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                           PF NET COMMUNICATIONS, INC.
                       c/o Odyssey Investment Partners LLC
                                 280 Park Avenue
                                New York New York




                                                                    May 12, 2000




Mr. Robert Annunziata
95 Minisink Road
Short Hills, NJ 07078


Dear Bob,

         This letter ("Letter Agreement") will confirm the terms of your
affiliation with PF Net Communications, Inc. (the "Company"), where you will
serve as non-executive Chairman of the Board of Directors of the Company (the
"Board") commencing upon approval of this Letter Agreement by the Board of
Directors of the Company (the "Commencement Date"). It is your intent (but not
legal obligation) to serve as Chairman for a period of three (3) years (the
"Service Period"). You will devote such time as reasonably requested by the
Company, recognizing your activities as a director of 5 companies disclosed to
the Company, Chairman of Corean and as sole owner of Atlantic Telecommunications
Enterprise Fund Inc. and GCT (both of which we understand from you are purely
entities for investments) (the "Activities"), to serving as Chairman. In such
role you will provide strategic guidance and advice (including consistent with
your Contractual Obligations, opportunities for expansion and introductions to
industry opportunities), advising in connection with offerings and other capital
markets and assisting in recruiting Company management. You agree that during
the first eighteen (18) months of the Service Period (the "Initial Period"), the
Chairmanship of the Company will be your primary obligation and you will not
increase Activities without the Company's written consent, which consent shall
not be unreasonably withheld so long as the activity is not a Chairmanship, is
noncompetitive and does not change the primary nature of your commitment to the
Company. In addition, you will not be involved in any activity that is
competitive with those of the Company (the restrictions specified in this
paragraph are hereinafter referred to as the "Priority Provisions"). The
Activities are not competitive.

         During the Initial Period and thereafter while you continue to be
Chairman and continue to abide by the Priority Provisions, you will receive a
fee at the rate of $400,000 per annum payable in semi-monthly installments. For
the duration of the Service Period that you do not abide by the Priority
Provisions but continue as Chairman, you will receive a fee at the rate of

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$150,000 per annum payable in semi-monthly installments. You will not be
eligible for the fees or other compensation paid to outside directors, but
nothing contained herein shall prevent the Company from paying bonuses or
granting additional options for your achievement in the Company's discretion. In
the event that you and the Company agree at any time to continue your
relationship with the Company as director (and not as Chairman), you will be
paid mutually agreed upon amounts and execute an appropriate agreement.

OPTION GRANT

         Effective on the Commencement Date hereof you will receive nonstatutory
exercisable options ("Options") to purchase 4,200,000 shares of the Company's
par value one cent common stock at a price of $6.40 per share under the
Company's 2000 Equity Incentive Plan (the "Plan").

VESTING OF OPTIONS

The Options shall vest as following: twenty percent (20%) on the Commencement
Date; twenty percent (20%) on the first anniversary of the Commencement Date
(subject to acceleration as provided below); ten percent (10%) as of the end of
the Initial Period; twenty five percent (25%) on the second anniversary of the
Commencement Date; and twenty five percent (25%) of the third anniversary of the
Commencement Date; provided, in all cases, that you are still providing service
to the Company on the relevant date and subject to the provisions below. In the
event that during the first six (6) months that you are providing services to
the Company, the Company hires a chief executive officer, one half of the
portion of options that are to vest on the first anniversary shall vest upon
such chief executive officer commencing employment. Furthermore, in the event
that during the first twelve (12) months that you are providing service to the
Company, the Company either has an initial public offering or closes an
investment of at least $100 million in it based on a valuation of at least $1.5
billion, upon the first to occur of the foregoing one half of the portion of the
Options that are to vest on the first anniversary shall vest.

DEATH; DISABILITY; TERMINATION WITHOUT CAUSE; TERMINATION FOR GOOD REASON

Upon termination of Service for Termination without Cause or Termination for
Good Reason, there shall be immediate vesting of the greater of (I) the number
of Options that would have vested during the 18 month period following your
termination had your Service continued through that date or (II) seventy five
percent (75%) of the Options that are unvested immediately prior to your
termination. Upon Termination of Service as a result of death or Disability,
there shall be immediate vesting of the greater of (I) the number of Options
that would have vested at the next vesting date or (II) fifty percent (50%) of
the Options that are unvested immediately prior to your termination. All vested
Options will remain exercisable for a period of 5 years from your termination as
Chairman (or, if later as director or consultant), subject to the ten (10) year
Option term and the general terms of the Plan not inconsistent with this letter
(for example, it is acknowledged that it would not be inconsistent with this
letter to cease exercisability of options on a merger). All non-vested Options
will be forfeited and canceled immediately upon termination.

TERMINATION WITHOUT GOOD REASON OR TERMINATION FOR CAUSE

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If you terminate Service as Chairman without Good Reason or the Company
terminates your Service as Chairman for Cause (I) all your non-vested Options
will be forfeited and canceled immediately upon termination and (II) your vested
options will remain exercisable for a period of 5 years from your termination as
Chairman (or if later, director or consultant), subject to the ten year Option
Term and the general terms of the Plan not inconsistent with this letter (for
example, it is acknowledged that it would not be inconsistent with this letter
to cease exercisability of options on a merger).

Notwithstanding the foregoing as to termination of vesting on a Termination of
Service, if you and the Company agree that you will thereafter provide services
as a director or consultant upon mutual agreement of the Company and you (and
subject to a Company right to remove you as such at any time), your vesting
shall continue while you are in such capacities and the additional vesting or
cutoff of exercisability referred to above shall only occur when you cease to
provide services as a director or consultant and, while the type of termination
shall not change, the measurement shall be from such later date or as you and
the Company may otherwise agree at such time.

"Disability" means (I) a determination made by a physician chosen by the Board
and you that it can reasonably be expected that you will be unable to perform
your duties due to a physical or mental infirmity for more than six (6)
consecutive months or (II) your inability to perform your duties due to a
physical or mental infirmity for one hundred eighty (180) days in any twelve
(12) month period.

"Cause" means (I) your willful misconduct or gross negligence that has material
adverse effect on the Company; (ii) your willful failure after notice by the
Board to attempt in good faith to perform the duties required (other than a
result of your incapacity due to physical or mental illness); (iii) your
conviction of, or pleading of nolo contendre to, a felony; or (iv) your
violation of the Priority Provisions. For these purposes, no act or failure to
act will be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that action or omission was in the best interests of
the Company.

"Good Reason" means your removal from the position of Chairman of the Company or
any material violation of the Agreement without your written consent that is not
cured within thirty (30) days after you have given written notice thereof to the
Company.

In any proposed termination for Cause you shall have the right to appear before
the Board with counsel before any notice is given and the right to cure any
breach within fifteen (15) days.

IMPACT OF CHANGE IN CONTROL

Upon a Change in Control all options and stock awards made to you shall be one
hundred percent (100%) vested and shall be exercisable after termination for
five (5) years after you cease to be Chairman (or, if later, a director or
consultant), subject to the ten (10) year Option Term and the general provisions
of the Plan not inconsistent with this letter (for example, it is acknowledged
that it would not be inconsistent with this letter to cease exercisability of
options

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on a merger). Change in Control means: (I) any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing more than: fifty percent (50%) of the combined voting power of the
Company's then outstanding voting securities; (ii) a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation in substantially the same proportions as their
ownership of the Company; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person (other than those covered by the exceptions in clause (I)
above) acquires more than fifty percent (50%) of the combined voting power of
the Company's then outstanding securities shall not constitute a Change in
Control of Company, or (iii) the consummation of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
(or any transaction having a similar effect), other than a sale or disposition
by the Company of all or substantially all of the Company's assets to its
stockholders or to an entity, at least fifty percent (50%) of the combined
voting power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the Company
immediately prior to such sale.

"Affiliate" means an affiliate of the Company, as defined in Rule 12b-2
promulgated under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").

"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the Exchange
Act;

"Person" has the meaning set forth in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (1) the Company, (2) so long as the Company is not publicly
owned, any current shareholder of Common Stock of the Company's preferred stock
on the date of this Letter Agreement, (3) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, (4) an underwriter
temporarily holding securities pursuant to an offering of such securities or (5)
a corporations owned, directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of shares of Common
Stock of the Company.

MISCELLANEOUS OPTION PROVISIONS (TO BE MORELY FULLY DELINEATED BY MUTUAL
AGREEMENT IN THE OPTION GRANT AGREEMENT)

Options are nontransferable prior to vesting. Vested Options are nontransferable
(other than to immediate family members, trusts or family limited partnerships
entirely for the benefit of you and such immediate family members or, provided
an offering of the Option to it (or exercise of the option by it) would not be
in violation of the applicable securities laws without further Company action, a
corporation beneficially owned by the Chairman and his immediate family). Option
Shares are nontransferable (other than on the same basis as the options) while
the Company is private.

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Sales of Option Shares shall be subject to same lock-up restriction imposed on
major shareholders upon the Company becoming public if required by underwriters.

The Company and other shareholders shall have bring along rights (proportionate)
on sale of more than 50% of the Company stock.  The Option grant will permit you
to exercise  options prior to vesting in order to receive  Restricted Stock that
will be subject to forfeiture on the same basis as the vesting.


Any grants of stock options made to you by the Company will be subject to the
terms of the applicable option agreement except as provided herein.  The Company
shall consider making additional optional grants at least annually,  but without
imposing any legal obligation to do so.

         Your service as Chairman, unless extended by the mutual written
agreement of you and the Company, will terminate at the end of the Service
Period or, if earlier, on the earliest to occur of your death, termination by
the Company for Disability, termination by the Company with or without Cause or
your voluntary termination with or without Good Reason.

         In the event your service with the Company is terminated during the
Service Period by you or by the Company for any reason (i) The Company will pay
you (or your survivors, if applicable) your earned retainer through the date of
termination, to the extent not yet paid, (ii) your Options and any shares of
Company common stock transferred to you on exercise of your Options ("Option
Shares") will be treated as provided here and, (iii) any other equity awards
will be treated in accordance with the terms of the applicable award agreement
and (iv) if the termination of service as Chairman is by the Company without
Cause or by you for Good Reason, Four Hundred Thousand Dollars ($400,000) . Upon
such payments the Company shall have no further obligations under this
Agreement.

         Miscellaneous provisions:

         (a) You will be reimbursed for all reasonable business expenses
incurred in connection with the Chairmanship and other requested activities in
accordance with the Company's customary policy.

         (b) You will keep all information you receive in connection with, or as
a result of,  your  service  with the  Company  (and not in the  public  domain)
Confidential (the "Confidentiality Provision"). You will not identify for
solicitation,  solicit or hire  employees  of the Company,  or assist  others in
doing so, during the Service Period or for a period of two (2) years thereafter
(the "Non-Solicitation Provision"). Your activities will be limited as provided
above during the Initial Period and if you continue as Chairman. The Company
will be entitled to injunctive relief to enforce the provisions of this
paragraph (b).

         (c) You will be reimbursed for reasonable fees and costs incurred in
connection with the negotiation and preparation of this Letter Agreement in an
amount not to exceed Thirty-Five Thousand Dollars ($35,000).

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         (d) This Letter Agreement may be amended only by a written document and
supersedes all prior understandings.

         (e) This Letter Agreement shall be governed by the laws of New York.
Any dispute shall be settled by arbitration under the rules of the American
Arbitration Association in New York City, New York. The decision of the
arbitrator shall be final and binding and may be entered in any court of
competent jurisdiction. All your reasonable fees and expenses in such
arbitration will be paid by the Company if the arbitrator determines that you
have prevailed on substantially all items. Otherwise each party shall bear its
own costs and expenses and equally share the charges of the AAA and the
arbtirator.

         (f) The Company and you will issue a mutually agreed upon press release
and other activities designed to indicate your appointment and your affiliation;
provided, that the Company must, in any event, comply with applicable securities
law.

         (g) You will abide by all restrictions imposed by Federal Securities
law including those related to inside information.

         (h) You will be covered by the directors and officers liability
insurance of the Company and be indemnified by the Company in the same manner as
the outside directors or senior officers are so covered or indemnified by the
Company.

         Please sign this Letter Agreement in the space provided below. This
will constitute a binding agreement upon, and only upon, its approval by the
Board of Directors of the Company on or prior to May 30, 2000.


                                                     Sincerely,

                                                     PF Net Communications, Inc.



                                                     /s/  Muzzi Mirza
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                                                     Agreed To:



                                                     /s/  Robert Annunziata
                                                     --------------------------
                                                     Robert Annunziata