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                                                                    EXHIBIT 10.7


November 2, 1998


Mr. David J. Kramer
630 Blossom Drive
Rockville, MD  20850

Dear David:

This letter sets forth the terms and conditions which shall govern your
employment by PSINet Inc. (the "Company") as outlined below.

1.  EMPLOYMENT.

A)  The Company agrees to employ you as Vice President and Associate General
Counsel, reporting to the Vice President and Deputy General Counsel of the
Company or her designee.  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 vacation periods and sickness, to provide during standard business
hours a minimum of forty (40) hours per week of management services to the
Company, as determined by and under the direction of the Vice President and
Deputy General Counsel.

B)  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.

2.  TERM OF EMPLOYMENT.  The term of the employment shall commence on November
2, 1998, and shall continue for a period of three (3) years.

3.  COMPENSATION.

A)  BASE SALARY.  The Company shall pay you a base salary at the rate of
$175,000.00 per annum.  On January 1/st/ 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 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)  BONUS COMPENSATION.  The Company will pay you a bonus upon the successful
completion of the objectives established for your performance, which will be
measured on or about January of each year during the term of your employment
with the Company.  The performance criteria will be issued separately by the
Vice President and 
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Deputy General Counsel, and may be changed, with mutual fairness, from time to
time as situations develop. The target bonus for the period ending December 31,
1998 (start date through December 31, 1998) will be a total of up to $40,000.00.
Separate criteria will be established for your entitlement for the year starting
January 1, 1999. The performance bonus for subsequent years will be $50,000.00
or greater.

C)  INCENTIVE STOCK OPTIONS.   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 to
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.

4.  EMPLOYEE BENEFITS.  You shall be provided employee benefits, including
(without limitation) 401(k), four (4) weeks' paid vacation, and life, health,
accident and disability insurance under the Company's plans, policies and
programs available to employees in accordance with the provisions of such plans,
policies, and programs.

5.  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.  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.  Your employment may
also be terminated by the Company at any time without Cause provided the Company
shall have given you thirty (30) days' prior written notice of such termination.
That written notice must state whether the Company has elected to use the non-
Competition restriction (which decision may not be rescinded).  If you are
terminated by the Company without cause, you will be paid twenty-six (26) weeks
severance pay.  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.  By the 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 other than for Cause, and the Company has elected to use the non-
Competition restriction, you shall be entitled, for a period of twelve (12)
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 12-month period.  The Company shall make up
the 

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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, or any
material breach by you of this Agreement.

6.   AGREEMENT NOT TO COMPETE.

A)   In consideration of your employment pursuant to this Agreement and 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 twelve
(12) months following the termination of such employment (but only if the
Company has elected to enforce the restriction), you shall not, without the
prior 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 Director's 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 

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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.

7.  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
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.

8.  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, who shall assume and
agree to perform this Agreement.

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.

9.  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.

10. 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.

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11.  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.

12.  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.

13.  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.

Please confirm your agreement with the foregoing 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
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     WILLIAM L. SCHRADER
     CHAIRMAN & CEO



Accepted and Agreed to as of November 2, 1998:


By:     /s/ David J. Kramer
     -----------------------------
     DAVID J. KRAMER

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