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                                                                   Exhibit 10.59
                                                                                



October 16, 1998


Mr. David N. Kunkel
3007 South Erin Drive
Oakton, VA 22124

Dear David:

     This letter confirms our  Agreement concerning your continued employment by
PSINet Inc. (the "Company"), and sets forth the terms and conditions which shall
govern such employment as outlined below.  This agreement amends the terms of
your employment agreement dated June 21, 1995, as amended on June 24, 1997.


I.  EMPLOYMENT.

    A.  The Company hereby employs you as Executive Vice President and General
        Counsel for the Company, although you may serve in other executive
        capacities within the Company and/or its subsidiaries as the Board of
        Directors of the Company shall determine is appropriate over time. This
        is a corporate officer position and as an officer of the Company you
        must stand for election by the Board of Directors each year. You accept
        the employment and agree to remain in the employ of the Company, and,
        except during vacations or periods of illness, to provide management
        services to the Company, as determined by and under the direction of the
        Chairman of the Company.

    With respect to the provisions of said services, the parties agree to
observe and to abide by the terms and conditions set forth herein.
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    B.  In connection with your employment by the Company, your principal place
        of employment shall be the greater Washington, D.C. area and you shall
        not be required permanently to relocate to a principal place of business
        outside the greater Washington, D.C. area during the term of your
        employment hereunder.

    C.  During your employment, you will, except during vacations, periods of
        illness, and other absences beyond your reasonable control, devote your
        best efforts, skill and attention to the performance of your duties on
        behalf of the Company.

II. TERM OF EMPLOYMENT.  The term of the employment under this Agreement shall
commence on October 16, 1998, and shall continue for a period of four (4) years.

III.  COMPENSATION.

    A.   BASE SALARY. The Company shall pay you a base salary at the rate of
         $350,000 per annum beginning October 16, 1998. Beginning on January 1,
         2000 and on January 1st of each succeeding year during the term of this
         Agreement, your base salary shall be increased at a minimum by an
         amount equal to five percent (5%) of your then current base salary.
         Your base salary shall be subject to additional increases at the
         discretion of the Compensation Committee of the Company's Board of
         Directors. Your base salary shall be payable in such installments as
         the Company regularly pays its other salaried employees, subject to
         such deductions and withholdings as may be required by law or by
         further agreement with you.

    B.   PERFORMANCE BONUS. The Company will pay you a bonus upon the successful
         completion of the objectives established for your performance for the
         applicable year. The performance criteria will be issued separately by
         the Chairman, at the beginning of each year, and may be changed, with
         mutual fairness, from time to time as situations develop. The
         performance bonus for the period ending December 31, 1998 will be
         $150,000. The performance bonus for subsequent years will be $150,000
         or greater, as determined by the Compensation Committee of the
         Company's Board of Directors.

    C.   INCENTIVE STOCK OPTIONS. In the event of a Change of Control, as
         defined in Section 8 below, or upon the occasion of your death during
         the term of this Agreement while you are in compliance with the
         requirements hereof, the Company shall: (i) vest immediately all of the
         unvested stock options you have received pursuant to the terms of your
         employment agreement dated June 21, 1995, as amended by the amendment
         of June 24, 1997, as well as any unvested stock options you may receive
         during the period of your employment hereunder, (ii) in the event that
         your employment is terminated or continued under conditions not
         substantially the same as those called for in this Agreement, the
         Company shall provide a loan sufficient to exercise all vested stock
         options and pay any required taxes to which you may be subjected as a
         result, with the terms of the loan to be no less favorable than
         installment free for the duration, interest charged at the IRS minimum
         rate, with a five (5) year balloon payment for interest and principal.

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IV.  EMPLOYEE BENEFITS.

         You shall be provided employee benefits, including (without limitation)
401(k) and related plans, revenue bonus plan participation, four weeks' paid
vacation which can accumulate to a maximum of two (2) years (eight (8) weeks),
and life, health, accident and disability insurance under the Company's standard
plans, policies and programs available to employees in accordance with the
provisions of such plans, policies, and programs.

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V.  TERMINATION.

    A.  Your employment with the Company may be terminated by the Company at any
        time for "Cause" as defined in Section 5(c) hereof. In the event of a
        termination for "Cause", all salary and benefits otherwise payable to
        you shall cease immediately upon such termination. Upon such
        termination, the Company will provide written notice whether it has
        elected to use the non-competition restrictions set forth in Section
        6(a) hereof. Termination by the Company or its successors in interest
        for any reason other than Cause shall be deemed a breach hereof. In
        addition, your employment may be terminated by you at any time for any
        reason, provided you shall have given the Company at least thirty (30)
        days' prior written notice of such termination. In the event of
        termination by you, your salary and benefits shall continue during the
        thirty (30) day notice period and shall cease thereafter, subject to the
        provisions of Section 5(b) hereof. By the thirtieth (30th) day the
        Company must notify you in writing whether it has elected to use the 
        non-Competition restriction. Such decision may not be rescinded. Failure
        of the Company to so notify you shall result in the non-Competition
        restriction not being in place.

    B.  Subject to your compliance with your obligations under Section 6 hereof,
        in the event that your employment terminates or is terminated by you or
        the Company for any reason, and the Company has elected to use the non-
        Competition restriction, you shall be entitled, for a period of twenty-
        four (24) months after termination of employment, to the following
        (collectively, the "Termination Payments"): (i) your then current rate
        of base salary as provided in Section 3; (ii) all life insurance and
        health benefits, disability insurance and benefits and reimbursement
        theretofore being provided to you; and (iii) Company contributions, to
        the extent permitted by applicable law, to a SEP-IRA, Keogh or other
        retirement mechanism selected by you sufficient to provide the same
        level of retirement benefits you would have received if you had remained
        employed by the Company during such twenty-four (24) month period. The
        Company shall make up the difference in cash payments directly to you to
        the extent that applicable law would not permit it to make such
        contributions.

    C.  The Company shall have "Cause" for your termination of your employment
        by reason of any breach of your agreement not to compete pursuant to
        Section 6 hereof, your committing an act materially adversely affecting
        the Company which constitutes wanton or willful misconduct, your
        conviction of a felony, your voluntary resignation, or any material
        breach by you of this Agreement.

VI.  AGREEMENT NOT TO COMPETE.

    A.  In consideration of your employment pursuant to this Agreement and 
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        for other good and valuable consideration, the receipt and adequacy of
        which is hereby acknowledged, you covenant to and agree with the Company
        that, so long as you are employed by the Company under this Agreement
        and for a period of twenty-four (24) months following the termination of
        such employment (but only if the Company has elected to enforce the
        restriction), you shall not, without the prior 

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        written consent of the Company, either for yourself or for any other
        person, firm or corporation, manage, operate, control, participate in
        the management, operation or control of or be employed by any other
        person or entity which is engaged in providing Internet-related network
        or communications services competitive with the Internet-related network
        or communication services offered to customers by the Company as of the
        date of termination or within six (6) months thereafter. The foregoing
        shall in no event restrict you from: (i) the general practice of law,
        either individually or in a private firm practice; (ii) writing or
        teaching, whether on behalf of for-profit, or not-for-profit
        institution(s); (iii) investing (without participating in management or
        operation) in the securities of any private or publicly traded
        corporation or entity; or (iv) after termination of employment, becoming
        employed by a hardware, software or other vendor to the Company,
        provided that such vendor does not offer network or communication
        services that are competitive with the Internet-related network or
        communications services offered by the Company as of the date of
        termination of employment or within six (6) months thereafter.

    B.  You may request permission from the Company's Board of Directors to
        engage in activities which would otherwise be prohibited by Section
        6(a). The Company shall respond to such request within thirty (30) days
        after receipt. The Company will notify you in writing if it becomes
        aware of any breach or threatened breach of any of the provisions in
        Section 6(a), and you shall have thirty (30) days after receipt of such
        notice in which to cure or prevent the breach, to the extent that you
        are able to do so. You and the Company acknowledge that any breach or
        threatened breach by you of any of the provisions in Section 6(a) 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 thirty (30) day period, the Company may pursue injunctive relief
        for any such breach or threatened breach. If a court of competent
        jurisdiction determines that you breached any of such provisions, you
        shall not be entitled to any Termination Payments from and after date of
        the breach. In such event, you shall promptly repay any Termination
        Payments previously made plus interest thereon from the date of such
        payment(s) at twelve percent (12%) per annum. If, however, the Company
        has suspended making such Termination Payments and a court of competent
        jurisdiction finally determines that you did not breach such provision
        or determines such provision to be unenforceable as applied to your
        conduct, you shall be entitled to receive any suspended Termination
        Payment, plus interest thereon from the date when due at twelve percent
        (12%) per annum. The Company may elect (once) to continue paying the
        Termination Payments before a final decision has been made by the court.

VII.  INTELLECTUAL PROPERTY; 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 you 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. You
automatically assign, and shall assign at the time of creation of the Work
Product, without any 

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requirement of further consideration, any right, title, or interest you may have
in such Work Product, including any copyrights or other intellectual property
rights pertaining thereto. Upon request of the Company, you 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.

VIII.  TRANSFERABILITY.

       A.  As used in this Agreement, the term "Company" shall include any
           successor to all or part of the business or assets of the Company.
           This Agreement shall inure to the benefit of and be enforceable by
           you and your personal or legal representatives, executors,
           administrators, heirs, distributees, devisees and legatees.

       B.  Except as provided under paragraph (a) of this Section 8, neither
           this Agreement nor any of the rights or obligations hereunder shall
           be assigned or delegated by any party hereto without the prior
           written consent of the other party.

       C.  As used in this Agreement, "Change in Control" shall mean: (i) the
           shareholders of the Company approve an agreement for the 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 (A) the Company, (B) 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 of 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.

IX.  SEVERABILITY.

     The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this Agreement shall
be construed in all respects as if such invalid or unenforceable provision were
omitted.  If a court of competent jurisdiction determines that any particular
provision of this Agreement is invalid or unenforceable, the court shall
restrict the provision so as to be enforceable.  However, if the provisions of
Section 6 shall be restricted, a proportional reduction shall be made in the
payments under Section 5(b).

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X.  ENTIRE AGREEMENT; WAIVERS.  This letter Agreement contains the entire
agreement of the parties concerning the subject matter hereof and supersedes and
cancels all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written. No waiver or modification of any
provision of this Agreement shall be effective unless in writing and signed by
both parties.

XI.  NOTICES.  Any notices, requests, instruction or other document to be given
hereunder shall be in writing and shall be sent certified mail, return receipt
requested, addressed to the party intended to be notified at the address of such
party as set for at the head of this agreement or such other address as such
party may designate in writing to the other.

XII.  GOVERNING LAW.  THIS LETTER AGREEMENT SHALL BE SUBJECT TO, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO ITS PRINCIPLES OF CONFLICTS OF LAW.

XIII.  COUNTERPARTS.  This letter 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.

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     Please confirm your agreement with the forgoing by signing and returning
one copy of this letter Agreement to the undersigned, whereupon this letter
agreement shall become a binding agreement between you and the Company.

Sincerely,

PSINet Inc.


By:  /s/ William L. Schrader
     -----------------------------------
     William L. Schrader, Chairman & CEO



Accepted and Agreed to as of         , 1998:
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By:  /s/ David N. Kunkel
     --------------------------------------
     David N. Kunkel

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