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                                PLEDGE AGREEMENT

      Agreement made as of this 1st day of October 1996, between PSINet Inc., a
New York corporation (hereinafter sometimes referred to as the "Pledgor"), and
Fleet National Bank, a national banking association (the "Bank"). All
capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Credit Agreement (as defined below).

                              W I T N E S S E T H:

      WHEREAS, the Pledgor and InterCon Systems Corporation ("InterCon")
(Pledgor and InterCon as hereinafter sometimes collectively referred to as
"Debtors") have entered into an Amended and Restated Credit Agreement dated as
of November 10, 1995 with the Bank, as amended by the First Amendment to Amended
and Restated Credit Agreement dated as of August 13, 1996 with the Bank (said
Amended and Restated Credit Agreement as amended by said First Amendment, and as
the same may be further amended, modified, supplemented or restated from time to
time, the "Credit Agreement") providing for the establishment by the Bank of a
credit facility in favor of Debtors in the maximum aggregate principal amount of
$23,500,000 (the "Loans");

      NOW, THEREFORE, to induce the Bank to make the Loans provided for by the
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:

      1. Pledge. As security for the due and punctual payment and performance of
the Obligations described in Section 2 below, Pledgor hereby delivers and
pledges to the Bank the securities listed in Exhibit A hereto (the "Pledged
Securities"), and Pledgor hereby grants
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to the Bank a security interest in and lien on all of the Pledged Securities.
The certificates representing the Pledged Securities are accompanied by stock
powers duly executed in blank by the Pledgor as the registered owner of the
Pledged Securities. The term "Pledged Securities" as used in this Agreement
shall include, in addition to the aforesaid securities, any other securities or
collateral which may from time to time be delivered to the Bank hereunder as
security for the Obligations, together with all the proceeds of any of the
foregoing.

      2. Obligations. The Pledged Securities from time to time held hereunder
shall secure the following obligations of Debtors (herein the "Obligations"):

         (a) The prompt and complete payment when due (whether by acceleration
or otherwise) of all amounts outstanding under the Credit Agreement and all
promissory notes and L/Cs issued in connection therewith, including, without
limitation, the Term Credit Notes in the maximum aggregate original principal
amount of $18,500,000, the Revolving Credit Note in the original principal
amount of $5,000,000 and all L/Cs;

         (b) Any and all other obligations of the Pledgor or other Debtor under
the Credit Agreement or under any other document, instrument, or agreement
executed and delivered pursuant thereto, including, without limitation, all
fees, expenses and costs thereunder; and

         (c) Any and all other liabilities and obligations of every name and
nature whatsoever of the Pledgor or other Debtor to the Bank, whether such
liabilities and obligations be direct or indirect, absolute or contingent,
secured or unsecured, now existing or hereafter arising or acquired, due or to
become due.

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      3. Representations and Warranties. The Pledgor hereby represents and
warrants to the Bank that:

         (a) The Pledgor is the legal, beneficial and record owner and has good
title to all of the Pledged Securities free and clear of all claims, mortgages,
pledges, liens, security interests and other encumbrances of every nature
whatsoever except to or in favor of the Bank hereunder;

         (b) All of the shares of Pledged Securities have been duly and validly
issued and are fully paid and non-assessable;

         (c) Except for any shares, options, warrants or other rights issued in
accordance with Section 4(b) hereof, the Pledged Securities constitute all the
issued and outstanding shares of capital stock of the issuer thereof as of the
date of this Agreement and, as of the date of this Agreement, there are no
outstanding no options, warrants or other rights to purchase or acquire any
additional shares of the capital stock of such issuer; and

         (d) The Pledgor has full corporate and other power and authority to
pledge the Pledged Securities as herein contemplated.

      4. Issues or Sales of Pledged Stock. (a) Except as permitted by Section
4(b) hereof, the Pledgor hereby covenants and agrees that,

         (i) it will not directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of the Pledged Securities;

         (ii) it will not permit the issuer of any of the Pledged Securities,
directly or indirectly, to issue or sell any additional shares of capital stock
or any options, warrants or rights to acquire such shares other than to Pledgor;
and

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         (iii) in the event that the issuer of any of the Pledged Securities
issues any additional shares of its capital stock to Pledgor, Pledgor will
pledge any such shares to the Bank pursuant to this Agreement.

         (b) Notwithstanding anything herein to the contrary, PSINet Japan K.K.
may issue shares of its capital stock and options, warrants or rights to acquire
shares of its capital stock, to directors officers, employees and/or consultants
as incentive or other compensation.

      5. Voting Rights of Pledgor. Provided that there exists no Event of
Default (as hereinafter defined) and so long as the Pledgor shall be the record
owner of the Pledged Securities, the Pledgor shall be entitled, to the extent
permitted by applicable law, to exercise voting power with respect to the
Pledged Securities; provided, however, that in no event shall the Pledgor
exercise such voting power in any manner contrary to or inconsistent with the
terms hereof or with the terms of the Agreement. Upon the occurrence of an Event
of Default which is continuing, the Bank shall have those rights specified in
paragraph 7 except to the extent that such rights may be limited by the laws of
the jurisdiction of organization of the issuer of the Pledged Securities.

      6. Distribution. Upon the dissolution, winding up, liquidation or
reorganization of any corporation or other entity which issued the Pledged
Securities, whether in bankruptcy, insolvency or receivership proceedings, or
upon an assignment for the benefit of creditors or otherwise, any sum to be paid
or any property to be distributed upon or with respect to any of the Pledged
Securities shall be paid over to the Bank to be held by it as collateral
security for the Obligations; provided that any cash distribution shall be
applied to outstanding Obligations. In the event that any stock dividend shall
be declared on any of the

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Pledged Securities, or any shares of stock or fractions thereof shall be issued
pursuant to any stock split involving any of the Pledged Securities, or any
property shall be distributed upon or with respect to any of the Pledged
Securities, the shares or other property so distributed shall be delivered to
the Bank, to be held as collateral security for the Obligations.

      7. Default. If any one or more of the following events, (herein referred
to as "Events of Default") shall occur:

         (a) Default shall be made in the due performance or observance of any
provision of this Agreement and such default shall continue for a period of
fifteen (15) days following the earlier to occur if (i) Pledgor shall become
aware of any such default or (ii) notice of any such default to Pledgor by Bank;

         (b) Any of the Obligations shall have become due by demand,
acceleration, maturity or otherwise and such Obligations have not been paid in
full; or

         (c) An Event of Default (as defined in the Credit Agreement) shall have
occurred and be continuing under the Credit Agreement;

then upon the occurrence of an Event of Default, the Bank shall have, (1) full
power and authority to sell or otherwise dispose of the Pledged Securities or
any part thereof, (2) after giving written notice to the Pledgor of its
intention to exercise such right, to vote the Pledged Securities with respect to
any and all matters and to exercise all rights to payments, conversion,
exchange, subscription or otherwise with respect to the Pledged Securities, or
(3) to exercise any and all rights and remedies of a secured party under the
Uniform Commercial Code, except to the extent that the foregoing rights may be
unavailable or limited by the laws of the jurisdiction of organization of the
issuer of the Pledged Securities.

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      To the extent permitted by applicable law with the agreement of the
Pledgor, any sale or other disposition by the Bank may be by public or private
proceedings and may be made by one or more contracts, as a unit or in parcels,
at such time and place, by such method, in such manner and on such terms as the
Bank may determine. To the extent permitted by applicable law, such sale or
other disposition may be made without advertisement or notice of any kind or to
any person. Where reasonable notification of the time or place of such sale or
other disposition is required by law, such requirement shall have been met if
such notice is telegraphed, cabled or mailed, postage prepaid, at least ten (10)
days before the time of such sale or other disposition to each person entitled
thereto at such person's address as specified in Section 16 below. To the extent
permitted by applicable law, the Bank or any other holder of the Obligations may
buy any or all of the Pledged Securities upon any public or private sale
thereof. To the extent permitted by applicable law, upon any such sale or sales,
the Pledged Securities so purchased shall be held by the purchaser absolutely
free from any claims or rights of whatsoever kind or nature, including any
equity of redemption or any similar rights, all such equity of redemption and
any similar rights being hereby expressly waived and released by the Pledgor to
the extent permitted by applicable law. In the event any consent, approval or
authorization of any governmental agency shall be necessary to effectuate any
such sale or sales, the Pledgor shall execute, and hereby agrees to cause the
issuer of any Pledged Securities to execute, as necessary, all applications or
other instruments as may be required; provided that the foregoing shall not
obligate the Pledgor to register the Pledged Securities under the Securities Act
of 1933 or under the securities laws of any other applicable jurisdiction. After
deducting all reasonable costs and expenses of collection, custody, sale or
other disposition or delivery (including legal costs and reasonable

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attorneys' fees) and all other charges due against the Pledged Securities
(including any charges of the type described in Section 10 below), the residue
of the proceeds of any such sale or other disposition shall be applied to the
payment of the Obligations in the order of priorities as is determined at the
time by the Bank, except as otherwise provided by applicable law or directed by
any court purporting to have jurisdiction thereof, and any surplus shall be
returned to the Pledgor, except as otherwise provided by law or such court. The
Pledgor shall be liable for any deficiency in payment of the Obligations,
including all costs and expenses of collection, custody, sale or other
disposition or delivery and all other charges due against the Pledged
Securities, as hereinbefore enumerated. As used in this Section 7, "applicable
law" shall include, without limitation, any applicable laws of the jurisdiction
of organization of the issuer of the Pledged Securities.

      The Pledgor recognizes that the Bank may be unable to effect a public sale
of all or a part of the Pledged Securities by reason of certain prohibitions
contained in the Securities Act of 1933 or the securities laws of any other
applicable jurisdiction, but may be compelled to resort to one or more private
sales to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire such Pledged Securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor agrees that private sales so made may be at a price and on other terms
less favorable to the seller than if such Pledged Securities were sold at public
sales, and that the Bank has no obligation to delay the sale of any such Pledged
Securities for the period of time necessary to permit such Pledged Securities to
be registered for public sale under the Securities Act of 1933 or the securities
laws of any other applicable jurisdiction. The Pledgor agrees that sales made
under the foregoing circumstances shall not be deemed to have been made in a
commercially

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unreasonable manner by virtue of any sale made on terms less favorable to the
seller resulting from the private nature of the sale. Subject to the foregoing,
the Bank agrees that any sale of the Pledged Securities made by the Bank shall
be made in a commercially reasonable manner.

      8. Transfer of Pledged Stock. The Pledgor hereby irrevocably appoints the
Bank as agent to arrange for any and all transfers of the Pledged Securities as
the Bank may from time to time deem advisable to assist the Bank in obtaining
the benefit of its security interest therein after the occurrence of an Event of
Default, including, but not limited to, the transfer of the Pledged Securities
into the name of the Bank or its nominee at any time following the occurrence of
an Event of Default, the foregoing appointment being deemed a power coupled with
an interest. The right to vote the Pledged Securities is governed by Paragraph 5
of this Agreement.

      9. Payment of Taxes, Charges, Etc. The Bank, at its option, may discharge
any taxes, charges, assessments, security interests, liens or other encumbrances
upon the Pledged Securities or otherwise protect the value thereof. All such
expenditures incurred by the Bank shall become payable by the Pledgor to the
Bank upon demand, shall bear interest at the rate applicable to the Loans.

      10. Duties with Respect to Collateral. The Bank shall have no duty to the
Pledgor with respect to the Pledged Securities other than the duty to use
reasonable care in the safe custody of any Pledged Securities in its possession.
Without limiting the generality of the foregoing, the Bank, although it may do
so at its option, shall be under no obligation to the Pledgor to take any steps
necessary to preserve rights in the Pledged Securities against other parties.

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      11. Waivers. The Pledgor hereby waives demand, payment, notice of dishonor
or protest and all other notices of any kind in connection with the Obligations
except notices required by law or by this or any other agreement between the
Pledgor and the Bank. Nothing herein shall modify or limit any right of the Bank
to release, supersede, exchange or modify any other collateral security which it
may from time to time hold and the Bank may release, surrender or modify the
liability of any third party without giving notice hereunder to the Pledgor and
any such modifications, changes, renewals, releases or other actions shall in no
way affect the Pledgor's obligations hereunder.

      12. Expenses. The Pledgor agrees to pay, indemnify and hold harmless the
Bank and the nominees of the Bank from and against all costs and expenses
(including taxes, if any) arising out of or incurred in connection with any
transfer of Pledged Securities into or out of the name of the Bank's nominees
and all costs and expenses of the Bank arising out of or incurred in connection
with the exercise by the Bank of its rights hereunder; provided, however, the
Debtor shall not be responsible for expenses arising out of or incurred as a
result of willful misconduct by the Bank.

      13. Statement as to Default. The Pledgor and the Bank agree that any
written statement by an officer of the Bank asserting the occurrence of an Event
of Default as the authorization for the exercise by the Bank of its rights
hereunder shall be presumed to be true, and that any purchaser of the Pledged
Securities at a foreclosure sale shall have the right to rely on such a
statement.

      14. Modification. This Agreement may not be modified or amended without
the prior written consent of the parties hereto.

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      15. Notices. All notices shall be deemed to have been given when delivered
in person, telefaxed to the number set forth below (with receipt acknowledged)
or, if mailed, when actually received by the party to whom addressed. Such
actual receipt shall be conclusively presumed if such notice shall be mailed by
registered or certified mail, addressed to any party at its address set forth
below or at any other address notified in writing to the other parties hereto,
and if the sender shall have received back a return receipt, or if telefaxed to
the number set forth below and receipt acknowledged.

         To the Bank:        Fleet National Bank
                             75 State Street, 4th Floor
                             Boston, Massachusetts 02109
                             Attention: Thomas W. Davies, III
                                          Vice President
                             Fax: (617) 346-1633

         With a copy to:     H. David Henken, Esq.
                             Goodwin, Procter & Hoar
                             Exchange Place
                             Boston, Massachusetts 02109-2881
                             Fax:  (617) 523-1231

         To the Debtor:      PSINet Inc.
                             510 Huntmar Park Drive
                             Herndon, VA 22070
                             Attention: President
                                          and
                                     David N. Kunkel,
                                          General Counsel
                             Fax:  (703) 904-4200

         With a copy to:     Nixon, Hargrave, Devans & Doyle, LLP
                             437 Madison Avenue
                             New York, New York 10022
                             Attention: Richard F. Langan, Jr., Esq.
                             Fax: (212) 940-3111

         16. Rights. No course of dealing between the Pledgor and the Bank nor
any delay in exercising, on the part of the Bank any right, power or privilege
hereunder, shall operate

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as a waiver thereof; nor shall any single or partial exercise of any rights,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
hereunder are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law, including, without limitation, the rights
and remedies of a secured party under the Uniform Commercial Code.

      17. Waiver of Subrogation. Pledgor hereby waives and releases any right of
subrogation it may have against the Bank or the Pledged Securities by reason of
any of the actions taken by the Bank hereunder, until all Obligations have been
paid in full.

      18. Binding Effect, Etc. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts, except to the extent that the laws of
the jurisdiction of organization of the issuer govern by virtue of such issuer's
organization in such other jurisdiction. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, including any other holder or holders of any Obligations and may be
executed in two or more counterparts, each of which shall together constitute
one and the same agreement.

      19. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision hereof.

      20. Foreign Law. Notwithstanding anything in this Agreement or the Credit
Agreement to the contrary, the Pledgor and the other Debtor make no
representation or warranty as to the validity or enforceability of this
Agreement under the laws of the jurisdiction of organization of the issuer of
the Pledged Securities.

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      IN WITNESS WHEREOF, the parties hereto have executed this Pledge Agreement
as of the date first above written.

                                                 PSINET INC.

                                                 By:  /s/ David N. Kunkel
                                                    ----------------------------
                                                 Title: Sr VP & Gen Counsel

                                                 FLEET NATIONAL BANK

                                                 By:   /s/ Thomas W. Davies
                                                    ----------------------------
                                                 Title: Vice President

                                                 By:  /s/ William E. Rurode
                                                    ----------------------------
                                                 Title: Senior Vice President

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                                    EXHIBIT A

                           List of Pledged Securities

         Name of Entity Issuing                            Description of
         the Pledged Securities                          Pledged Securities
         ----------------------                          ------------------
1.    EUNet GB Limited                                   500,000 shares,
      (a corporation organized under                     (pound)1.00
       the laws of the United Kingdom)

2.    PSINet Limited                                     2,000 shares of
      (a corporation organized under                     Common Stock, without
       the Canada Business Corporations Act)             par value


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