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                                                                   EXHIBIT 10.14

                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT, dated as of November 6, 2000 (hereinafter
"Agreement"), by and between PSINet Inc. (hereinafter "the Company"), a New York
corporation with its principal place of business located at 44983 Knoll Square,
Ashburn, Virginia 20147 and Lawrence E. Hyatt (hereinafter "the Executive").

      WHEREAS, the Company has determined that it is in the best interests of
the Company to delegate certain management responsibilities of the Company to
the Executive;

      WHEREAS, the Executive is willing to provide his services as an employee
of the Company for the inducements and on the terms and conditions set forth
below in this Agreement; and

      NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:

      1. EMPLOYMENT POSITION.

         (a) POSITION AND DUTIES. The Company hereby employs the Executive to
         serve as Executive Vice President and Chief Financial Officer of the
         Company, and the Executive hereby accepts such employment in the
         capacity and subject to the terms and conditions hereinafter set forth.
         This position is a corporate officer position and, as an officer of the
         Company, the Executive must stand for election by the Company's Board
         of Directors (the "Board") each year of the Term (as defined in Section
         2 hereof). The Executive shall have such powers, duties, authority, and
         responsibilities as are (i) consistent with such position, (ii)
         assigned to such offices in the Company's By-laws, and (iii) reasonably
         assigned to the Executive by the Chairman and Chief Executive Officer
         of the Company. The Executive accepts such employment and agrees to
         remain in the employ of the Company and provide management services to
         the Company, as determined by and under the direction of the Chairman
         and Chief Executive Officer.

         (b) LOCATION OF EMPLOYMENT. The principal place of employment of the
         Executive shall be in the greater Washington, D.C. area. The Executive
         shall be available to travel to the extent reasonably required to carry
         out the duties and responsibilities as Executive Vice President and
         Chief Financial Officer or as otherwise may be reasonably required by
         the business of the Company.

         (c) MANAGEMENT RESPONSIBILITIES. The Executive shall at all times
         perform his responsibilities and duties with appropriate care and
         consistent with his position as may be assigned by the Chairman and
         Chief Executive Officer of the Company and shall at all times
         exercise reasonable judgment and discretion in the performance of
         such responsibilities and duties.

      2. TERM OF EMPLOYMENT. The initial term of the Executive's employment
under this Agreement shall commence as of the date of this Agreement and shall
terminate on the third anniversary hereof (the "Initial Term") subject to
earlier termination as provided in Section 6.


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After the Initial Term, this Agreement shall be automatically extended each year
for an additional one (1) year period (each, a "Renewal Term"). The Initial Term
together with any Renewal Term are referred to herein collectively as the
"Term."

      3. COMPENSATION.

         (a) BASE SALARY. The Company shall pay the Executive a base salary
         at a rate of $350,000.00 per year beginning on the date hereof.
         Beginning on January 1, 2001 and January 1 of each subsequent year
         thereafter, the Executive's base salary shall be increased at a
         minimum by an amount equal to five percent (5%) of the Executive's
         then current base salary. The Executive's base salary shall be
         subject to additional increases at the discretion of the Chairman
         and Chief Executive Officer of the Company subject to the approval
         of the Compensation Committee of the Board (the "Compensation
         Committee"). The Executive's base salary shall be payable in such
         installments as the Company regularly pays its other salaried
         employees. All payments shall be subject to the deduction of payroll
         withholdings taxes and similar assessments as required by law or by
         further agreement with the Executive.

         (b) PERFORMANCE BONUS. The Company will pay the Executive a bonus
         subject to the successful completion of the objectives established
         for the Executive's performance for each calendar year during the
         Term. The performance criteria will be issued separately by the
         Chairman and Chief Executive Officer of the Company with respect to
         each calendar year during the Term, and may be changed, with mutual
         fairness, from time to time as situations develop. The target bonus
         for the one-year period ending December 31, 2000 will be a total of
         up to $150,000.00. Separate criteria will be established for the
         Executive's entitlement for the year starting January 1, 2001.
         Bonuses in subsequent years during the Term will be at least equal
         to the amount of the bonus during the previous calendar year.

         (c) STOCK OPTIONS. On the first anniversary of the date of this
         Agreement and each subsequent anniversary date during the Term, the
         Company shall grant the Executive options to purchase 15,000 shares
         of the Company's common stock (the "Options") pursuant to the
         Company's Executive Stock Incentive Plan (the "Plan") or another
         option plan of the Company, such grant being subject to the terms of
         this Agreement and the Executive's continued employment at the time
         of the grant and evidenced by an option agreement in such form and
         under the terms and conditions set forth in the applicable plan.

         (d) VESTING OF STOCK OPTIONS. In the event of (i) a Change in
         Control (as defined in Section 3(e) hereof); (ii) the termination of
         the Executive's employment by the Company for any reason other than
         for Cause (as defined in Section 6(c) hereof); or (iii) the
         termination of the Executive by the Company because of the
         Executive's death or disability, the Company shall immediately vest
         all of the unvested stock options the Executive has received prior
         to the date of the Change in Control or Date of Termination (as
         defined in Section 6(j) hereof), as applicable.

         (e) CHANGE IN CONTROL. As used in this Agreement, "Change in
         Control" shall mean: (i) the shareholders of the Company approve an
         agreement for the


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         sale of all or substantially all of the assets of the Company; or
         (ii) the shareholders of the Company approve a merger or
         consolidation of the Company with any other corporation (and the
         Company implements it), other than (A) a merger or consolidation
         which would result in the voting securities of the Company
         outstanding immediately prior thereto continuing to represent more
         than eighty percent (80%) of the combined voting power of the voting
         securities of the Company, or such surviving entity, outstanding
         immediately after such merger or consolidation, or (B) a merger or
         consolidation effected to implement a recapitalization of the
         Company (or similar transaction) in which no "person" (as defined
         below) acquires more than thirty percent (30%) of the combined
         voting power of the Company's then-outstanding securities; or (iii)
         any "person," as such term is used in Sections 13(d) and 14(d) of
         the Securities Exchange Act of 1934, as amended (the "Exchange Act")
         (other than (1) the Company or (2) any corporation owned, directly
         or indirectly, by the Company or the shareholders of the Company in
         substantially the same proportions as their ownership of stock in
         the Company), is or becomes the "beneficial owner" (as defined in
         Rule 13d-3 under the Exchange Act), directly or indirectly, of
         securities of the Company representing thirty percent (30%) or more
         of the combined voting power of the Company's then outstanding
         securities.

      4. FRINGE BENEFITS; AUTOMOBILE ALLOWANCE.

         (a) During the Term, the Executive shall be entitled to the maximum
         benefits that are generally provided to all senior executives of the
         Company under any life insurance, group insurance, medical,
         retirement, pension or other employee benefit or incentive plans or
         pursuant to other arrangements or understandings (excluding any
         equity, equity option or equity bonus plans), so long as any such
         plan, benefit, arrangement or understanding remains generally
         available to all other senior executive officers of the Company.

         (b) During the Term, the Executive shall also receive an automobile
         allowance of $800 per month or whatever greater amount the Company
         pays to its Executives as a matter of standard practice from time to
         time.

         (c) During the Term, the Executive shall be entitled to financial
         and tax advice at the Company's expense through the Mason Companies
         up to a maximum amount of $7,000.00 per year.

         (d) During the Term, the Executive shall be entitled to four (4)
         weeks paid vacation each year which can accumulate to a maximum of
         six (6) weeks.

      5. EXPENSE REIMBURSEMENT. In addition to the compensation and benefits
provided in Sections 3 and 4, the Company shall, upon receipt of appropriate
documentation, reimburse the Executive for his reasonable travel, lodging,
entertainment, and other ordinary and necessary business expenses incurred in
the course of his duties on behalf of the Company during the Term.

      6. TERMINATION. The Term is subject to early termination as provided
below:

         (a) TERMINATION BY THE COMPANY BECAUSE OF THE EXECUTIVE'S DISABILITY.
         If at any time during the Term, the Company determines in good faith
         that the Executive has been unable, as a result of physical or
         mental illness or incapacity,

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         to perform his duties hereunder for a period of either (i) one
         hundred eighty (180) consecutive days during any twelve-month period
         or (ii) ninety (90) consecutive days during any twelve-month period
         if the Executive's physical or mental illness or incapacity would
         reasonably be expected to continue for another consecutive ninety
         (90) day period after such initial ninety (90) day period, the Term
         may be terminated by the Company upon thirty (30) days' written
         notice to the Executive. Should the Executive be terminated pursuant
         to this Section 6(a), he shall be entitled to Termination Payments
         as provided for in Section 6(g).

         (b) TERMINATION BY THE COMPANY BECAUSE OF THE EXECUTIVE'S DEATH. In the
         event that the Executive's death occurs prior to the expiration of the
         Term, the Term shall terminate as of the date of the Executive's death.
         Should the Executive be terminated pursuant to this Section 6(b), he
         shall be entitled to Termination Payments as provided for in Section
         6(g).

         (c) TERMINATION BY THE COMPANY FOR CAUSE. The Executive's employment
         may be terminated by the Company at any time for "Cause." In the event
         of a termination for Cause, all salary and benefits otherwise payable
         to the Executive shall cease immediately upon such termination. For
         purposes of this Agreement, the Company shall have Cause for
         termination of the Executive's employment under this Agreement by
         reason of (i) any breach by the Executive of his agreement not to
         compete or solicit pursuant to Section 7 hereof; (ii) any violation of
         Company policy which materially and adversely affects the business or
         reputation of the Company; (iii) any act or omission by the Executive
         constituting willful misconduct or gross negligence, (iv) the
         Executive's conviction of a felony (or a plea of guilty or NOLO
         CONTENDRE thereto); (v) the Executive's conviction of any other
         criminal action (or a plea of guilty or NOLO CONTENDRE thereto) that
         has or might reasonably be expected to have an adverse effect on the
         business or reputation of the Company or its subsidiaries; (vi) the
         Executive's commission of an act of fraud; (vii) a material breach by
         the Executive of any provision of this Agreement which breach and the
         effects thereof remain uncured for a period of thirty (30) days after
         written notice, specifically identifying the breach, is given to the
         Executive by the Company (however, it being expressly understood that
         the Company need not provide any notice and may terminate the Executive
         immediately where the Company in good faith believes that the
         Executive's material breach is not curable within thirty (30) days); or
         (viii) the Executive's voluntary resignation without Good Reason and
         without having given the Company at least thirty (30) days prior
         written notice.

         (d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
         the employment of the Executive under this Agreement at any time
         without cause with thirty (30) days' prior written notice. Should the
         Executive be terminated pursuant to this Section 6(d), he shall be
         entitled to Termination Payments as provided for in Section 6(g).

         (e) TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON. The Executive may
         terminate his employment at any time without Good Reason (as that term
         is defined in Section 6(f)), provided that the Executive shall have
         given the Company at least thirty (30) days prior written notice of
         such termination. In the event of termination by the Executive without
         Good Reason, the Executive's


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         salary and benefits shall continue during the notice period specified
         by the Executive and shall cease thereafter.

         (f) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive may
         terminate his employment at any time for Good Reason. For purposes of
         this Agreement, "Good Reason" shall mean any of the following
         occurrences but only if occurring within twelve (12) months after a
         Change in Control:

                  (i)      the diminution or change, without the Executive's
                           written consent, of his position, title, authority,
                           duties or responsibilities as indicated in Section
                           1(a) hereof;

                  (ii)     the Company requiring the Executive, without his
                           written consent, to be based at any office or
                           location or to relocate to any location other than
                           the Company's headquarters which shall be located in
                           the Washington, D.C. area;

                  (iii)    any material breach by the Company of this Agreement
                           which is not cured within thirty (30) days after
                           notice is given to the Company in accordance with
                           this Agreement.

         (g)      TERMINATION PAYMENTS. A. If the Executive's employment is
                  terminated by the Company (1) without Cause pursuant to
                  Section 6(d) or (2) because of the Executive's death or
                  disability pursuant to Section 6(a) or (b) (each of the
                  circumstances in Section 6(g)(A)(1) and (2) being known as a
                  "Termination Event"), the Company shall provide the Executive
                  (or, in the case of his death, his estate, heirs or legal
                  representatives) the following (collectively, the "Termination
                  Payments"), to be paid or given within thirty (30) days of the
                  Date of Termination (except with respect to item (iii) below
                  which will be granted and given in accordance with Section
                  3(d) herein):

                  (i) a lump sum representing (1) the Executive's monthly base
                  salary as derived from the Executive's annual salary and
                  giving effect to all annual increases thereto as provided in
                  Section 3(a) herein, times the greater of (y) the number of
                  months remaining in the current Term and (z) twenty-four (24)
                  months; and (2) all other accrued and unpaid amounts due to
                  the Executive as of the Date of Termination (including,
                  without limitation, accrued vacation pay and reimbursement of
                  business expenses);

                  (ii) a lump sum representing all annual bonus amounts, as
                  provided for in Section 3(b) hereof, calculated on the
                  assumption that all performance criteria objectives would have
                  been exceeded, such that the Executive would receive the
                  maximum bonus established by the Chairman and Chief Executive
                  Officer of the Company to which the Executive would have been
                  entitled had he remained employed by the Company for the
                  longer of (y) the remainder of the current Term or (z)
                  twenty-four (24) months after the Date of Termination; and

                  (iii) the vested options provided in Section 3(d).

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                  Moreover, should the Company terminate the Executive without
         Cause pursuant to Section 6(d) herein, the Executive shall be entitled
         to the immediate vesting of such number of options as are equal to the
         number which would have vested, ratably, monthly, had the Executive
         remained employed for the longer of the remainder of the current Term
         or twenty-four (24) months after the Date of Termination.

                  B. If the Executive terminates his employment for Good Reason
         as defined in Section 6(f) or a Termination Event occurs within twelve
         months after a Change in Control, the Executive is entitled to the
         Termination Payments as stated in Section 6(g)(A)(i) (ii) and (iii)
         above as well as the following:

                  (iv) continuation of all life insurance and health benefits,
                  disability insurance and benefits and reimbursement
                  theretofore being provided to the Executive and/or his family,
                  or such other more favorable benefits applicable to any senior
                  executive officer of the Company, to which the Executive would
                  have been entitled had he remained employed by the Company for
                  the longer of (y) the remainder of the current Term or (z)
                  twenty-four (24) months after the Date of Termination, with
                  the exception of the car allowance as provided in Section 4(b)
                  herein;

                  (v) Company contributions, to the extent permitted by
                  applicable law, to a SEP-IRA, Keogh or other retirement
                  mechanism reasonably selected by the Executive sufficient to
                  provide the same level of retirement benefits the Executive
                  would have received if he had remained employed by the Company
                  for the longer of (y) the remainder of the current Term or (z)
                  twenty-four (24) months after the Date of Termination
                  provided, however, that the Company shall make up the
                  difference in cash payments directly to the Executive to the
                  extent that applicable law would not permit it to make such
                  contributions;

                  C. In consideration of the Termination Payments provided in
         this Section 6(g)(A) and (B), the Executive agrees to execute a
         termination of employment agreement under which the Executive agrees to
         fully release all claims against the Company.

         (h) TAX PROVISIONS. In the event that any payments under this Agreement
         or any other compensation, benefit or other amount from the Company for
         the benefit of the Executive are subject to the tax imposed by Section
         4999 of the Internal Revenue Code of 1986, as amended (the "Code")
         (including any applicable interest and penalties, the "Excise Tax"), no
         such payment ("Parachute Payment") shall be reduced (except for
         required tax withholdings) and the Company shall pay to the Executive
         by the earlier of the date such Excise Tax is withheld from payments
         made to the Executive or the date such Excise Tax becomes due and
         payable by the Executive, an additional amount (the "Gross-Up Payment")
         such that the net amount retained by the Executive (after deduction of
         any Excise Tax on the Parachute Payments, taxes based upon the Tax Rate
         (as defined below) upon the payment provided for by this Section 6(h)
         and Excise Tax upon the payment provided for by this Section 6(h)),
         shall be equal to the amount the Executive would have received if no
         Excise Tax had been imposed.


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         A Tax counsel chosen by the Company's independent auditors, provided
         such person is reasonably acceptable to the Executive ("Tax Counsel"),
         shall determine in good faith whether any of the Parachute Payments are
         subject to the Excise Tax and the amount of any Excise Tax, and Tax
         Counsel shall promptly notify the Executive of its determination. The
         Company and the Executive shall file all tax returns and reports
         regarding such Parachute Payments in a manner consistent with the
         Company's reasonable good faith determination. For purposes of
         determining the amount of the Gross-Up Payment, the Executive shall be
         deemed to pay taxes at the Tax Rate applicable at the time of the
         Gross-Up Payment. In the event that the Excise Tax is subsequently
         determined to be less than the amount taken into account hereunder at
         the time a Parachute Payment is made, the Executive shall repay to the
         Company promptly following the date that the amount of such reduction
         in Excise Tax is finally determined the portion of the Gross-Up Payment
         attributable to such reduction (without interest). In the event that
         the Excise Tax is determined to exceed the amount taken into account
         hereunder at the time a Parachute Payment is made (including by reason
         of any payment the existence or amount of which cannot be determined at
         the time of the Gross-Up Payment), the Company shall pay the Executive
         an additional amount with respect to the Gross-Up Payment in respect of
         such excess (plus any interest or penalties payable in respect of such
         excess) at the time that the amount of such excess is finally
         determined. The Company shall reimburse the Executive for all
         reasonable fees, expenses, and costs related to determining the
         reasonableness of any Company position in connection with this
         paragraph and preparation of any tax return or other filing that is
         affected by any matter addressed in this paragraph, and any audit,
         litigation or other proceeding that is affected by any matter addressed
         in this Section 6(h) and an amount equal to the tax on such amounts at
         the Executive's Tax Rate. For the purposes of the foregoing, "Tax Rate"
         means the Executive's effective tax rate based upon the combined
         federal and state and local income, earnings, Medicare and any other
         tax rates applicable to the Executive, all at the highest marginal rate
         of taxation in the country and state of the Executive's residence on
         the date of determination, net of the reduction in federal income taxes
         which could be obtained by deduction of such state and local taxes.

         (i) NOTICE OF TERMINATION. Any termination of the Executive's
         employment during the Term by the Company or by the Executive shall be
         communicated by Notice of Termination to the other party hereto given
         in accordance with Section 16 of this Agreement. For purposes of this
         Agreement, a "Notice of Termination" means a written notice which (i)
         indicates the specific termination provision in this Agreement relied
         upon, (ii) to the extent applicable, sets forth in reasonable detail
         the facts and circumstances claimed to provide a basis for termination
         of the Executive's employment under the provision so indicated, and
         (iii) if applicable, specifies a termination date. The failure by the
         Executive or the Company to set forth in the Notice of Termination any
         fact or circumstance which contributes to a showing of Good Reason or
         Cause shall not waive any right of the Executive or the Company
         hereunder or preclude the Executive or the Company, as applicable, from
         asserting such fact or circumstance in enforcing the Executive's or the
         Company's rights hereunder.

         (j) DATE OF TERMINATION. For purposes of this Agreement, "Date of
         Termination" means (i) if the Executive's employment is terminated by
         reason of

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         death, the date of death; or (ii) if the Executive's employment is
         terminated under any other circumstances, the date of receipt of the
         Notice of Termination by the party being so notified or any later date
         specified therein. For purposes of this Agreement, the Executive will
         be deemed to be employed through the end of the calendar day on the
         Date of Termination.

      7. COVENANTS OF EXECUTIVE

         (a) COVENANT NOT TO COMPETE. In consideration of the Executive's
         employment pursuant to this Agreement and for other good and valuable
         consideration, the receipt and adequacy of which is hereby
         acknowledged, the Executive agrees that, so long as the Executive is
         employed by the Company under this Agreement and for a period of twelve
         (12) months following the termination of such employment (but only if
         the Company has elected to enforce the restriction), the Executive
         shall not, without the prior written consent of the Company, either for
         the Executive or for any other person, firm or corporation, own,
         manage, operate, control, be employed by, participate in or be
         associated in any manner with the ownership, management, operation or
         control of any business providing Internet-related, E-commerce,
         web-hosting, network or communication services competitive with the
         Company as of the Date of Termination or within six (6) months
         thereafter. The foregoing shall in no event restrict the Executive
         from: (i) writing or teaching, whether on behalf of for-profit, or
         not-for-profit institution(s); (ii) investing (without participating in
         management or operation) in the securities of any private or publicly
         traded corporation or entity; or (iii) after termination of employment,
         becoming employed by a hardware, software or other vendor to the
         Company, provided that such vendor does not offer Internet-related,
         E-commerce, web-hosting, network or communication services that are
         competitive with the services offered by the Company as of the Date of
         Termination or within six (6) months thereafter.

         (b) NONSOLICITATION. In consideration of the Executive's employment
         pursuant to this Agreement and for other good and valuable
         consideration, the receipt and adequacy of which is hereby
         acknowledged, the Executive agrees that, so long as the Executive is
         employed by the Company under this Agreement and for a period of
         eighteen (18) months following the termination of such employment, the
         Executive agrees not to hire, solicit, nor attempt to solicit for
         himself or any third party, the services of any employee or
         subcontractor of the Company or any of the Company's subsidiaries or
         affiliates without the Company's prior written consent; provided,
         however, that the Executive is not prevented from employing such person
         who contacts the Executive on his or her own initiative and without any
         direct or indirect solicitation by the Executive.

         (c) BREACH/THREATENED BREACH. The Executive may request permission from
         the Company's Board of Director's to engage in activities which would
         otherwise be prohibited by Section 7(a) or (b). The Company shall
         respond to such request within thirty (30) days after receipt. The
         Company shall notify the Executive in writing if it becomes aware of
         any breach or threatened breach of any of the provisions in Section
         7(a) or (b), and the Executive shall have thirty (30) days after
         receipt of such notice in which to cure or prevent the breach, to the
         extent that the Executive is able to do so. The Executive and the
         Company acknowledge that any breach or threatened breach by the
         Executive of any of the


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         provisions in Section 7(a) or (b) above cannot be remedied by the
         recovery of damages, and agree that in the event of any such breach or
         threatened breach which is not cured with such 30-day period, the
         Company may pursue injunctive relief for any such breach or threatened
         breach. If a court of competent jurisdiction determines that the
         Executive breached any of such provisions, the Executive shall not be
         entitled to any Termination Payments from and after date of the breach.
         In such event, the Executive shall promptly repay any Termination
         Payments previously made plus interest thereon from the date of such
         payment(s) at 12% per annum. If, however, the Company has suspended
         making such Termination Payments and a court of competent jurisdiction
         finally determines that the Executive did not breach such provision or
         determines such provision to be unenforceable as applied to the
         Executive's conduct, the Executive shall be entitled to receive any
         suspended Termination Payment, plus interest thereon from the date when
         due at 12% per annum. The Company may elect (once) to continue paying
         the Termination Payments before a final decision has been made by the
         court.

         (d) OWNERSHIP OF WORK PRODUCT. All copyrights, patents, trade secrets,
         or other intellectual property rights associated with any ideas,
         concepts, techniques, inventions, processes, or works of authorship
         developed or created by the Executive during the course of performing
         the Company's work (collectively the "Work Product") shall belong
         exclusively to the Company and shall, to the extent possible, be
         considered a work made for hire for the Company within the meaning of
         Title 17 of the United States Code. The Executive automatically
         assigns, and shall assign at the time of creation of the Work Product,
         without any requirement of further consideration, any right, title, or
         interest the Executive may have in such Work Product, including any
         copyrights or other intellectual property rights pertaining thereto.
         Upon request of the Company, the Executive shall take such further
         actions, including execution and delivery of instruments of conveyance,
         as may be appropriate to give full and proper effect to such
         assignment.

         (e) EQUITABLE RELIEF. The Executive acknowledges and agrees that the
         covenants and obligations of Executive contained in Section 7 hereof
         relate to special, unique and extraordinary matters and are reasonable
         and necessary to protect the legitimate interests of the Company and
         that a breach of any of the terms of such covenants and obligations
         will cause the Company irreparable harm and injury for which adequate
         remedies at law are not available. The Executive therefore agrees that
         the Company need not prove actual damages in order to obtain injunctive
         relief, a restraining order, an order of specific performance or any
         other equitable relief (together, "Equitable Relief") with respect to
         any of Executive's obligations under Section 7. The Executive hereby
         waives any claim or defense therein that the Company has an adequate
         remedy at law or that money damages would provide an adequate remedy.
         It shall, however, be the option of the Company whether or not to seek
         Equitable Relief.


      8. REPRESENTATION AND WARRANTIES.

         (a) THE COMPANY. The Company hereby represents and warrants to the
         Executive as follows:

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                  (i)      the Company is duly organized, validly existing and
                           in good standing under the laws of the State of New
                           York;

                  (ii)     this Agreement has been duly authorized, executed and
                           delivered by the Company and will constitute the
                           legal, valid and binding obligation of the Company,
                           enforceable against the Company in accordance with
                           its terms, subject to applicable bankruptcy,
                           insolvency, moratorium or other similar laws
                           affecting the rights of creditors generally and to
                           general principles of equity whether considered in a
                           suit at law or in equity; and

                  (iii)    the execution and delivery of this Agreement by the
                           Company, the performance by the Company of its
                           obligations hereunder and the consummation by the
                           Company of the transactions contemplated hereby will
                           not violate any agreement to which the Company is a
                           party.

         (b) EXECUTIVE. The Executive hereby represents and warrants to the
         Company as follows:

                  (i)      this Agreement has been duly executed and delivered
                           by the Executive and will constitute the legal, valid
                           and binding obligation of the Executive, enforceable
                           against the Executive in accordance with its terms,
                           subject to applicable bankruptcy, insolvency,
                           moratorium or other similar laws affecting the rights
                           of creditors generally and to general principles of
                           equity whether considered in a suit at law or in
                           equity;

                  (ii)     the execution and delivery of this Agreement by
                           Executive, the performance by the Executive of his
                           obligations hereunder and the consummation by the
                           Executive of the transactions contemplated hereby
                           will not violate any agreement to which he is a
                           party; and

                  (iii)    the Executive has made such investigations of the
                           business and properties of the Company as he deems
                           necessary or appropriate before entering into this
                           Agreement.

      9. TRANSFERABILITY.

         (a) This Agreement is personal to the Executive and without the prior
         written consent of the Company shall not be assignable by the Executive
         otherwise than by will or the laws of descent and distribution. This
         Agreement shall inure to the benefit of and be enforceable by the
         Executive's legal representatives.

         (b) This Agreement shall inure to the benefit of and be binding upon
         the Company, its successors and assigns.

         (c) The Company shall require any successor (whether direct or
         indirect, by purchase, merger, consolidation, share exchange or
         otherwise) to all or


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<PAGE>

         substantially all of the business and/or assets of the Company to
         expressly assume in writing and agree to perform this Agreement in the
         same manner and to the same extent that the Company would be required
         to perform it if no such succession had taken place. As used in this
         Agreement, "Company" shall mean the Company as defined herein and any
         successor to its businesses and/or assets as aforesaid that assumes and
         agrees to perform this Agreement by operation of law, or otherwise. A
         failure of the Company to cause a successor to assume this Agreement in
         any such transaction shall be a breach of this Agreement by the
         Company.

      10. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
plan, program, policy or practice provided by the Company and for which the
Executive may qualify (except with respect to any benefit to which the Executive
has waived his rights in writing), nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement entered into after the date of this Agreement with the Company.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any benefit, plan, policy, practice or program of, or any
contract or agreement entered into with, the Company shall be payable in
accordance with such benefit, plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

      11. FULL SETTLEMENT; MITIGATION, COSTS AFTER A CHANGE IN CONTROL. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts (including amounts for damages
for breach) payable to the Executive under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not the Executive
obtains other employment. In addition, following a Change in Control only, the
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. Notwithstanding any other
provisions in this Agreement to the contrary, in the event that, following a
Change in Control, any successor in interest to the Company unsuccessfully
contests and/or challenges any of the Executive's rights under this Agreement,
then the successor in interest to the Company shall pay the Executive's
reasonable attorney's fees and costs incurred in such contest or challenge.

      12. NO WAIVER. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.

      13. ARBITRATION. With the exception of disputes arising under Section 7
hereof, any dispute arising under this Agreement shall be settled by arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator may be rendered in any court
having jurisdiction thereof. Arbitration hereunder shall be by a single
arbitrator appointed by agreement of the parties. The parties shall agree that
any arbitration award shall be final and binding on the parties. Except as
stated otherwise in Paragraph 11 of this Agreement, each party shall bear its
own costs and attorneys' fees associated with the arbitration.

      14. SEVERABILITY. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding, or

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<PAGE>

unenforceable in its entirety or partially or as to any party, for any reason,
such provision may be changed, consistent with the intent of the parties hereto,
to the extent reasonably necessary to make the provision, as so changed, legal,
valid, binding, and enforceable. If any provision of this Agreement is held to
be illegal, void, voidable, invalid, nonbinding, or unenforceable in its
entirety or partially or as to any party, for any reason, and if such provision
cannot be changed consistent with the intent of the parties hereto to make it
fully legal, valid, binding, and enforceable, then such provision will be
stricken from this Agreement, and the remaining provisions of this Agreement
will not in any way be affected or impaired, but will remain in full force and
effect.

      15. ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains and its terms
constitute the entire agreement of the parties and supersedes all prior
agreements regarding the subject matter herein. This Agreement supersedes and
replaces any prior or contemporaneous agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written regarding the
subject matter herein. No amendment or modification of any provision of this
Agreement shall be effective unless in writing and signed by the party against
whom enforcement of such amendment or modification is sought.

      16. NOTICES. All notices required to be given or which may be given
under this Agreement shall be in writing, delivered in accordance with one or
more of the following and deemed received upon the earlier of (i) when it is
personally delivered to the party, (ii) three (3) days after having been mailed
by certified mail, postage prepaid, return receipt requested, (iii) two (2) days
after having been sent via overnight delivery by a recognized overnight delivery
service or (iv) one (1) day after having been sent via facsimile transmission,
in each case addressed to the party intended to be notified at the address of
such party as set forth in the records of the Company or such other address as
such party may designate in writing to the other.

      17. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commonwealth of Virginia without giving effect to the conflicts of law
principles thereof.

      18. SURVIVAL. All provisions which may reasonably be interpreted or
construed to survive the expiration or termination of this Agreement shall
survive the expiration or termination of this Agreement.

      19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
be one and the same instrument.

      20. EXECUTION. This Agreement shall be deemed effective upon the
execution by the Company and the Executive.






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<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as the date first written above.



Executive:

/s/ LAWRENCE E. HYATT
-------------------------
Lawrence E. Hyatt



PSINet Inc. ("Company"):


By: /s/ WILLIAM L. SCHRADER
    --------------------------------
Title: Chairman and Chief Executive Officer














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