deposited into the Deposit Account in connection
with the offering of the Over-Allotment Shares.

                                   ARTICLE 2

                                 MISCELLANEOUS
                                 -------------

     Section 2.1  Governing Law.  This First Amendment 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.

     Section 2.2  Counterparts.  This First Amendment may be executed in any
                  ------------
number of counterparts all of which, taken together, shall constitute the same
agreement.

     Section 2.3  Deposit Agreement.  Except as amended hereby, the Deposit
                  -----------------
Agreement is in all respects ratified and confirmed and all the terms thereof
shall remain in full force and effect.  From and after the effectiveness of this
First Amendment, any reference to the Deposit Agreement shall mean the Deposit
Agreement as amended by this First Amendment.

                   [signatures appear on the following page]

                                      -2-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the date and year first above written.

                                    PSINET INC.

                                    By: /s/ Michael J. Malesardi
                                       --------------------------------
                                        Name:  Michael J. Malesardi
                                        Title: Vice President and Controller

                                    WILMINGTON TRUST COMPANY

                                    By: /s/ James J. McGinley
                                       --------------------------------
                                        Name: James J. McGinley
                                        Title: Authorized Signor
<PAGE>

                                   Schedule A
                                   ----------

                                  PSINet Inc.

                           DEPOSIT ACCOUNT PURCHASES
                                   Amendment

                        Trade Settlement Date: 02/07/00

   CUSIP #         FACE                ISSUE             PRICE        COST
                  VALUE
------------------------------------------------------------------------------

912833FL9      $2,528,000.00    U.S. TREASURY STRIP     0.98504  $2,490,181.12
                                DUE 5/15/2000

912820AX5      $2,187,000.00    U.S. TREASURY STRIP     0.97012  $2,121,652.44
                                DUE 8/15/00

912833FM7      $2,188,000.00    U.S. TREASURY STRIP     0.95398  $2,087,308.24
                                DUE 11/15/00

912820AZ0      $2,187,000.00    U.S. TREASURY STRIP     0.93766  $2,050,662.42
                                DUE 2/15/01

Total Value    $9,090,000.00                                     $8,749,804.22
               =============                                     =============

                              Less Excess Deposit
                              Funds                              $ (130,648.64)
                                                                 -------------

                              Total Funding of Deposit
                              Account                            $8,619,155.58
                                                                 =============<PAGE>

                                                                     Exhibit 4.3

PD
                                  PSINet Inc.
              INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK

                                                               CUSIP 74437C 40 8
                                                                SEE REVERSE SIDE
                                                         FOR CERTAIN DEFINITIONS

This Certifies that

is the owner of

  SHARES OF THE 7% SERIES D CUMULATIVE CONVERTIBLE PREFERRED STOCK, PAR VALUE

                               $.01 PER SHARE, OF

PSINet  Inc., transferable on the books of the Corporation by the holder hereof
in person or by duly authorized attorney upon surrender of this certificate
properly endorsed.  The shares represented hereby are issued and shall be held
subject to the provisions of the Certificate of Incorporation and By-laws of the
Corporation and all amendments thereto, and any restrictions on the reverse side
hereof, to all of which the holder by acceptance hereof assents.  This
certificate is not valid until countersigned and registered by the Transfer
Agent and Registrar.

     WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

          Corporate Secretary            Chairman and Chief Executive Officer

            Countersigned and Registered:

                    First Chicago Trust Company of New York
                                           Transfer Agent and Registrar

                         By

                         Authorized Signature
<PAGE>

                                  PSINet Inc.

     THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT
CHARGE A FULL STATEMENT OF THE DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND
LIMITATIONS OF THE SHARES OF EACH CLASS AUTHORIZED TO BE ISSUED AND THE
DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF EACH SERIES OF ANY
CLASS OF PREFERRED STOCK WHICH THE CORPORATION IS AUTHORIZED TO ISSUE SO FAR AS
THE SAME HAVE BEEN FIXED AND THE AUTHORITY OF THE BOARD TO DESIGNATE AND FIX THE
RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF OTHER SERIES.  SUCH REQUEST
SHOULD BE ADDRESSED TO THE SECRETARY OF THE CORPORATION OR TO THE TRANSFER AGENT
NAMED ON THE FACE HEREOF.

     THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS.  EXCEPT AS SET FORTH IN
THE NEXT SENTENCE, BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER:

     (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),

     (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OF FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THIS SECURITIES ACT,
(D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND

     (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.

     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable law or regulations:

TEN COM - as tenants in common      UNIF GIFT MIN ACT - .......Custodian.......
                                                         (Cust)         (Minor)

TEN ENT - as tenants by the                        under Uniform Gifts to Minors
          entireties
                                                   Act..........................
                                                                (State)
JT TEN - as joint tenants with
         right of survivorship
         and not as tenants in
         common

Additional abbreviations may also be used though not in the above list.
<PAGE>

For value received                        hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE

                Shares of the capital stock represented by the within
Certificate, and do hereby irrevocably constitute and appoint

Attorney to transfer the said stock on the books of the within-named Corporation
with a full power of substitution in the premises.

Dated, ___________________

                                      ________________________________________
                             NOTICE:  THE SIGNATURE TO THIS ASSIGNMENT MUST
                                      CORRESPOND WITH THE NAME AS WRITTEN UPON
                                      THE FACE OF THE CERTIFICATE, IN EVERY
                                      PARTICULAR, WITHOUT ALTERATION OR
                                      ENLARGEMENT, OR ANY CHANGE WHATEVER.

                                      SIGNATURE(S) GUARANTEED

                                      By _____________________________________
                                      THE SIGNATURE(S) SHOULD BE GUARANTEED BY
                                      AN ELIGIBLE GUARANTOR INSTITUTION (Banks,
                                      Stockbrokers, Savings and Loan
                                      Associations and Credit Unions) WITH
                                      MEMBERSHIP IN AN APPROVED SIGNATURE
                                      GUARANTEE MEDALLION PROGRAM PURSUANT TO
                                      S.E.C. Rule 17ad. - 15.

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