Exhibit 10.5




                       MASTER RIGHT-OF-WAY LEASE AGREEMENT


                                     BETWEEN


                           COLONIAL PIPELINE COMPANY,
                             A DELAWARE CORPORATION


                                       AND


                        PATHNET TELECOMMUNICATIONS, INC.,
                             A DELAWARE CORPORATION



                         DATED: March 30, 2000







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                                TABLE OF CONTENTS

ARTICLE I.    AGREEMENT TO LICENSE..........................................   2
     1.1  LEASEHOLD INTERESTS...............................................   2
     1.2  PERMITS; SEGMENT LEASES...........................................   2
     1.3  TERM..............................................................   4
     1.4  REVERSION TO COLONIAL.............................................   4
     1.5  USE...............................................................   5

ARTICLE II.   CONSIDERATION; RENEWAL PAYMENTS; OTHER FEES AND EXPENSES......   5
     2.1  CONSIDERATION.....................................................   5
     2.2  RENEWAL PAYMENT...................................................   5
     2.3  EXPENSES..........................................................   7
     2.4  PAYMENTS..........................................................   8
     2.5  DEFAULT INTEREST..................................................   8

ARTICLE III.  INSTALLATION OF TELECOMMUNICATIONS NETWORK....................   8
     3.1  PERFECTION; PRE-INSTALLATION DETERMINATIONS.......................   8
     3.2  REQUIREMENTS FOR INSTALLATION OF THE TELECOMMUNICATIONS
          NETWORK AND THE PTI WORK..........................................  10
     3.3  SERVICES AGREEMENT WITH COLONIAL..................................  12
     3.4  COMPLETION OF PTI WORK............................................  13
     3.5  UNAUTHORIZED WORK.................................................  13

ARTICLE IV.   OPERATION, MAINTENANCE AND REPAIR.............................  14
     4.1  PTI OPERATION, MAINTENANCE AND REPAIR.............................  14
     4.2  WARRANTIES........................................................  14
     4.3  SUBCONTRACTORS....................................................  14
     4.4  COLONIAL INSPECTIONS..............................................  14

ARTICLE V.    PIPELINE MAINTENANCE AND REPAIR...............................  15
     5.1  PIPELINE MAINTENANCE AND REPAIR...................................  15

ARTICLE VI.   INSURANCE.....................................................  15
     6.1  ACQUISITION OF INSURANCE POLICIES.................................  15
     6.2  TYPES OF REQUIRED INSURANCE FOR PTI...............................  15
     6.3  TYPES OF REQUIRED INSURANCE FOR COLONIAL..........................  16
     6.4  TERMS OF INSURANCE................................................  16
     6.5  FAILURE TO MAINTAIN INSURANCE.....................................  17
     6.6  BLANKET POLICIES; SELF-INSURANCE..................................  17

ARTICLE VII.  INTENTIONALLY OMITTED.........................................  18

ARTICLE VIII. CONDEMNATION..................................................  18
     8.1  MATERIAL TAKING...................................................  18
     8.2  CONTINUATION OF AGREEMENT.........................................  18
     8.3  APPORTIONMENT OF AWARD(S).........................................  18

ARTICLE IX.   REPRESENTATIONS, WARRANTIES AND COVENANTS OF PTI..............  19
     9.1  PTI'S REPRESENTATIONS, WARRANTIES AND COVENANTS...................  19

ARTICLE X.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLONIAL.........  21
    10.1  COLONIAL'S REPRESENTATIONS, WARRANTIES AND COVENANTS..............  21

<PAGE>
ARTICLE XI.   INDEMNIFICATION; LIMITATION OF LIABILITY......................  22
    11.1  INDEMNIFICATION BY PTI............................................  22
    11.2  INDEMNIFICATION BY COLONIAL.......................................  22
    11.3  LIMITATION OF LIABILITY...........................................  23
    11.4  NO CONSEQUENTIAL OR SPECIAL DAMAGES...............................  23
    11.5  LEGAL PROCEEDINGS.................................................  23

ARTICLE XII.  DEFAULT.......................................................  24
    12.1  EVENT OF DEFAULT BY PTI...........................................  24
    12.2  EFFECT OF ARBITRATION.............................................  25
    12.3  REMEDIES OF COLONIAL..............................................  25
    12.4  EFFECT OF TERMINATION.............................................  25
    12.5  EVENT OF DEFAULT BY COLONIAL......................................  26
    12.6  NO WAIVERS........................................................  26
    12.7  NO REMEDY EXCLUSIVE...............................................  27
    12.8  FORCE MAJEURE.....................................................  27
    12.9  NO PERSONAL LIABILITY.............................................  27

ARTICLE XIII. VOLUNTARY REMOVAL OF TELECOMMUNICATIONS NETWORK...............  27
    13.1  REMOVAL OF TELECOMMUNICATIONS NETWORK BY PTI......................  27

ARTICLE XIV.  ARBITRATION...................................................  28
    14.1  ARBITRATION.......................................................  28
    14.2  SELECTION OF ARBITRATORS..........................................  28
    14.3  QUALIFIED ARBITRATORS.............................................  28
    14.4  ARBITRATION HEARING; DISCOVERY VENUE..............................  28
    14.5  DECISION..........................................................  29
    14.6  NON-BINDING IN CERTAIN EVENTS.....................................  29

ARTICLE XV.   ASSIGNMENT....................................................  29
    15.1  ASSIGNMENT BY PTI.................................................  29
    15.2  ASSIGNMENT BY COLONIAL............................................  30
    15.3  BINDING UPON SUCCESSORS AND ASSIGNS...............................  30

ARTICLE XVI.  CONFIDENTIALITY...............................................  30
    16.1  CONFIDENTIALITY...................................................  30

ARTICLE XVII. MISCELLANEOUS.................................................  30

    17.1   NOTICES..........................................................  30
    17.2   NO PARTNERSHIP...................................................  31
    17.3   TIME OF THE ESSENCE..............................................  31
    17.4   ENTIRE AGREEMENT.................................................  31
    17.5   CAPTIONS.........................................................  32
    17.6   MEANING OF TERMS.................................................  32
    17.7   AGREEMENT CONSTRUED AS A WHOLE...................................  32
    17.8   SEVERABILITY.....................................................  32
    17.9   SURVIVAL.........................................................  32
    17.10      AMENDMENT....................................................  32
    17.11      ATTORNEYS' FEES..............................................  32
    17.12      INTEREST.....................................................  32
    17.13      GOVERNING LAW................................................  33
    17.14      BUSINESS DAYS................................................  33
    17.15      REFERENCE DATE OF AGREEMENT..................................  33
    17.16      COUNTERPARTS.................................................  33
    17.17      EXHIBITS.....................................................  33

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<PAGE>
LIST OF EXHIBITS:


          Exhibit A           System Map
          Exhibit B           Form of Right-of-Way Permit
          Exhibit C           Form of Segment Lease
          Exhibit D           Currently Perfected Segments
          Exhibit E           General Colonial Construction Standards



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<PAGE>
LIST OF DEFINED TERMS:
- ----------------------

Agreement                                    Recitals
Applicable Laws                              Subsection 3.2(b)
Colonial                                     Recitals
Colonial Conduit                             Defined in the Fiber Optic
                                             Access and Purchase Agreement
Colonial  Construction  Standards  Subsection 3.2(c) Colonial Engineering Notice
Subsection  3.1(c) Colonial  Indemnified  Parties Section 11.1 Colonial  Parties
Subsection  10.1(f) Colonial Pipeline Recitals Colonial  Rights-of-Way  Recitals
Colonial System Recitals  Colonial  System Map Recitals  Conduit(s)  Section 1.5
Construction  Management Work Subsection  3.1(b)  Currently  Perfected  Segments
Subsection  2.3(b)  Default Rate Section  17.12  Designation  Notice  Subsection
1.2(a) Event of Default  Section 12.1 Fiber Optic Access and Purchase  Agreement
Subsection  1.1(a)  Governmental   Authorities   Subsection  2.3(a)  Impositions
Subsection  9.1(l)  Initial Term Section 1.3 Insurance  Requirements  Subsection
3.2(e)  Landowners   Subsection  2.3(a)  Leasehold  Interest  Subsection  1.1(a)
Material  Taking Section 8.1 Notice of Arbitration  Section 14.1  Perfection and
Construction Management Contractor Subsection 3.1(a) Perfection and Construction
Management  Work  Subsection  3.1(a)  Perfection   Expenses   Subsection  2.3(a)
Perfection   Process  Subsection  1.2(b)  Perfection  Rights  Subsection  1.2(b)
Permit(s)  Subsection  1.2(c) PTI Recitals PTI Indemnified  Parties Section 11.2
PTI Operation and Maintenance Services Section 4.1 PTI Parties Subsection 9.1(i)
PTI Stock Section 2.1 PTI Work Section 3.2 Related Facility(ies)  Recitals Regen
Facilities  Subsection  1.2(a) Renewal  Payment  Subsection  2.2(a) Renewal Term
Section 1.3 Required  Permits  Subsection  9.1(f)  Rerouted  Portion  Subsection
3.1(f) Reversion Date Subsection  1.4(a) Revised  Designation  Notice Subsection
1.2(c)  Right-of-Way  Agents Subsection 2.3(a) Route Engineering Work Subsection
3.1(b)
<PAGE>

Segment(s)                                   Subsection 1.2(a)
Segment Lease                                Subsection 1.2(c)
Services Agreement                           Section 3.3
Sub-Segment(s)                               Subsection 1.2(a)
Sub-Segment Lease                            Subsection 1.2(c)
Taking                                       Section 8.1
Telecommunications Network                   Section 1.5
Telecommunications Network Contractors       Subsection 3.2(f)
Term                                         Section 1.3
Trade Standards                              Subsection 3.2(e)
Undeployed Segments and Stations             Subsection 1.4(b)
<PAGE>


                       MASTER RIGHT-OF-WAY LEASE AGREEMENT


     THIS  MASTER  RIGHT-OF-WAY  LEASE  AGREEMENT  (the  "Agreement"),  made and
entered into as of this 30th_ day of March,  2000, 1999, by and between COLONIAL
PIPELINE   COMPANY,   a   Delaware   corporation    ("Colonial")   and   PATHNET
TELECOMMUNICATIONS, INC., a Delaware corporation ("PTI").

                              W I T N E S S E T H:

     WHEREAS,   Colonial   transports   refined  liquid  petroleum  products  in
interstate  commerce as a common carrier and maintains a system of pipelines and
related  facilities across fourteen states and the District of Columbia for such
purposes (the "Colonial System");

          WHEREAS, the Colonial System consists of (a) pipelines  (collectively,
the  "Colonial   Pipeline")   located  on  certain   interests  in  land  (e.g.,
rights-of-way,  easements,  licenses,  permits, leases, etc. [collectively,  the
"Colonial  Rights-of-Way"]),  and (b) injection stations, booster stations, tank
farms, delivery locations and terminals (collectively, the "Related Facilities")
located on certain other tracts of land owned in fee or leased by Colonial,  all
of which Colonial Rights-of-Way and Related Facilities are located approximately
as shown on that certain system map of the Colonial  System,  attached hereto as
Exhibit A and made a part hereof (the "Colonial System Map");

     WHEREAS,  PTI desires the right to use designated portions of the currently
existing   Colonial   System  for  the  purpose  of  installing   and  operating
communications facilities,  including, but not limited to, fiber optic conduits,
regeneration stations and related machinery and equipment for the operation of a
telecommunications network;

     WHEREAS,  Colonial  desires  to lease  to PTI  designated  portions  of the
Colonial Rights-of-Way and Related Facilities to use for the aforesaid purposes,
subject to applicable title  restrictions and  encumbrances,  and upon the terms
and conditions hereinafter set forth; and

     WHEREAS,  Colonial and PTI desire to enter into this  Agreement in order to
set forth the terms and conditions of the foregoing.

     NOW,  THEREFORE,  for and in  consideration  of the  premises  hereof,  the
covenants contained herein, the sum of Ten and No/100 Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Colonial and PTI hereby agree as follows:



<PAGE>
                                    ARTICLE I
                               AGREEMENT TO LEASE

     1.1  Leasehold Interests.

          (a) Subject to all of the terms and conditions of this Agreement,  and
that certain Fiber Optic Access and Purchase  Agreement entered into by Colonial
and PTI  contemporaneously  herewith  (the  "Fiber  Optic  Access  and  Purchase
Agreement"),  Colonial  agrees to lease to PTI the right to use  portions of the
currently  existing Colonial  Rights-of-Way and Related  Facilities for the uses
and purposes  described  herein (each such portion leased to PTI pursuant to the
terms  hereof  being a  "Leasehold  Interest").  The  Leasehold  Interests to be
granted hereby include the non-exclusive use of a strip of land five (5) feet on
either  side  of  the   centerline   of  the   telecommunication   conduits  and
appurtenances  to  be  installed   hereunder  within  the  designated   Colonial
Rights-of-Way,  or such  larger  area  as may be  reasonably  necessary  for the
construction  and operation of the  "Telecommunications  Network" (as defined in
Section 1.5  hereof),  as approved by Colonial in  accordance  with  Article III
hereof; provided that, if necessary along a particular "Segment" (as hereinafter
defined),   PTI  may  request  that  Colonial  attempt  to  acquire   additional
right-of-way  at  PTI's  expense,  to  be  included  as  part  of  the  Colonial
Rights-of-Way for the purposes hereof.

          (b) In the event that Colonial  expands the Colonial System beyond its
current  boundaries as of the date hereof, and should PTI desire to utilize such
expansion,  then  Colonial  and PTI will  negotiate  in good faith to extend the
Leasehold  Interests to be granted hereunder to include the additional  Colonial
Rights-of-Way  applicable  to such  extensions  of the  Colonial  System  and to
determine the compensation to be received by Colonial therefor.

          (c) PTI's rights in the Colonial  Rights-of-Way and Related Facilities
hereunder  consist  solely of Leasehold  Interests  subject to the terms of this
Agreement and PTI does not acquire  hereby any other or additional  rights in or
to any portion of the  Colonial  Rights-of-Way  or any Related  Facilities.  PTI
further  acknowledges that Colonial hereby reserves such access and other rights
as are necessary to enable  Colonial to reasonably  commercialize  the "Colonial
Conduit"  (as  defined  in the  Fiber  Optic  Access  and  Purchase  Agreement),
including, without limitation, full rights of access with respect to any portion
of the Colonial Rights-of-Way otherwise leased to PTI in order to allow Colonial
(or its  assignee(s) or licensee(s) to maintain,  operate,  repair,  replace and
upgrade the Colonial Conduit as necessary or appropriate.

     1.2  Permits; Segment Leases.

          (a) From  time to time,  PTI shall  designate,  by  written  notice to
Colonial  (each, a  "Designation  Notice"),  specified  segments of the Colonial
System with respect to which PTI desires to acquire  Leasehold  Interests.  Each
such Designation Notice shall identify or describe, as applicable: (i) a segment
or  segments  of the  Colonial  Rights-of-Way  within the  Colonial  System (the
"Segment(s)"),  using Colonial's  location number references as beginning points
and ending points, and shall describe the approximate distance of the applicable
Segment(s);  (ii)  one or more of the  Related  Facilities  along  the  Colonial
System; (iii) the types of



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<PAGE>

facilities PTI intends to install (i.e., regeneration facilities ("Regen
Facilities"), junctions, terminals, etc.); and (iv) the number of conduits PTI
plans to install within the Segment(s).

          (b)  Subject  to  Section  3.3 below,  within  thirty  (30) days after
receipt of a Designation Notice, Colonial shall prepare,  execute and deliver to
PTI  a  segment  lease  for  the  applicable  Segment  or  Related  Facility  in
substantially  the form set forth on Exhibit B  attached  hereto and made a part
hereof (each,  a "Segment  Lease").  Upon the execution by Colonial of a Segment
Lease,  Colonial  also shall  notify PTI of the exact  number of  Conduits  that
Colonial determines,  in its reasonable  discretion,  may be installed along the
applicable  Segment in  question  without  material  interference  with the use,
operation and maintenance of the Colonial Pipeline in the applicable  portion of
the  Colonial  Rights-of-Way  and/or  without  compromising  the  safety  of the
Colonial  Pipeline.  If Colonial does not own the applicable  Segment or Related
Facility  in fee,  each such  Segment  Lease  shall have  attached as an exhibit
thereto a description of the  applicable  leases,  easements,  licenses or other
similar  agreements  (together  with all amendments or  modifications  thereto),
pursuant to which  Colonial  has the right to use such  portion of the  Colonial
Rights-of-Way or Related Facility. Colonial also shall provide or otherwise make
available to PTI such documents,  agreements and  information  pertaining to the
Colonial System, the Colonial Rights-of-Way and or Related Facilities as PTI may
reasonably request.  Upon execution and delivery of a completed Segment Lease by
Colonial and PTI, the terms of such Segment Lease will be incorporated into this
Agreement and become subject to its terms and conditions,  subject,  however, to
modification in accordance with the terms of applicable  "Permits" (as described
in  Subsection  1.2(c) below issued  hereunder).  A Segment  Lease shall signify
Colonial's  authority for PTI to proceed with the  modification of such existing
leases, easements, licenses and other agreements to which Colonial is a party in
order to obtain the rights (the "Perfection Rights") for PTI to install, operate
and maintain the Telecommunications Network and the Colonial Conduit through the
designated Segments of the Colonial Rights-of-Way (collectively, the "Perfection
Process").  Each such Segment Lease shall confirm,  however,  that PTI shall not
have the right to  commence  any "PTI Work" (as  defined in Section  3.2 hereof)
until  compliance by PTI with the applicable  provisions of Sections 3.1 and 3.2
hereof.

          (c) PTI shall  notify  Colonial  in  writing  upon  completion  of the
Perfection  Process with respect to a  particular  Segment or Related  Facility,
such Perfection  Process to be performed in accordance with the terms of Section
3.1 below. After completion of the pre-installation  determinations described in
Subsections  3.1(b)-(d) hereof,  Colonial shall prepare,  execute and deliver to
PTI a Permit for the applicable  Segment Lease,  in  substantially  the form set
forth on Exhibit C attached  hereto and made a part hereof  (each,  a "Permit").
PTI's right to use the Leasehold Interests described herein for the installation
and operation of the  "Telecommunications  Network" (as described in Section 1.5
hereof) shall become  effective  with respect to a particular  Segment  and/or a
particular  Related  Facility  only  upon  the  execution  and  delivery  of the
applicable Permit for such Segment or Related Facility;  provided, however, that
PTI may request  that a Segment  Lease be divided  into  sub-segments  for "mini
construction  spreads" (hereinafter defined as "Sub-Segment(s)") of no less than
fifteen (15) miles in length.  In such event, PTI shall establish the applicable
Sub-Segment by delivering to Colonial a modification  to a previously  delivered
Designation Notice (a "Revised Designation Notice").



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<PAGE>

Receipt of same by Colonial shall  authorize  Colonial,  upon  completion of the
Perfection  Process  with  respect  to such  Sub-Segment,  to  deliver  to PTI a
"Sub-Segment Lease" for the applicable  Sub-Segment that conforms to the Revised
Designation Notice.

          (d) The books and records of Colonial shall be prima facie evidence of
the location and legal  description  of any  applicable  portion of the Colonial
Rights-of-Way  or Related  Facility  in any  dispute  between  Colonial  and PTI
relating to this Agreement.

     1.3  Term.  The  initial  term of this  Agreement  shall be for a period of
thirty (30) years from and after the date hereof (the "Initial Term").  Provided
that PTI is not in  default  hereunder,  PTI  shall  have the right to renew the
Initial Term for one (1) ten (10) year period (the  "Renewal  Term"),  by giving
written  notice to Colonial of the  exercise of such right not later than twelve
(12)  months  prior to the  expiration  of the  Initial  Term and by  paying  to
Colonial,  upon  the  termination  of the  Initial  Term,  the  renewal  payment
described  in Article II hereof.  PTI's use of its rights  hereunder  during the
Renewal  Term  shall be on the same terms and  conditions  as  provided  in this
Agreement.  Whenever  the word  "Term"  is used in this  Agreement,  it shall be
deemed to mean the Initial Term together with, if applicable, the Renewal Term.

     1.4  Reversion to Colonial.

          (a) In the event that, as of the fifth (5th)  anniversary  of the date
of  this  Agreement  (the   "Reversion   Date"),   PTI  has  not  installed  its
Telecommunications  Network  with  respect to at least  2,200  miles of Colonial
Rights-of-Way  throughout the Colonial System,  then PTI shall have the right to
issue a  Designation  Notice,  within ten (10) days after said  Reversion  Date,
designating  additional  Segments of the  Colonial  Rights-of-Way  (and  Related
Facilities)  which, when added to the Segments for which Permits previously have
been  granted to PTI,  will equal 2,200 miles or less.  In such event,  upon the
execution  and  delivery  of  appropriate  Segment  Leases  for such  additional
designated portions of the Colonial  Rights-of-Way and Related Facilities,  then
PTI  shall  have the  right to use  such  Segments  and  Related  Facilities  in
accordance with the terms of this Agreement.

          (b) All  other  portions  of the  Colonial  Rights-of-Way  or  Related
Facilities  (i) in  which  PTI has not  then  installed  its  Telecommunications
Network;  and (ii)  that are not then the  subject  of  Designation  Notices  as
described in Subsection 1.4(a) above will revert to Colonial as of the thirtieth
(30th) day after the Reversion Date. If any such reversion occurs, (aa) PTI will
have  no  further   rights  with  respect  to  such  portions  of  the  Colonial
Rights-of-Way or Related Facilities (collectively,  the "Undeployed Segments and
Stations")  and (bb) the  Undeployed  Segments  and  Stations  will no longer be
subject to the terms and  conditions of this Agreement or the Fiber Optic Access
and Purchase Agreement.  Additionally, at the end of the second (2nd) year after
the  Reversion  Date,  any  Segment  of the  Colonial  Rights-of-Way  or Related
Facilities that is the subject of Designation Notices as described in Subsection
1.4(a) above will be released  from the  exclusivity  restrictions  set forth in
Section 3 of the Fiber Optic Access and Purchase  Agreement  from and after such
date unless (x) PTI has then  installed its  Telecommunications  Network  within
such Segment,  or (y) PTI is then proceeding with such  installation  process in
good faith and with diligent efforts. Upon the release of any such



                                       -4-
<PAGE>

Segments or Related  Facilities from said exclusivity  restrictions as described
in the immediately  preceding sentence,  PTI shall continue to have the right to
install its Telecommunications  Network within the applicable Segments and/or at
such Related  Facilities;  provided that PTI's rights under this  Agreement with
respect  to such  Segments  or Related  Facilities  then shall be subject to the
rights  of other  parties,  if any,  claiming  by,  through  or under  Colonial;
provided,  however,  that although Colonial acknowledges that it shall not grant
"exclusive  rights" to any such other parties,  PTI acknowledges  that there are
space  limitations  within the Colonial  Rights-of-Way  and that any granting by
Colonial  of rights to other  parties  for the last  remaining  available  space
within a Segment  or  portion  thereof  shall not  constitute  the  granting  of
"exclusive rights" for the purposes hereof.

     1.5 Use. PTI  acknowledges and agrees that the property to be leased to PTI
hereunder may be used only for the purpose of installing,  constructing,  using,
operating, maintaining, repairing and replacing a fiber optic telecommunications
network  consisting of not more than ten (10)  telecommunications  conduits (the
"Conduit(s)")  within a given Segment (together with appurtenant and necessarily
related Regen  Facilities and other  telecommunications  machinery and equipment
(collectively, the "Telecommunications Network")), the exact number and location
of Conduits to be located  within a given Segment to be determined in accordance
with the terms and conditions of Subsection 1.2(b) and Article III hereof.

                                   ARTICLE II
             CONSIDERATION; RENEWAL PAYMENT; OTHER FEES AND EXPENSES

     2.1 Consideration.  The parties hereto  acknowledge that,  pursuant to that
certain  Contribution  Agreement,  by and between  Colonial and PTI, dated as of
November 2,  1999,  Colonial  and  PTI  have agreed that,  in  consideration  of
Colonial's  permission to allow PTI to use  designated  portions of the Colonial
Rights-of-Way as described  herein for the Initial Term,  Colonial has received,
simultaneously  with the  execution  of this  Agreement  ONE MILLION SIX HUNDRED
EIGHTY  FOUR  THOUSAND  ONE  HUNDRED  FIFTEEN  (1,684,115) shares  of  Series  D
convertible preferred stock of PTI (collectively, the "PTI Stock").

     2.2  Renewal Payment.

           (a) In the event that PTI  exercises  its right to extend the Term of
this Agreement for the Renewal Term, PTI shall pay to Colonial, on or before the
expiration  of the Initial  Term, a renewal  payment  equal to the  then-current
"fair  market  value" of the  Leasehold  Interests  to be  granted  herein  (the
"Renewal Payment").

          (b) Within  the thirty  (30) day  period  commencing  upon  Colonial's
receipt of PTI's  written  notice of renewal as  described in Section 1.3 above,
Colonial and PTI shall  negotiate in good faith in order to determine a mutually
satisfactory  amount for the Renewal Payment.  If Colonial and PTI fail to agree
upon the amount of such Renewal Payment within such thirty (30) day period, then
the renewal payment will be determined by the following third party  independent
appraisal procedure:



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<PAGE>

               (i) The parties shall  attempt to agree upon a single  appraiser;
     however,  if the  parties  are  unable to agree  upon an  appraiser  within
     fifteen (15) days after the  expiration of the thirty (30) day  negotiation
     period described in the first sentence of this Subsection 2.2(b), then each
     party shall appoint an appraiser  within five (5) days after the expiration
     of the initial fifteen (15) day period. Upon the appointment of the two (2)
     appraisers,  said  appraisers,  within  five (5)  Business  Days  after the
     appointment of the second appraiser,  and before exchanging views as to the
     question  at issue,  shall  appoint in writing a third  appraiser  and give
     written notice of such  appointment to the parties.  If any appraiser shall
     not be  appointed  or agreed  upon within the time  herein  provided,  then
     either of the parties may apply to the United States District Court for the
     Northern  District of Georgia for such  appointment.  The appraisers  shall
     have  thirty  (30)  days  from  the  date of the  appointment  of the  last
     appraiser to provide a determination under this Section 2.2.

               (ii) Any appraiser  appointed  hereunder shall be a member of the
     MAI and shall have no less than five (5) years  experience in the appraisal
     of comparable assets or rights.

               (iii)  In  the  event  any   appraiser   appointed  as  aforesaid
     thereafter shall die or become unable or unwilling to act, such appraiser's
     successor  shall be appointed  in the same manner  provided in this Section
     2.2 for the  appointment  of the  appraiser so dying or becoming  unable or
     unwilling to act.

               (iv) The question to be  determined by the  appraisers  shall be:
     "What is the then fair  market  value of the  renewal of the rights  leased
     under the Segment Leases?"

               (v) For the  purposes of this  Section 2.2, the term "fair market
     value" shall mean the highest  price for cash that the rights  leased under
     the Segment  Leases would bring in a competitive  and open market under all
     conditions  requisite to a fair transaction with the lessor and lessee each
     acting prudently and knowledgeably, and subtracting therefrom the costs and
     expenses of such a transaction,  including, without limitation, commissions
     and legal fees and assuming further that (aa) such price is not affected by
     undue stimulus;  (bb) lessor and lessee are typically motivated;  (cc) both
     parties are  well-informed  or well-advised  and are each acting in what it
     considers  its own best  interest;  (dd) a  reasonable  time is allowed for
     exposure  on  the  open  market;  (ee)  payment  is  made  in  cash  or its
     equivalent; and (ff) to the extent applicable,  that the Telecommunications
     Facilities  to be installed and operated on the Colonial  Rights-of-Way  in
     connection with such renewal already have been installed.

               (vi)  As  applicable,   the  determination  of  (aa)  the  single
     agreed-upon appraiser,  or (bb) the concurring  determination of any two of
     the three appraisers shall be binding upon Colonial and PTI; provided that,
     in  the  event  no  two  of  the  appraisers   shall  render  a  concurring
     determination,  then  the  average  of the two  appraised  values  that are
     closest in amount shall be binding upon Colonial and PTI.



                                       -6-
<PAGE>

               (vii) The fees and expenses of the appraiser(s)  shall be divided
     equally between the two parties to the transaction.

               (viii) Wherever the  determination  of "fair market value" of the
     rights licensed  hereunder is at issue,  the procedure  established in this
     Section 2.2 shall be binding upon Colonial and PTI and shall be a condition
     precedent  to the  filing  of any  action  at law or in equity by any party
     hereto.

          (c) PTI will not be  entitled  to any  return  or refund of all or any
     portion of either the PTI Stock or any Renewal  Payment in the event of any
     termination  of this Agreement "for cause" by Colonial or in the event that
     PTI  elects  not to use or is  prohibited  from  using any  portion  of the
     Colonial  Rights-of-Way  or Related  Facilities for the purposes  described
     herein,  including,  without  limitation,  any  portions  of  the  Colonial
     Rights-of-Way  that become  Undeployed  Segments and  Stations  pursuant to
     Section 1.4 hereof.

     2.3  Expenses.

          (a) Except to the extent that  Colonial is obligated for same pursuant
to the "Services  Agreement" described in Section 3.3 hereof, PTI will be solely
responsible  for all costs and expenses of any nature  whatsoever  in connection
with:

               (i) all aspects of the  Perfection  Process  (including,  without
     limitation,  any payments to the fee owners,  ground  lessors or lessees of
     applicable  land  (collectively,   the  "Landowners")  or  to  contractors,
     right-of-way agents and other brokers,  agents,  consultants or other third
     parties (collectively, "Right-of-Way Agents") for the purposes of assisting
     in  such  Perfection  Process  (all  of the  foregoing  being  collectively
     referred to as the "Perfection Expenses");

               (ii) the construction, installation, use, operation, maintenance,
     repair, replacement and/or removal of the Telecommunications Network or any
     portion thereof in accordance with the requirements of Articles III, IV and
     IX hereof; and

               (iii)  any  construction,  grading  or other  work of any  nature
     whatsoever  required  by  any  state,   county,   municipal  and/or  tribal
     governments, and/or the appropriate agencies, offices, departments, boards,
     bureaus,  authorities or  commissions  thereof with  jurisdiction  over the
     matter in question (collectively,  the "Governmental Authorities") in order
     to allow  the use of  applicable  portions  of the  Colonial  Rights-of-Way
     and/or  Related  Facilities  for the  deployment of the  Telecommunications
     Network;

          (b) PTI  acknowledges  that,  as of the date hereof,  Colonial has not
completed the Perfection Process with respect to the Colonial Rights-of-Way, but
has  substantially  completed  the  Perfection  Process  with respect to certain
segments of the Colonial  Rights-of-Way  described on Exhibit D attached  hereto
and made a part hereof (collectively,  the "Currently Perfected Segments"). Upon
the  issuance  of a  Designation  Notice  by PTI  with  respect  to a  Currently
Perfected Segment, PTI will reimburse Colonial for all actual and reasonable



                                       -7-
<PAGE>

Perfection Expenses for such Currently Perfected Segments, such reimbursement to
be made within thirty (30) days of receipt of an invoice from  Colonial,  and to
be  calculated in accordance  with the methods and  procedures  described in the
Services Agreement.

     2.4 Payments.  All rentals,  license fees,  Renewal Payments,  expenses and
other payments or reimbursements  to be paid by PTI to Colonial  hereunder shall
be payable in lawful money of the United States of America.  All payments  shall
be made by PTI to Colonial without notice or demand,  deduction or offset at the
address provided in Section 17.1 hereof.

     2.5 Default Interest. In the event that any payment or reimbursement is not
paid  within  ten (10) days after  written  notice of such  nonpayment  is given
pursuant to Section  12.1  hereof,  then  interest  shall  accrue on such unpaid
payment or reimbursement at the "Default Rate" described in Section 17.12 hereof
from the date such payment or reimbursement was due until finally paid.

                                   ARTICLE III
                   INSTALLATION OF TELECOMMUNICATIONS NETWORK

     3.1  Perfection; Pre-Installation Determinations.

          (a) The parties  hereto  agree that PTI shall be obligated to complete
the Perfection Process for the right to install the  Telecommunications  Network
and the  Colonial  Conduit  within  any  discrete  portion  of a Segment  before
commencing  any "PTI Work" (as  defined  in  Section  3.2  hereof)  within  such
portion, unless PTI receives Colonial's express written permission not to do so,
which  permission  will be based,  among other matters,  upon PTI's agreement to
indemnify  Colonial for any liabilities  described in Subsection 11.1(c) hereof.
PTI will use good faith  efforts to obtain  Perfection  Rights in a manner  that
provides   authority   generally  to  install  and  operate   telecommunications
facilities  along the Colonial  Rights-of-Way,  such good faith efforts to be as
follows: Prior to and during the Perfection Process,  Colonial and PTI will work
together to create and modify Perfection Process  methodologies that balance (i)
Colonial's  interest  in  maximizing  "broad  form"  perfection  and (ii)  PTI's
interest  in  controlling  perfection  costs  and  minimizing  delays.  If it is
determined that there is an incremental cost difference  between (aa) broad form
perfection and (bb) the minimum Perfection Rights that are necessary in order to
install  PTI's  Telecommunications  Network and the Colonial  Conduit  along the
applicable  property,  then  Colonial  shall  have the  option  of  paying  such
difference.

          (b) Within  thirty (30) days after PTI's  designation  of a Segment or
Related Facility pursuant to Section 1.2 hereof,  Colonial,  at its own cost and
expense,  (along with any other  potential  contractor that PTI may consider for
such work) shall prepare a proposal for  completion of the  Perfection  Process,
route  engineering  that  may be  necessary  prior  to the  installation  of the
Telecommunications  Network  ("Route  Engineering  Work") and the performance of
construction   management  services  in  connection  with  installation  of  the
Telecommunications  Network  ("Construction  Management  Work";  the  Perfection
Process,  Route  Engineering  Work and  Construction  Management  Work sometimes
collectively  referred to as "Perfection  and  Construction  Management  Work").
Colonial acknowledges that PTI shall



                                       -8-
<PAGE>

have no obligation to select Colonial for the performance of such Perfection and
Construction  Management Work; provided,  however, that in the event Colonial is
not  selected to perform  such  Perfection  and  Construction  Management  Work,
Colonial  nevertheless  shall have the right to approve the contractor that will
perform such Perfection and  Construction  Management Work (the  "Perfection and
Construction  Management  Contractor")  in  accordance  with the  provisions  of
Subsection  3.2(f)  hereof.  Colonial  also  shall  have the  right  to  review,
supervise and approve,  jointly with PTI, the performance of all such Perfection
and Construction  Management Work and to receive periodic  progress reports from
the Perfection and Construction  Management  Contractor (if not Colonial) during
the course of performance of the Perfection and Construction Management Work.

          (c) PTI shall  notify  Colonial  in  writing  upon  completion  of the
Perfection  Process as to a Segment of the Colonial  Rights-of-Way or a discrete
portion of such  Segment.  Within thirty (30) days after receipt of such notice,
Colonial shall notify PTI in writing (the "Colonial Engineering Notice") of:

               (i) the exact  location  in which PTI may  install  the  Conduits
     within such Segment of the Colonial Rights-of-Way or the applicable portion
     thereof (such location to be, whenever possible, running along a centerline
     located not less than five (5) feet from an outer right-of-way  boundary of
     the Segment in question,  but no closer than ten (10) feet from the closest
     pipeline within the Segment in question); and

               (ii)  any  special   conditions   regarding   any   construction,
     installation,  use or operation that must be conducted  within such Segment
     or the  applicable  portion  thereof or Related  Facility and not otherwise
     generally  described  herein  (including,  without  limitation,  the timing
     deadlines  for  the  completion  of  the  applicable   work  on  any  given
     Landowner's   property)  that  are  necessary,   in  Colonial's  reasonable
     determination,  to prevent  or limit  material  interference  with the use,
     operation and maintenance of Colonial's  Pipeline in the applicable portion
     of the Colonial Rights-of-Way, to prevent any compromising of the safety of
     the Colonial  Pipeline and/or,  in the case of construction  schedules,  to
     maintain good relations with Landowners on the Colonial Rights-of-Way.

Colonial will attempt to develop general  guidelines for such  determinations to
the  extent  reasonably  feasible  in order  to  provide  PTI  with  appropriate
flexibility so long as development is consistent with such guidelines.  If PTI's
concerns  cannot  be  resolved  without   re-routing  or  obtaining   additional
Perfection Rights, the cost of same shall be borne by PTI.

     (d) If PTI objects to any of the  determinations  made by Colonial pursuant
to  Subsection  3.1(c)  above or to the  determination  of the  exact  number of
Conduits to be allowed, as described in the second sentence of Subsection 1.2(b)
above,  then,  upon PTI's written  request to Colonial  within fifteen (15) days
after  receipt of the  Colonial  Engineering  Notice (or other  notice  provided
pursuant to Subsection  1.2(b), as applicable),  representatives of each party's
appropriate  departments  will meet to discuss the  concerns of both parties and
possible resolutions.  If the parties are not able to resolve the dispute within
ten (10) days after the first



                                       -9-
<PAGE>

meeting,  then either  party may elect to escalate  the issue to the senior vice
president level and/or any comparable  executive-level officer of each party for
good  faith  discussions  to  resolve  the  matter.  It is the  intent  of  such
discussions  to find a resolution  that protects the safety and integrity of the
Colonial System,  while minimizing to the extent reasonably possible the harm to
PTI that may result from a limitation on the permitted  number of Conduits to be
developed or other restrictions imposed by Colonial. If, after such discussions,
the  parties are unable to reach  agreement,  then the  decision  of  Colonial's
applicable executive-level officer shall be final as to the matter in question.

          (e) As referenced in Subsection 1.2(b),  Permits shall be prepared and
executed   upon   completion   of  the   Perfection   Process   and  the   other
pre-installation determinations described in Subsections 3.1(b)-(d) above. Among
other  matters,  said Permits shall have the effect of modifying the  applicable
Segment  Leases  by  limiting  the  areas  leased  to PTI  within  the  Colonial
Rights-of-Way to the areas specifically described in the Permits.

          (f) In circumstances in which PTI elects not to install its facilities
within  a  portion  of the  Colonial  Rights-of-Way  and  instead  installs  its
facilities  on land that is adjacent to or within five (5) miles of such portion
(the "Rerouted  Portion"),  PTI agrees (i) to comply with the Perfection Process
and other  requirements  of this Section 3.1 with respect to all parcels of land
which are within the Rerouted  Portion and which are not owned by, or subject to
leases,  easements  or other  right-of-way  grants  in favor  of,  utilities  or
government  authorities   (including,   without  limitation,   railroad,   power
companies,  pipeline  companies,  and  federal,  state or local  governments  or
agencies) and (ii) to provide contemporaneous written notice to Colonial of such
reroute, identifying the Rerouted Portion in reasonable detail.

     3.2 Requirements for Installation of the Telecommunications Network and the
PTI Work. All work to be performed by or on behalf of PTI in connection with the
development,  construction,  installation,  operation, maintenance and repair of
PTI's  Telecommunications  Network  within any  applicable  Segments of Colonial
Rights-of-Way  or at any Related  Facility  (collectively,  "PTI Work") shall be
subject in all events to the following terms and conditions, the satisfaction of
which shall be at the sole cost and expense of PTI:

          (a)  The   plans  and   specifications   for  all  PTI  Work  and  any
     modifications  thereto  must be approved in advance by Colonial  and no PTI
     Work may commence until receipt of such  approval,  which approval will not
     be unreasonably  withheld. PTI shall deliver to Colonial, for its approval,
     complete detailed  engineering and design plans and  specifications for the
     performance of the PTI Work on the applicable  Segment or at the applicable
     Related Facility,  including,  without limitation, all construction methods
     and staging areas to be used in connection  with the same.  Colonial  shall
     approve, or propose  modifications,  within thirty (30) days of its receipt
     of such plans and  specifications or revised plans and  specifications,  as
     applicable.  In the event of any dispute between Colonial and PTI regarding
     such approval, the matter shall be referred to the Head Engineer of each of
     PTI and Colonial for resolution.



                                      -10-
<PAGE>

          (b) All PTI Work shall be performed in a good and workmanlike  manner,
     free and clear of all mechanics' and  materialmen's  liens and encumbrances
     related  thereto and in accordance  with all applicable  present and future
     statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
     concessions,  franchises  and  similar  items  of or  from  all  applicable
     Governmental  Authorities with jurisdiction over the applicable portions of
     the Colonial  Rights-of-Way  and/or the Related  Facilities and the use and
     operation thereof (including,  without limitation, any rules or regulations
     issued by the Department of Transportation  or the Occupational  Safety and
     Health  Administration,  and all applicable  judicial,  administrative  and
     regulatory  decrees,  judgments and orders relating thereto  (collectively,
     "Applicable Laws").

          (c) All PTI Work shall be  performed  in  accordance  with the general
     construction  requirements and  specifications for work within the Colonial
     Rights-of-Way  or at the applicable  Related  Facility  attached  hereto as
     Exhibit E and made a part hereof (the "Colonial Construction Standards").

          (d) All PTI Work with respect to the initial development, construction
     and  installation of any portion of the  Telecommunications  Network within
     any  applicable  Segments  of  Colonial  Rights-of-Way  or at  any  Related
     Facilities  must be  performed  in  accordance  with all general or special
     conditions or requirements noted on the applicable Permits.

          (e) All PTI Work shall be performed in  accordance  with all standards
     or  requirements,  whether  now or  hereafter  in force,  issued by (i) any
     insurer  or  insurance  carrier,  board of fire  underwriters  or any other
     company,  bureau,  organization  or entity  performing  the same or similar
     functions  applicable  to  the  Telecommunications  Network,  the  Colonial
     Pipeline  and/or  the  Related  Facilities  (collectively,  the  "Insurance
     Requirements");  and (ii) the American Society of Mechanical Engineers, the
     American Petroleum Institute,  the National Electrical Safety Code, and the
     National  Association  of  Corrosion  Engineers  (collectively,  the "Trade
     Standards").

          (f) All contractors,  materialmen, mechanics and any other parties who
     may  perform  work in, on or about  the  Colonial  Rights-of-Way  or at the
     applicable  Related  Facilities  for the benefit of the  Telecommunications
     Network pursuant to agreements with PTI (collectively,  "Telecommunications
     Network  Contractors")  (i) must be approved in advance by  Colonial;  (ii)
     must submit for review and  approval by Colonial  satisfactory  evidence of
     contractor's liability and worker's compensation insurance;  and (iii) must
     acknowledge receipt and review of the Colonial  Construction  Standards and
     the potential  liability  arising out of any breach of the integrity of the
     adjacent  Colonial  Pipeline.  Colonial  and PTI will  establish  a list of
     pre-approved  contractors  and  suppliers,  and a mechanism  to provide for
     approval  by  Colonial  of  parties   performing   work  on  the   Colonial
     Rights-of-Way  or at the applicable  Related Facility in a manner that does
     not materially delay or interfere with work to be performed on the Colonial
     Rights-of-Way or at the applicable Related Facility.



                                      -11-
<PAGE>

          (g) During  all phases of the  construction  and  installation  of any
     portion of the Telecommunications Network within any applicable Segments of
     Colonial  Rights-of-Way  or at the applicable  Related  Facility,  Colonial
     shall assign one or more inspectors to work with each PTI construction crew
     in order to provide  construction  inspection services with respect to such
     PTI Work. PTI shall  reimburse  Colonial for the costs of such  inspections
     within  thirty  (30) days of  receipt  of an invoice  from  Colonial,  such
     reimbursement  payment to be calculated in accordance  with the methods and
     procedures  described in the Services  Agreement.  In connection  with such
     inspections,  PTI will make available to Colonial and its inspectors,  upon
     Colonial's reasonable request, the PTI personnel and all Telecommunications
     Network contractors and other agents working for or on behalf of PTI in the
     performance of the PTI Work.

          (h) All PTI Work must be done in such a manner  as will not  interfere
     with in any way  whatsoever  the use,  maintenance,  operation,  repair and
     replacement of the adjacent Colonial Pipeline.

          (i) PTI shall provide monthly engineering  progress reports and weekly
     construction  progress reports advising Colonial of the status and progress
     of all PTI Work and any issues of concern arising therefrom.

          (j) PTI shall perform a complete  locations  survey of the  applicable
     Segment or Related Facility in question,  including the staking and marking
     of the existing Colonial  Pipeline and the route of the  Telecommunications
     Network and any  applicable  Regen  Facilities  that are a part  hereof) in
     accordance   with  the  Colonial   Construction   Standards   and  standard
     telecommunications industry practices.

          (k) PTI shall prepare field alignment maps showing the route along the
     Segment in question as well as the property ownership, terrain description,
     materials and other pertinent information.

          (l) PTI shall prepare railroad, highway, waterway or wetlands crossing
     permit  drawings  sufficient  for approval by the  applicable  Governmental
     Authorities or railroads and obtain any and all other permits necessary for
     such crossings.

          (m) All PTI Work shall be  performed  at such a standard  of care that
     equals  the  Colonial  Construction  Standards  or that which is normal and
     customary in the telecommunications industry, whichever standard is higher.

          (n) In the  event  that PTI fails to comply  with  Colonial  safety or
     operational  regulations,  and such  failure  interferes  or is  likely  to
     interfere  with  Colonial's  operations,  Colonial  may  require  that  PTI
     immediately  suspend all affected  operations  on the  applicable  Segment.
     Promptly  after such  suspension,  and if such  suspension  materially  and
     adversely affects PTI's  Telecommunications  network,  within two (2) hours
     after  such  suspension,  Colonial  and PTI each  will  make  available  by
     telephone  a  representative  of upper  management,  as  designated  on the
     escalation list agreed to by the parties, to discuss



                                      -12-
<PAGE>

     prompt  resolution of the  situation.  If the parties are unable to resolve
     the issue by  telephone,  then  Colonial and PTI will escalate the issue to
     the  next  higher  individual  on the  escalation  list  for a face to face
     meeting at a mutually  agreeable  location within twenty-four (24) hours of
     the  suspension.  The parties  thereafter  will  negotiate in good faith to
     resolve the issue and prevent the  occurrence of similar  situations in the
     future.

     3.3 Services Agreement with Colonial.  Notwithstanding the other provisions
of this Article III or of  Subsection  1.2(b) or Section 4.1 below,  the parties
hereto  acknowledge  that Colonial shall not be obligated to execute and deliver
to PTI any Segment Lease hereunder prior to the execution by Colonial and PTI of
that certain Master Services Agreement (the "Services Agreement"). Such Services
Agreement shall set forth,  among other matters,  the designation by Colonial of
specified  employees  to work  within  PTI's  organization,  Perfection  Process
methodologies,  the scope of work for  Colonial's  performance,  if any,  of any
Perfection and Construction  Management Work and inspections with respect to the
Colonial  Rights-of-Way  and  Related  Facilities  (or  portions  thereof) to be
deployed by PTI hereunder and the  compensation  to be paid to Colonial for such
services;  however,  PTI shall continue to have sole  responsibility for all PTI
Work  hereunder for any  applicable  Segment to the extent that Colonial has not
expressly assumed such responsibility  within such Segment pursuant to the terms
of the Services Agreement.

     3.4  Completion of PTI Work.  Upon the  completion of any PTI Work within a
designated Segment or Related Facility, PTI shall do the following:

          (a) Perform an as-built  survey of the Segment or Related  Facility in
     question and cause any applicable  system maps and drawings of Colonial for
     such  particular  Segment or Related  Facility to be revised and updated as
     appropriate  so that each of PTI and Colonial have at least one full set of
     revised and updated maps and drawings.

          (b)  Deliver to Colonial  complete  technical  specifications  for the
     Telecommunications  Network,  including all Regen  Facilities and any other
     machinery or equipment  placed  within the Colonial  Rights-of-Way  or at a
     Related Facility, as the case may be.

          (c)  Deliver  to  Colonial  equipment  manuals  for  the  proper  use,
     operation,  maintenance and repair of any portion of the Telecommunications
     Network,  including  all  Regen  Facilities  and  any  other  machinery  or
     equipment that is to be or may be maintained by Colonial.

          (d)   Deliver  to   Colonial   a   certificate   from  PTI's   general
     contractor(s),  certifying that all PTI Work within the applicable  Segment
     or Related  Facility has been  completed in  accordance  with the plans and
     specifications  previously approved by Colonial, that all such PTI Work has
     been paid for, that all  Telecommunications  Network  Contractors have been
     paid and that no party has any lien  rights or claims of lien with  respect
     to any  portion  of the  completed  PTI Work for such  Segment  or  Related
     Facility.



                                      -13-
<PAGE>

          (e) Obtain any certificates,  permits,  licenses or approvals required
     to be  obtained  by  any  applicable  Governmental  Authorities  under  any
     Applicable  Laws or  Trade  Standards  upon  completion  of the PTI Work in
     question  including,  without  limitation,  such of the foregoing as may be
     required for the operation of the Telecommunications Network.

     3.5  Unauthorized  Work.  In the event that PTI performs any PTI Work along
any  portion of the  Colonial  Rights-of-Way  or at a Related  Facility  without
obtaining Colonial's approval therefor or completing the Perfection Process with
respect to the applicable  Segment,  or if Colonial determines that any such PTI
Work or portion thereof is prohibited by applicable Governmental  Authorities or
Applicable Laws, then Colonial may require PTI to remove the PTI Work (including
any  Conduits,   Regen  Facilities  or  other  improvements  installed  therein)
immediately and to restore the subject property to its original condition,  wear
and tear and casualty  excepted,  provided  that  Colonial will not require such
removal for so long as PTI is in good faith  contesting or otherwise  attempting
to  resolve  such  prohibitions.  In the  event  that PTI  fails to do so,  then
Colonial  may  perform  such  removal  and  restoration  at PTI's  sole cost and
expense, without any liability to Colonial.

                                   ARTICLE IV
                        OPERATION, MAINTENANCE AND REPAIR

     4.1  PTI  Operation,   Maintenance  and  Repair.  Upon  completion  of  any
applicable portion of the Telecommunications Network, and during the Term hereof
PTI shall be responsible, at its sole expense, for all costs and expenses of the
operation of the Telecommunications  Network (except only as expressly described
in the  Fiber  Optic  Access  and  Purchase  Agreement),  and all  ordinary  and
extraordinary  maintenance  and  repair  (including,   without  limitation,  the
performance of continual  monitoring and routine or special  inspections) of all
aspects of the Telecommunications  Network (including,  without limitation,  any
fibers,  conduits,  Regen  Facilities or junctions,  line  amplifiers  and other
equipment  and  machinery  that  are a part  thereof)  (collectively,  the  "PTI
Operation and Maintenance Services"), all pursuant to and in accordance with the
provisions  of Section 3.2 and in compliance  with the plans and  specifications
for the  Telecommunications  Network approved by Colonial as provided in Section
3.2.  PTI  shall  have  no  responsibility  for,  or  authorization  to  perform
maintenance  or repairs on any  portion of the  Colonial  Pipeline  or any other
Colonial  equipment or machinery located along the Colonial  Rights-of-Way or at
the Related Facilities.

     4.2   Warranties.   In  the  event  any   maintenance  or  repairs  to  the
Telecommunications  Network  are  required  as a  result  of any  breach  of any
warranty made by any of PTI's  manufacturers,  contractors or vendors, PTI shall
pursue any  remedies it may have  against  such  manufacturers,  contractors  or
vendors,  and PTI shall  reimburse  Colonial for any expenses  that Colonial has
incurred as a result of any such breach of warranty.



                                      -14-
<PAGE>

     4.3 Subcontractors.  PTI may subcontract its obligations under this Article
IV; however,  in any such event,  PTI shall require the  subcontractors  to meet
operations,  maintenance and repair standards for the Telecommunications Network
that are at least as high as those  standards  set forth in Section  3.2 of this
Agreement. The use of any such subcontractor shall not relieve PTI of any of its
obligations hereunder.

     4.4  Colonial  Inspections  . In addition to the matters  described  in the
Services Agreement,  after installation of the Telecommunications Network within
any Segment,  Colonial shall have the right, but not the obligation,  to inspect
all  or  any  portion  of the  PTI  Work,  including,  without  limitation,  the
Telecommunications  Network,  as Colonial may deem appropriate,  such additional
inspections  to  be  performed  at  Colonial's   expense.   Notwithstanding  the
foregoing,   in  the  event  that  Colonial  considers   special,   non-periodic
inspections  of the PTI Work to be  reasonably  necessary  because of  perceived
interference  with or threats to the use and operation of the adjacent  Colonial
Pipeline and/or the safety and integrity of such Colonial Pipeline, PTI will pay
Colonial  for the  cost of such  special  inspections  in  accordance  with  the
provisions of the Services Agreement.

                                    ARTICLE V
                         PIPELINE MAINTENANCE AND REPAIR

     5.1 Pipeline  Maintenance  and Repair.  Colonial will perform,  at its sole
expense,  all emergency,  routine and necessary  maintenance,  replacements  and
repair on the Colonial  Pipeline and other Colonial  equipment located along the
Colonial  Rights-of-Way and at the Related Facilities,  excluding,  however, any
portion of the Telecommunications Network located at any Related Facility.

                                   ARTICLE VI
                                    INSURANCE

     6.1 Acquisition of Insurance Policies. During the entire Term, Colonial and
PTI shall  procure and maintain the  insurance  described in this Article VI (or
its then available equivalent). Policy limits shall be reviewed annually and may
be adjusted if prudent,  considering levels of inflation,  risk of loss, premium
expenses and other relevant factors.

     6.2  Types of Required Insurance for PTI. PTI shall procure and maintain
the following:


          (a) commercial  general public  liability  insurance  covering loss or
     damage  resulting from accidents or occurrences on, about or arising out of
     or in  connection  with the  Telecommunications  Network (or the  attempted
     installation  thereof)  and/or  the  Segments  that  may be  leased  to PTI
     hereunder,  with personal injury, death and property damage combined single
     limit liability of not less than One Million Dollars  ($1,000,000.00)]  for
     each accident or occurrence and in the aggregate. Coverage under


                                      -15-
<PAGE>

     such  policies  shall be broad  form and  shall  include,  but shall not be
     limited to, operations,  contractual,  owner's and contractor's protective,
     products and completed operations,  environmental pollution, and the use of
     all owned, non-owned and hired vehicles;

          (b)  umbrella liability insurance in an amount not less than
     Thirty-Five Million Dollars ($35,000,000.00);

          (c) "all risk" or "special"  physical  damage  insurance  covering all
     risks of physical loss or damage to all portions of the  Telecommunications
     Network installed by or on behalf of PTI, with liability limits of not less
     than one hundred  percent (100%) of the then full  replacement  cost of all
     such property;

          (d)  contractor's   liability  and  builder's  risk  insurance  during
     performance of all PTI Work and during any subsequent maintenance,  repair,
     modification, or replacement thereof;

          (e)  worker's compensation and employer's liability insurance as
     required by Applicable Laws; and

          (f) such  other  insurance  in  amounts  from time to time  reasonably
     required by Colonial  against other  insurable  risks if, at the time, such
     coverage is  available  at  commercially  reasonable  rates and is commonly
     obtained with respect to similar improvements or systems.

     6.3  Types of Required Insurance for Colonial. Colonial shall procure and
maintain the following:

          (a) commercial  general public  liability  insurance  covering loss or
     damage  resulting  from accidents or occurrences on or about or arising out
     of or in connection  with the Colonial  Pipeline and/or the portions of the
     Colonial  Rights-of-Way  not leased to PTI hereunder with personal  injury,
     death and property  damage combined single limit liability of not less than
     One  Million  Dollars  ($1,000,000.00)  for  each  occurrence  and  in  the
     aggregate.  Coverage  under  such  policies  shall be broad  form and shall
     include, but shall not be limited to, operations,  contractual, owner's and
     contractor's protective,  products and completed operations,  environmental
     pollution, and the use of all owned, non-owned and hired vehicles;

          (b)  umbrella liability insurance in an amount not less than
     Thirty-Five Million Dollars ($35,000,000.00); and

          (c)  worker's compensation and employer's liability insurance as
     required by Applicable Laws.

     6.4  Terms of Insurance. The policies required under Sections 6.2 and 6.3
shall name Colonial or PTI, as applicable, as additional insured(s). Each party
shall provide to the other



                                      -16-
<PAGE>

party  certificates of insurance and copies of policies obtained by the insuring
party  hereunder  promptly upon the request of the other party.  All policies of
insurance  obtained by a party  pursuant to Sections 6.2 or 6.3, as  applicable,
also:

          (a) shall be written by  responsible  insurance  companies  reasonably
     acceptable to the other party having a Best's rating of "A-VIII" or better;

          (b) shall be  written  as  primary  policies  with  respect  to losses
     arising out of the acts or omissions of the named insured not  contributing
     with and not in excess of any coverage that the other party may carry;

          (c) shall contain an endorsement providing that the amount of coverage
     will not be reduced  with  respect to any party  except  after  thirty (30)
     days' prior written  notice from the  insurance  company to the other party
     and  such  coverage  may  not  be  cancelled  with  respect  to  any  party
     (including,  without  limitation,  for non-payment of premium) except after
     thirty (30) days' prior written  notice from the  insurance  company to the
     other party;

          (d) shall contain, if obtainable, a statement that the insurance shall
     not be invalidated  should any insured waive in writing prior to a loss any
     or all  right of  recovery  against  any  party  for loss  accruing  to the
     property described in the insurance policy; and

          (e) shall contain, if obtainable,  a provision that no act or omission
     of the party  procuring such insurance shall affect or limit the obligation
     of the insurance carrier to pay the amount of any loss sustained.

     6.5 Failure to Maintain  Insurance.  If either party at any time during the
Term fails to procure or maintain any insurance required hereunder or to pay the
premiums  therefor,  the other party shall have the right to procure the same on
behalf of the defaulting party and to pay any and all premiums thereon.  In such
event,  any amounts paid by such other party in connection  with the acquisition
of such insurance shall be immediately  due and payable by the defaulting  party
and interest on the amount so paid shall accrue at the Default Rate.

     6.6  Blanket Policies; Self-Insurance.

          (a) Any insurance  required to be carried  pursuant to this Article VI
may be carried under a "blanket" policy or policies  covering other  liabilities
and locations of Colonial or PTI, as applicable;  provided,  however,  that such
policy or policies:  (i) shall apply to the  property  required to be insured by
this Article VI and in an amount not less than the amount of insurance  required
to be carried by Colonial or PTI with respect  thereto;  and (ii) shall  provide
that no payment of insurance  proceeds under any such policy with respect to any
location  other than the  Telecommunications  Network  (with  respect to PTI) or
other than the Colonial Rights-of-Way and/or Related Facilities (with respect to
Colonial),  shall reduce the amount of insurance  available  with respect to the
Telecommunications Network or to the Colonial Rights-of-Way



                                      -17-
<PAGE>

and/or  Related  Facilities,  as  applicable,  to an amount  below the limits of
liability required to be maintained herein.

          (b) The  insurance  requirements  described  in this Article VI may be
satisfied  with respect to the initial One Million  Dollars  ($1,000,000.00)  of
liability by any plan of self-insurance from time to time maintained by Colonial
or PTI on condition  that: (i) the party so  self-insuring  has and maintains an
aggregate net worth of One Million Dollars ($1,000,000.00) or more; and (ii) any
party so self-insuring shall furnish to the other party, upon request,  evidence
of the  adequacy  of its net  worth.  The  annual  report of such  party that is
audited  by an  independent  certified  public  accountant  shall be  sufficient
evidence  of its net worth.  If either  Colonial  or PTI  elects to  self-insure
pursuant to the provisions set forth herein,  or thereafter  elects to terminate
such self-insurance program, it shall give at least ten (10) days' prior written
notice thereof to the other party.

                                   ARTICLE VII
                              INTENTIONALLY OMITTED

                                  ARTICLE VIII
                                  CONDEMNATION

     8.1 Material  Taking.  If (a) all or any portion of a Segment (or a Related
Facility,  as applicable)  shall be acquired for any public or quasi-public  use
through taking by  condemnation,  eminent domain or any similar  proceeding,  or
purchase in lieu thereof (each, a "Taking"); and (b) PTI and Colonial reasonably
determine,  as applicable,  that (i) the Segment or portion thereof  cannot,  at
reasonable cost,  continue to be operated for both the existing Pipeline and the
operation of the  Telecommunications  Network,  or (ii) the Related  Facility or
portion thereof cannot, at reasonable cost, continue to be operated for both the
existing  Colonial  Related Facility and the operation of PTI's Regen Facilities
thereon (in either such case, a "Material Taking"),  then any Permits or Segment
Leases  applicable  to the  portion  of the  Colonial  Rights-of-Way  or Related
Facility  so taken  shall  cease  and  terminate  as of the date the  condemning
authority  takes title or  possession,  whichever  first  occurs and only to the
extent that such Permits or Segment Leases apply to the property so taken.

     8.2 Continuation of Agreement.  If there is a Taking that is not a Material
Taking and this  Agreement is not  partially  terminated  as provided in Section
8.1,  this  Agreement  shall  remain in full force and  effect and any  award(s)
received thereby shall be apportioned pursuant to Section 8.3 hereof.

     8.3  Apportionment of Award(s) .

          (a) If there is a Taking,  whether  a  Material  Taking or  otherwise,
Colonial  and PTI shall be entitled to receive and retain such  separate  awards
and  portions  of lump  sum  awards  as may be  allocated  to  their  respective
interests in any condemnation proceedings, or as may be otherwise agreed, taking
into consideration the nature of the respective interests of Colonial and PTI in
the subject property, as subject to this Agreement.



                                      -18-
<PAGE>

          (b) If the condemning  authority does not make separate awards and the
parties  are  unable  to agree as to  amounts  that are to be  allocated  to the
respective  interests  of  Colonial  and PTI,  the award shall be  allocated  as
follows:  (i) first,  if the Taking is not a Material Taking and Colonial and/or
PTI  elect(s) to restore the property and  improvements  so taken,  then to such
party(ies) in the amount(s) equal to the costs and expenses incurred by Colonial
and/or PTI in performing any such restoration;  (ii) second, to Colonial and PTI
in  proportional  amounts  reflecting  the  respective  unamortized  cost of any
portion of the Colonial Pipeline,  Related Facilities and/or  Telecommunications
Network  so taken;  and (iii)  the  balance,  if any,  shall be  distributed  in
proportion to the amounts of the award allocated to Colonial and PTI pursuant to
clause (ii) above.

                                   ARTICLE IX
                REPRESENTATIONS, WARRANTIES AND COVENANTS OF PTI

     9.1  PTI's Representations, Warranties and Covenants. PTI represents,
warrants and covenants that:

          (a)  PTI is a corporation existing and in good standing under the laws
of the State of Delaware,

          (b) PTI has the power and  authority to enter into this  Agreement and
to consummate the  transactions  provided for herein.  This Agreement and all of
the documents executed and delivered by PTI constitute the legal, valid, binding
and enforceable obligations of PTI and there are no claims or defenses, personal
or otherwise,  or offsets  whatsoever to the  enforceability or validity of this
Agreement.

          (c) The execution,  delivery and performance by PTI of its obligations
under  this  Agreement  will not  conflict  with or  result  in a breach  of any
Applicable Law by which PTI is bound or by any of the provisions of any contract
to  which  PTI is a party  or by  which  PTI is  bound,  or  PTI's  articles  of
incorporation or by-laws.  There is no action, suit, proceeding or investigation
pending or, to PTI's knowledge,  threatened,  before any agency,  court or other
Governmental  Authority that relates to PTI, this Agreement or the  installation
of the  Telecommunications  Network  contemplated  herein that would  materially
interfere with PTI's ability to perform its rights and obligations hereunder.

          (d)  PTI  has  not  made a  general  assignment  for  the  benefit  of
creditors,  filed any voluntary petition of bankruptcy or suffered the filing of
an involuntary petition by its creditors, suffered the appointment of a receiver
to take possession of substantially  all of its assets,  suffered the attachment
or other  judicial  seizure of  substantially  all of its assets,  admitted  its
inability  to pay its debts as they come  due,  or made an offer of  settlement,
extension or compromise to its creditors generally.



                                      -19-
<PAGE>

          (e)  PTI  warrants  and  covenants  that  the  installation,  use  and
operation of the Telecommunications Network (and any related maintenance, repair
or replacement thereof) shall comply with all Applicable Laws.

          (f) PTI shall  obtain (and cause to remain  effective  for the Term of
this  Agreement) all rights,  licenses,  authorizations,  permits,  consents and
other   agreements   or   approvals   required   by   Governmental   Authorities
(collectively,  the "Required Permits") necessary for the installation,  use and
operation of the Telecommunications Network (including,  without limitation, all
Conduits, Regen Facilities, cables, fibers or other physical plant facilities or
machinery or equipment related thereto). Colonial shall have the right to review
and approve all documents evidencing or reflecting the Required Permits.

          (g) PTI will comply with all requirements, conditions and stipulations
set forth in any of the Required Permits and in any easements, licenses or other
agreements   evidencing   the  rights  of  Colonial  in  and  to  the   Colonial
Rights-of-Way that have been disclosed to PTI.

          (h) PTI shall notify  promptly  Colonial of any matters  pertaining to
any   damage  or   threatened   damage  to  or  loss  of  any   portion  of  the
Telecommunications  Network,  the Colonial Pipeline or any Related Facilities of
which it becomes aware.

          (i) PTI shall respect  Colonial's  right to use the Colonial  Pipeline
and the Related Facilities.  PTI shall not use the Telecommunications Network in
a manner that  interferes  in any way with or  adversely  affects  the  Colonial
Pipeline or any Related Facility,  and PTI shall take all reasonable precautions
against, and shall assume liability for, subject to the terms herein, any damage
to the Colonial  Pipeline or any Related  Facility caused by PTI or any of PTI's
employees,   officers,   directors,   contractors,   agents,   licensees  and/or
concessionaires, as applicable (collectively, the "PTI Parties").

          (j) PTI agrees to cooperate  with and support  Colonial in  connection
with the compliance with any government  requirements issued by any Governmental
Authority applicable to the Telecommunications Network.

          (k) PTI shall pay when due all charges  for public or private  utility
services  to or for any  portion of the  Telecommunications  Network  during the
Term, including, without limitation, all charges for electricity,  water, sewer,
storm water drainage, gas, telephone and/or garbage collection.

          (l) PTI shall pay when due the  following,  as they  arise  during the
Term   (collectively,   the   "Impositions"):   (i)  all  real  property  taxes,
assessments,  fees  or  payments  in  lieu  thereof  due  with  respect  to  the
Telecommunications  Network, or any portion thereof, or any personal property or
intangibles  located  in or  used  in  connection  with  the  Telecommunications
Network;  (ii) any and all sales,  use,  income,  gross  receipts or other taxes
assessed on the basis of revenues  received or accrued by PTI arising out of its
use of the Telecommunications  Network; and (iii) all other taxes,  assessments,
excises, levies, license fees, permit fees, franchise fees,



                                      -20-
<PAGE>

inspection  fees  and  similar  charges  assessed,  levied,  or  imposed  on any
occupancy, use or possession of the Telecommunications  Network, including those
based upon the physical  location of the  Telecommunications  Network and/or the
construction  thereof in, on or along any public  road,  highways,  waterways or
rights-of-way,  or any part thereof.  Notwithstanding  the foregoing,  PTI shall
have no  responsibility  for (x) any tax based in whole or in part on Colonial's
income from this Agreement or the Fiber Optic Access and Purchase Agreement; (y)
any taxes that are the responsibility of Colonial pursuant to Subsection 7(g) of
the Fiber Optic Access and Purchase  Agreement;  or (z) any other real  property
taxes or assessments with respect to the Colonial Rights-of-Way other than those
set out in clause (i) of this Subsection  9.1(l) above. PTI shall have the right
to make a claim,  and Colonial shall cooperate  reasonably with PTI, for refund,
rebate, reduction or abatement of any such Impositions.

                                    ARTICLE X
              REPRESENTATIONS, WARRANTIES AND COVENANTS OF COLONIAL

     10.1 Colonial's Representations, Warranties and Covenants. Colonial
represents, warrants and covenants that:

          (a)  Colonial is a corporation existing and in good standing under the
laws of the State of Delaware,

          (b) Colonial has the power and authority to enter into this  Agreement
and to consummate the transactions  provided for herein.  This Agreement and all
of the documents executed and delivered by Colonial constitute the legal, valid,
binding  and  enforceable  obligations  of  Colonial  and there are no claims or
defenses,  personal or otherwise, or offsets whatsoever to the enforceability or
validity of this Agreement.

          (c)  The  execution,  delivery  and  performance  by  Colonial  of its
obligations under this Agreement will not conflict with or result in a breach of
any Applicable Law by which Colonial is bound or by any of the provisions of any
contract  to which  Colonial  is a party  or by  which  Colonial  is  bound,  or
Colonial's  articles  of  incorporation  or by-laws.  There is no action,  suit,
proceeding or  investigation  pending or, to Colonial's  knowledge,  threatened,
before  any  agency,  court or other  Governmental  Authority  that  relates  to
Colonial, this Agreement, the Colonial Pipeline or any Related Facility.

          (d)  Colonial  has not made a general  assignment  for the  benefit of
creditors,  filed any voluntary petition of bankruptcy or suffered the filing of
an involuntary petition by its creditors, suffered the appointment of a receiver
to take possession of substantially  all of its assets,  suffered the attachment
or other  judicial  seizure of  substantially  all of its assets,  admitted  its
inability  to pay its debts as they come  due,  or made an offer of  settlement,
extension or compromise to its creditors generally.

          (e) Colonial  shall promptly  notify PTI of any matters  pertaining to
any damage or threatened damage to or loss of any part of the Telecommunications
Network of which Colonial becomes aware.



                                      -21-
<PAGE>

          (f) Colonial  shall respect PTI's right to use the  Telecommunications
Network.  Colonial  shall take all  reasonable  precautions  against,  and shall
assume  liability  for,  subject  to  the  terms  herein,   any  damage  to  the
Telecommunications  Network  caused by Colonial or any of Colonial's  employees,
officers, directors,  contractors, agents, licensees and/or concessionaires,  as
applicable (collectively, the "Colonial Parties").

          (g) Colonial  agrees to cooperate  with and support PTI in  connection
with the compliance with any government  requirements issued by any Governmental
Authority and applicable to the Telecommunications Network.

          (h)  Except as  expressly  stated in  Subsections  10.1(a)-(g)  above,
Colonial  makes no  warranty  to PTI or any  other  person  or  entity,  whether
express, implied or statutory, as to the description,  quality, merchantability,
completeness   or  fitness  for  any  purpose  of  the  Colonial   Rights-of-Way
(including,  without  limitation,  for the  purposes  for  which PTI may use the
Colonial  Rights-of-Way  hereunder),  or as to any  other  matter,  all of which
warranties are hereby excluded and disclaimed.

                                   ARTICLE XI
                    INDEMNIFICATION; LIMITATION OF LIABILITY

     11.1  Indemnification  by PTI. PTI hereby  indemnifies  and holds  harmless
Colonial,  the Colonial  Parties and Colonial's  affiliates and shareholders and
their respective employees, officers, directors,  contractors, agents, licensees
and concessionaires (collectively,  the "Colonial Indemnified Parties") from and
against any  liability,  loss,  damage,  claim or cause of action of any kind or
nature  (including damage to property and injury to or death of persons) whether
actual or  alleged,  or  payments  to any  person in  compromise  of  settlement
thereof,  whether or not liability has been shown or can be known, and any costs
or expenses in connection therewith (including,  without limitation,  reasonable
court costs,  costs of litigation and attorneys'  fees and expenses  incurred in
enforcing  same) arising out of or in connection with PTI's use of the leasehold
rights  granted herein (but only to the extent such claims do not arise from the
negligence,  gross  negligence or willful  misconduct of a Colonial  Indemnified
Party), including, without limitation:

          (a) third party claims, or any death or personal injury to, or loss or
     damage to any property of, a Colonial  Indemnified Party, to the extent any
     of the  foregoing  is  caused  in whole or in part by the  presence  of the
     Telecommunications  Network on any portion of the Colonial Rights-of-Way or
     at any Related Facility or the performance of any PTI Work or PTI Operation
     and Maintenance Services by PTI or any PTI Parties on or along the Colonial
     Rights-of-Way or at any Related Facility;

          (b)  penalties,  fines  or  forfeitures  imposed  by any  Governmental
     Authority  arising out of any failure or refusal by any PTI Party to comply
     with  Applicable  Laws  applicable  to the  installation,  operation,  use,
     maintenance or repair of the



                                      -22-
<PAGE>

     Telecommunications Network (including,  without limitation, any inadvertent
     effect the same may have on the Colonial Pipeline or any Related Facility);
     and

          (c) any other  liability  arising out of or resulting from the acts or
     omissions, negligent or otherwise, of any PTI Party or in connection with a
     breach by PTI of any of its obligations  under this  Agreement,  including,
     without  limitation,  liabilities  arising  out of PTI's  failure to obtain
     easement,  license,  lease or other Perfection Rights from any Landowner so
     as to allow PTI to install,  operate and  maintain  the  Telecommunications
     Network through designated Segments of the Colonial Rights-of-Way, it being
     acknowledged,  however, that nothing in this Subsection 11.1(c) shall limit
     or restrict in any manner the  obligations  and  restrictions  contained in
     Subsection 3.1(a) hereof.

     11.2  Indemnification  by Colonial.  Colonial hereby  indemnifies and holds
harmless PTI, the PTI Parties and PTI's  affiliates and  shareholders  and their
respective employees,  officers, directors,  contractors,  agents, licensees and
concessionaires  (collectively,  the "PTI Indemnified Parties") from and against
any  liability,  loss,  damage,  claim or cause of  action of any kind or nature
(including  damage to property and injury to or death of persons) whether actual
or alleged,  or  payments to any person in  compromise  of  settlement  thereof,
whether  or not  liability  has been  shown or can be  known,  and any  costs or
expenses in connection  therewith  (including,  without  limitation,  reasonable
court costs,  costs of litigation and attorneys'  fees and expenses  incurred in
enforcing same) arising out of or in connection with Colonial's operation of the
Colonial Pipeline and the Related Facilities (but only to the extent such claims
do not arise from the negligence,  gross  negligence or willful  misconduct of a
PTI Indemnified Party, including, without limitation:

          (a) third party claims, or any death or personal injury to, or loss or
     damage to any property of, a PTI  Indemnified  Party,  to the extent any of
     the foregoing is caused in whole or in part by the presence of the Colonial
     Pipeline or the Related Facilities;

          (b)  penalties,  fines  or  forfeitures  imposed  by any  Governmental
     Authority  arising out of any failure or refusal by any PTI Party to comply
     with  Applicable  Laws  applicable  to the  installation,  operation,  use,
     maintenance  or repair of the  Colonial  Pipeline or any  Related  Facility
     (including, without limitation, any inadvertent effect the same may have on
     the Telecommunications Network; and

          (c) any other  liability  arising out of or resulting from the acts or
     omissions,  negligent or otherwise,  of any Colonial Party or in connection
     with a breach by Colonial of any of its obligations under this Agreement.

     11.3  Limitation of  Liability.  In no event will Colonial be liable to PTI
for any  interruption of or  interference  with the  Telecommunications  Network
arising out of any cause  whatsoever,  except to the extent caused by Colonial's
gross negligence or willful misconduct.



                                      -23-
<PAGE>

     11.4 No  Consequential  or Special  Damages.  Neither  party hereto will be
liable to the other for any incidental,  punitive,  indirect,  consequential  or
special damages suffered by the other,  including lost profits,  lost savings or
loss of use.

     11.5  Legal  Proceedings.  If any  action,  suit or  proceeding  is brought
against a party to which any  indemnity is  described in Sections  11.1 or 11.2,
the indemnifying  party,  upon the request of the indemnified  party, and at the
indemnifying  party's  expense,  shall  resist and defend such  action,  suit or
proceeding,  or cause the same to be resisted and defended by counsel designated
by the indemnifying party and approved by the indemnified party. The obligations
of the indemnifying party under this Section 11.5 relating to any matter subject
to indemnification  under this Agreement that occurs,  arises, or accrues during
the Term shall survive the expiration or earlier  termination of this Agreement.
The indemnified  party,  at its sole expense,  also shall be entitled to appear,
defend or  otherwise  take part in the  matter  involved,  at its  election,  by
separate counsel of its own choosing. The indemnifying party will not settle any
claim  without  the prior  written  approval  of the  indemnified  party,  which
approval shall not be unreasonably  withheld or delayed.  The indemnified  party
will be entitled to settle any claim on terms it deems appropriate.  The parties
will  treat any  settlement  of any claim  and the  terms of the  settlement  as
confidential information.

                                   ARTICLE XII
                                     DEFAULT

     12.1  Event of  Default by PTI.  Subject  to the other  provisions  of this
Article XII, the occurrence of any of the following  shall  constitute an "Event
of Default" by PTI hereunder:

          (a)  Failure by PTI to make any  payment  owed to  Colonial  hereunder
     within  ten (10)  days  after  written  notice  thereof  is given to PTI by
     Colonial;

          (b) Failure by PTI to maintain any of the insurance  coverage required
     hereunder,  or to pay any of the premiums to be paid with respect  thereto,
     and such failure  continues for a period of fifteen (15) days after written
     notice thereof is given to PTI by Colonial;

          (c) PTI breaches or fails to perform, comply with or observe any other
     term, covenant, warranty, condition,  agreement or undertaking contained in
     or arising under this Agreement other than those referred to in Subsections
     12.1(a)  and (b) above,  and such  occurrence  or failure  continues  for a
     period of  thirty  (30)  days  after  written  notice  thereof  is given by
     Colonial to PTI; provided,  however, that if such default is a non-monetary
     default and is not  susceptible  of being cured within said thirty (30) day
     period,  then no Event of Default  shall occur  hereunder if PTI  commences
     commercially  reasonable  efforts to cure such  default  within such thirty
     (30) day period and  diligently  pursues  the same to  completion  within a
     reasonable  time  thereafter,  not to exceed a total of one  hundred  fifty
     (150) days;



                                      -24-
<PAGE>

          (d)  The  subjection  of any  right  or  interest  of PTI  under  this
     Agreement to attachment, execution or other levy, or to seizure under legal
     process, if not released within sixty (60) days;

          (e) PTI shall make an assignment for the benefit of creditors,  file a
     petition  in  bankruptcy,  petition  or  apply  to  any  tribunal  for  the
     appointment of a custodian, receiver or any trustee for it or a substantial
     part of its  assets,  or commence  any  proceedings  under any  bankruptcy,
     reorganization,   arrangement,   readjustment   of  debt,   dissolution  or
     liquidation law or statute of any jurisdiction, whether now or hereafter in
     effect;  or if there shall have been filed against PTI any such petition or
     application,  or any such proceeding shall have been commenced  against it,
     in which an order for relief is entered or which remains  undismissed for a
     period  of  ninety  (90)  days of  more;  or PTI,  by any act or  omission,
     indicates its consent to, approval of or acquiescence in any such petition,
     application  or  proceeding  or order for  relief or the  appointment  of a
     custodian, receiver or any trustee for it or any substantial part of any of
     its  properties,  or  suffers  any  such  custodianship,   receivership  or
     trusteeship  to continue  undischarged  for a period of ninety (90) days or
     more; or

          (f)  PTI generally is unable to pay its debts as such debts become
     due.

     12.2 Effect of Arbitration.  Notwithstanding the provisions of Section 12.1
hereof,  if the Event of Default or the asserted  default giving rise to same is
subject to  arbitration  pursuant  hereto,  and the  existence  of such Event of
Default  or  asserted  default is being  contested  by the party  assertedly  in
default,  then, if and so long as such party is  cooperating  and acting in good
faith  to  complete  the   arbitration   proceeding   with  respect  thereto  as
expeditiously  as  possible,  the time for curing such  asserted  default  shall
commence upon the rendering of the arbitration decision with respect thereto, or
other resolution thereof, whichever occurs first.

     12.3 Remedies of Colonial.

          (a) In  addition  to  all of the  rights  and  remedies  available  to
Colonial by law or equity (other than  termination of this Agreement which shall
be  available  as a remedy  for an Event of  Default  only as  provided  in this
Section  12.3),  at any time after the occurrence of any Event of Default on the
part of PTI:

               (i) in the event that such Event of Default is a recurring and/or
     flagrant breach of this Agreement and materially and adversely  affects the
     safety or operation of the Colonial Pipeline, Colonial shall have the right
     to terminate this Agreement immediately upon written notice to PTI; and

               (ii) in the event  that such  Event of Default is not of the type
     and  nature  described  in  clause  (i) of  this  Subsection  12.3(a),  but
     constitutes  a  material  breach of a material  covenant  of PTI under this
     Agreement,  Colonial  shall have the right,  upon written notice to PTI, to
     suspend immediately all then pending and future installation,  construction
     and/or deployment of the Telecommunications Network on or about any



                                      -25-
<PAGE>

     Segment or  applicable  portion  thereof with respect to which the Event of
     Default has occurred until such time as the applicable  Event of Default is
     cured or PTI demonstrates to Colonial's  reasonable  satisfaction  that PTI
     has  taken  such  steps  and/or  implemented  such  procedures  so that the
     particular Event of Default in question will not recur.

          (b) In the event of any  failure  on the part of PTI to pay any sum of
money,  or to do any act or to satisfy any of the  obligations or covenants that
it is required to pay, do or perform  under the  provisions  of this  Agreement,
Colonial,  at its option,  after notice to PTI, may pay any or all of such sums,
or perform any or all of such acts,  obligations or covenants or incur any other
expense  whatsoever  in order to remedy such failure on the part of PTI. In such
event,  PTI shall  reimburse  Colonial  for all costs and expenses of any nature
whatsoever incurred by Colonial in connection therewith,  together with interest
at the  Default  Rate  provided in Section  17.12  hereof,  such  interest to be
calculated from and after the date payment is made by Colonial or the expense is
incurred.

     12.4 Effect of  Termination.  At the  expiration of the Term or any earlier
termination  of  this  Agreement,  whether  pursuant  to  this  Article  XII  or
otherwise,  all rights and  privileges of PTI and all duties and  obligations of
Colonial  hereunder  shall  terminate.  Within  one  hundred  eighty  (180) days
thereafter,    PTI   shall   remove   all   above-ground   facilities   of   the
Telecommunications  Network and only such  underground  facilities that Colonial
reasonably  requests be removed so as to avoid future interference with Colonial
pipeline operations;  provided,  however, that PTI may remove fiber optic cables
from within any Conduits (but not the actual  Conduits) if such removal of fiber
optic  cables may be performed  without the use of heavy  machinery in and about
the Colonial  Rights-of-Way  and without the need to dig or excavate  within any
portion of the Colonial  Rights-of-Way.  Any  facilities  not removed within the
foregoing time period shall become the sole property of Colonial, free and clear
of  any  and  all  claims  of  PTI,  without  the  payment  of  compensation  or
consideration  of any kind to PTI.  Immediately  upon  such  termination  of the
Agreement,  and without  further notice to any other party,  Colonial shall have
the right to assert,  perfect,  establish  or confirm  all rights  reverting  to
Colonial by reason of such  termination by any means  permitted by law.  Subject
only to the  rights  and  obligations  of PTI to remove  certain  facilities  as
described in the second sentence of this Section 12,4, and the continuing rights
of any bona fide third party  purchasers or assignees who have complied with the
provisions of  Subsections  15.1(c) or (d) hereof,  as  applicable,  such rights
shall include, without limitation,  the right to take possession of the property
leased  to PTI  hereunder,  together  with all  improvements  thereto,  fixtures
therein and any other alterations or improvements that may have been made to the
property leased hereunder (including, without limitation, the Telecommunications
Network),  with or  without  process  of law,  and to  remove,  at the option of
Colonial,  any such items from the  property  licensed  to PTI  hereby,  thereby
wholly terminating any right,  title,  interest or claim of or through PTI as to
such  property.  If Colonial  exercises any such rights,  it shall not incur any
liability  to PTI for any damage  caused or sustained by reason of such entry or
removal, except for damage resulting from Colonial's gross negligence or willful
misconduct in effecting such removal.



                                      -26-
<PAGE>

     12.5 Event of Default by Colonial.

          (a) Subject to the other  provisions  of this Article XII, it shall be
an Event of Default by Colonial  hereunder if Colonial shall be in breach of, or
Colonial  shall fail to  perform,  comply  with or observe  any term,  covenant,
warranty, condition, agreement or undertaking contained in or arising under this
Agreement  and such  failure  continues  for a period of thirty  (30) days after
written notice thereof is given by PTI to Colonial;  provided,  however, if such
default is a non-monetary  default and is not  susceptible of being cured within
thirty (30) days, no Event of Default shall have occurred  hereunder by Colonial
if it commences commercially reasonable efforts to cure such default within such
thirty (30) day period and  diligently  pursues the same to completion  within a
reasonable  time  thereafter,  not to exceed a total of one hundred  fifty (150)
days.

          (b) At any time  after the  occurrence  of an Event of  Default on the
part of Colonial,  PTI may exercise any and all rights or remedies  available to
PTI at law or in equity,  subject only to any limitations expressly set forth in
this Agreement.

     12.6 No Waivers.  No failure by any party  hereto to insist upon the strict
performance of any provisions of this Agreement or to exercise any right,  power
or remedy  consequent to any breach  thereof,  and no waiver of any such breach,
during the continuance thereof,  shall constitute a waiver of any such breach or
of any such provision or otherwise be deemed to affect or alter this  Agreement.
In any such event,  this Agreement shall continue in full force and effect,  and
the rights of any party hereto with respect to any other then-existing breach or
subsequent breach shall remain unaffected thereby.

     12.7 No Remedy Exclusive.  Except as expressly provided in this Article 12,
no remedy  herein  conferred  or  reserved  to Colonial or PTI is intended to be
exclusive of any other  available  remedy or  remedies,  but each and every such
remedy shall be cumulative, and shall be in addition to every other remedy given
under this  Agreement  or now or  hereafter  existing  at law or in equity or by
statute.  The  exercise  of any right or remedy  should not be  construed  as an
election  of remedies  and shall not  preclude  the right to exercise  any other
right or remedy.  No delay or failure to  exercise  any right or power  accruing
upon any  default  or Event of Default  shall  impair any such right or power or
shall be construed to be a waiver  thereof,  but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle  Colonial or PTI to exercise  any remedy  reserved to Colonial or PTI in
this Article XII, it shall not be necessary to give any notice,  other than such
notice as is herein expressly required by this Agreement.

     12.8 Force Majeure.  Neither party shall be in default under this Agreement
with  respect to any delay in such  party's  performance,  and all time  periods
shall be deemed  suspended,  to the extent  resulting  from any of the following
conditions:  act of God, fire, flood, material shortage or unavailability,  lack
of  transportation,  compliance with Applicable Laws, war or civil disorder,  or
any other cause beyond the reasonable  control of such party,  provided that the
party  claiming  relief  under this  Section  12.8 shall  notify the other party
promptly  in writing  of the  existence  of the event upon which such  relief is
claimed and further as to the cessation or



                                      -27-
<PAGE>

termination  of said event.  The party  claiming  relief under this Section 12.8
shall exercise reasonable efforts to minimize the time for any such delay.

     12.9 No Personal Liability.  Each action or claim against any party arising
under or relating to this  Agreement  shall be made only against such party as a
corporation,  and any  liability  relating  thereto  shall be  enforceable  only
against the  corporate  assets of such party.  No party shall seek to pierce the
corporate veil or otherwise seek to impose any liability relating to, or arising
from, this Agreement against any shareholder,  employee,  officer or director of
the other party.  Each of such persons is an intended  beneficiary of the mutual
promises  set forth in this  Article  XII and shall be  entitled  to enforce the
obligations of this Article XII.

                                  ARTICLE XIII
                 VOLUNTARY REMOVAL OF TELECOMMUNICATIONS NETWORK

     13.1 Removal of  Telecommunications  Network by PTI. Provided that an Event
of Default by PTI is not continuing to be in effect at such time, PTI may remove
any portion of the  Telecommunications  Network from any Segment (except for the
Colonial  Conduit and any Regen Facility or other Related  Facility that PTI has
made available for use by Colonial in connection with the Colonial Conduit,  all
of which must remain in place and intact in all  events) (it being  acknowledged
herein that PTI has no obligation  hereunder to provide any such Regen  Facility
or  Related  Facility  for  Colonial's  use),  provided  that as to  underground
facilities, PTI will provide Colonial with written notice of its intention so to
remove,  given (a) at least thirty (30) days prior to the date of such  removal,
and (b) not less than one (1) year  prior to the  expiration  of the Term.  Such
notice also will state whether PTI intends to replace the underground portion of
the  Telecommunications  Network so removed.  Upon the occurrence of an Event of
Default, PTI's rights of removal hereunder shall be suspended until such time as
such Event of Default has been cured.

                                   ARTICLE XIV
                                   ARBITRATION

     14.1 Arbitration.  In the event any dispute or disagreement arising between
Colonial and PTI in connection with this Agreement or the Fiber Optic Access and
Purchase Agreement is not settled to the mutual satisfaction of Colonial and PTI
within  thirty  (30) days from the date that either  party  informs the other in
writing that such dispute or disagreement  exists,  then either party may demand
arbitration by notifying the other party in writing (a "Notice of  Arbitration")
in  accordance  with the  notice  provisions  of  Section  17.1.  The  Notice of
Arbitration shall describe the reasons for such demand, the amount involved,  if
any, and the particular remedy sought.

     14.2  Selection of  Arbitrators.  The parties shall attempt to agree upon a
single  arbitrator;  however,  if the  parties are unable to agree upon a single
arbitrator  within fifteen (15) days after the Notice of Arbitration,  then each
party shall select an arbitrator within five (5) Business Days of the expiration
of the  initial  fifteen  (15)  day  period.  Upon  the  appointment  of the two
arbitrators,  and before  exchanging views as to the question at issue, said two
arbitrators



                                      -28-
<PAGE>

so selected shall appoint in writing a third arbitrator  within ten (10) days of
the selection of both of the first two arbitrators and shall give written notice
of such  appointment to the parties.  If the two  arbitrators  fail to appoint a
third  arbitrator in a timely manner,  then either party may apply to the United
States  District Court for the Northern  District of Georgia for the appointment
of such third arbitrator.

     14.3  Qualified  Arbitrator.  Any  arbitrator  selected in accordance  with
Section 14.2 shall be a natural  person not employed by either of the parties or
any parent or affiliated  partnership,  corporation or other enterprise  thereof
and  shall  be  knowledgeable  and  experienced  in  the  matters  sought  to be
arbitrated.   In  the  event  that  the  matter  to  be  arbitrated  deals  with
construction  or  engineering  issues,  the  arbitrator  so  appointed  shall be
experienced and knowledgeable in the construction and engineering industry as it
relates to the nature of the structure to which such arbitration applies. In the
event any arbitrator selected as aforesaid thereafter shall die or become unable
or unwilling to act, such  arbitrator's  successor shall be selected in the same
manner provided in Section 14.2.

     14.4 Arbitration Hearing;  Discovery;  Venue. The arbitration hearing shall
commence  within thirty (30) calendar days of appointment of the single or third
arbitrator,  as  applicable,  as  described in Section  14.2.  There shall be no
dispositive  motion practice (such as motions for summary judgment or to dismiss
or the like)  except as may be  permitted by the  arbitrators.  All  arbitration
shall be conducted  in  accordance  with the rules of the  American  Arbitration
Association,  except that  discovery  shall be permitted in accordance  with the
Federal Rules of Civil Procedure.  Venue of any arbitration  hearing pursuant to
this Article XIV shall be in the metropolitan Atlanta,  Georgia area. Each party
shall bear the cost of preparing and executing its own case.

     14.5 Decision.  The  arbitrators'  decision shall be made in no event later
than thirty (30) calendar days after the conclusion of the  arbitration  hearing
described in Section 14.4. The award shall be final and binding upon the parties
and shall include written  findings of law and fact, and judgment may be entered
thereon by either party in any court having competent  jurisdiction thereof. The
arbitrators may award specific  performance of this  Agreement.  The arbitrators
may  also  require  remedial  measures  as part of any  award.  The  cost of the
arbitration,  including  the fees and  expenses of the  arbitrator(s),  shall be
shared equally by the parties hereto unless the award otherwise provides.

     14.6  Non-Binding in Certain Events.  Notwithstanding  any provision to the
contrary in this Article XIV, the  obligation  herein to arbitrate  shall not be
binding  upon any party with respect to requests  for  preliminary  injunctions,
temporary  restraining  orders  or  other  procedures  in a court  of  competent
jurisdiction  to obtain  interim  relief when deemed  necessary by such court to
preserve the status quo or to prevent  irreparable  injury pending resolution by
arbitration of the actual dispute.



                                      -29-
<PAGE>

                                   ARTICLE XV
                                   ASSIGNMENT

     15.1 Assignment by PTI.

          (a) Except as expressly provided in this Section 15.1 below, PTI shall
not assign or  otherwise  transfer  this  Agreement  or its  rights,  covenants,
liabilities  or obligations  hereunder,  in whole or in part, to any other party
without the prior written consent of Colonial. Nothing herein shall prohibit PTI
from involving  strategic or co-development  partners or customers in connection
with its performance  hereunder,  on such terms as PTI may determine in its sole
discretion,  provided (i) all such  activities are conducted in accordance  with
the terms of this  Agreement;  (ii) PTI shall not be  released  from,  and shall
remain  fully  liable to  Colonial  for all of its  covenants,  liabilities  and
obligations  hereunder  and the acts or  omissions  of all parties  claiming by,
through or under PTI; (iii) PTI remains the sole point of contact with Colonial;
and (iv) all activities of parties claiming by, through or under PTI on Colonial
Rights-of-Way are conducted under PTI's supervision.

          (b) PTI shall have the right, without Colonial's consent, to assign or
otherwise  transfer  this  Agreement  (i)  to any  entity  that,  indirectly  or
directly,  is controlled by, controls or is under common control with PTI, or to
any entity into which PTI may be merged or  consolidated  or which purchases all
or  substantially  all of the assets of PTI; or (ii) as collateral in connection
with  any  financings  by any  lender;  provided,  however,  that  (x) any  such
assignment or transfer described in this Subsection 15.1(b) shall be subject and
subordinate  in all respects to this  Agreement and to Colonial's  rights as the
owner  of the  Colonial  Rights-of-Way;  (y) any  such  assignee  or  transferee
described in clause (i) above shall  continue to perform  PTI's  obligations  to
Colonial  under the terms and conditions of this  Agreement;  and (z) any lender
described in clause (ii) above shall have the right to assume all (but not part)
of PTI's  rights  and  obligations  under  this  Agreement.  In the event of any
permitted  partial  assignment of any rights  hereunder or in any portion of the
Telecommunications  Network,  PTI shall  remain the sole  point of contact  with
Colonial.

     15.2  Assignment  by  Colonial.  Colonial  shall  have the right to assign,
license or otherwise  transfer this  Agreement  and/or its rights or obligations
hereunder as it pertains to a particular  Segment (or discrete  portion thereof)
of the Colonial  Rights-of-Way,  in connection  with a sale or other transfer of
Colonial's  rights  within such Segment (or discrete  portion  thereof),  to any
third party;  provided,  however,  that any such assignment or transfer shall be
made subject to the terms and conditions of this Agreement and any such assignee
or transferee shall continue to perform Colonial's  obligations to PTI under the
terms and  conditions  of this  Agreement.  Colonial  also shall have the right,
without PTI's consent, to assign or otherwise transfer this Agreement and/or its
rights or obligations hereunder: (i) to any entity that, indirectly or directly,
is controlled by,  controls or is under common control with Colonial,  or to any
entity into which Colonial may be merged or  consolidated or which purchases all
or  substantially  all of the  assets  of  Colonial;  or (ii) as  collateral  in
connection with any financings by any lender.



                                      -30-
<PAGE>

     15.3 Binding Upon  Successors  and Assigns.  This Agreement and each of the
parties'  respective  rights  and  obligations  under this  Agreement,  shall be
binding  upon and shall inure to the  benefit of the parties  hereto and each of
their respective permitted successors and assigns.

                                   ARTICLE XVI
                                 CONFIDENTIALITY

     16.1 Confidentiality.  If either party provides confidential information to
the other in writing and it is  identified as such,  the  receiving  party shall
protect the  confidential  information from disclosure to third parties with the
same degree of care accorded its own confidential  and proprietary  information.
Neither party shall be required to hold  confidential  any information  that (a)
becomes publicly available other than through the recipient;  (b) is required to
be disclosed by a Governmental  Authority or Applicable Law; provided,  however,
that the information disclosed is limited to the existence and general nature of
the  relationship  between  the  parties,  including,  as  required,  the scope,
approximate revenues, purposes and expectations related to such relationship and
a description of any disputes relating thereto;  (c) is independently  developed
by the  disclosing  party;  or (d) becomes  available  to the  disclosing  party
without  restriction  from a third party.  These  obligations  shall survive any
expiration or termination of this Agreement.

                                  ARTICLE XVII
                                  MISCELLANEOUS

     17.1 Notices. All notices,  demands,  requests, or other writings delivered
pursuant to this  Agreement  shall be in writing and may be given  personally or
may be delivered by depositing  the same in the United  States mail,  certified,
registered or equivalent,  return receipt requested,  postage prepaid,  properly
addressed, and sent to the following addresses:

            If to Colonial:    Colonial Pipeline Company
                               945 E. Paces Ferry Rd., N.E.
                             Atlanta, GA 30326-0855
                               Attention:  General Counsel
                                Fax: 404-841-2315

            with a copy to:    Arnall Golden & Gregory, LLP
                               1201 West Peachtree Street, Suite 2800
                               Atlanta, Georgia 30309-2450
                               Attention: Donald I. Hackney, Jr., Esquire
                                Fax: 404-873-8639

            If to PTI:         Pathnet Telecommunications, Inc.
                               1661 Gateway Boulevard
                               Richardson, Texas  75080
                               Attention:  Senior Vice President, Engineering
                                Fax: 972-231-9728



                                      -31-
<PAGE>

            with a copy to:    Pathnet Telecommunications, Inc.
                               11720 Sunrise Valley Drive
                               Reston, Virginia 20191
                               Attention:  General Counsel
                                Fax: 703-390-2800

or to such other  address  as either  party may from time to time  designate  by
written notice to the other party.  Notices given by mail as aforesaid  shall be
deemed  received and  effective  as of the first  Business  Day  following  such
dispatch; provided, however, that if any such notice or other communication also
shall be sent by telecopy or fax  machine,  such notice shall be deemed given at
the time and on the date of machine  transmittal if the sending party receives a
written send  verification  on its machines and forwards a copy thereof with its
mailed or courier delivered notice or communication.

     17.2 No Partnership. Nothing contained herein or in any instrument relating
hereto shall be construed as creating a  partnership  or joint  venture  between
Colonial and PTI or between  Colonial and any other party,  or cause Colonial to
be  responsible  in any way for the  debts or  obligations  of PTI or any  other
party.

     17.3 Time of the Essence.  Time is hereby  expressly  declared to be of the
essence  of this  Agreement  and of each and every  term,  covenant,  agreement,
condition and provision hereof.

     17.4 Entire  Agreement.  Except for the  Services  Agreement  and the Fiber
Optic Access and Purchase Agreement,  this Agreement  constitutes the entire and
final  agreement  and  understanding  between  the parties  with  respect to the
subject  matter  hereof and  supersedes  all prior  agreements  relating  to the
subject  matter  hereof,  which are of no further force or effect.  The Exhibits
referred to herein are integral  parts hereof and are hereby made a part of this
Agreement.

     17.5  Captions.  The captions of this  Agreement  and the table of contents
preceding this Agreement are for  convenience  and reference only, and are not a
part of this  Agreement,  and in no way amplify,  define,  limit or describe the
scope or intent of this Agreement, nor in any way affect this Agreement.

     17.6 Meaning of Terms.  Words of any gender in this Agreement shall be held
to include any other  gender and words in the  singular  number shall be held to
include the plural when the sense requires.

     17.7 Agreement Construed as a Whole. The language throughout this Agreement
shall be construed as a whole according to its fair meaning and neither strictly
for nor against Colonial or PTI.

     17.8  Severability.  If any provision of this Agreement or the  application
thereof  to any  person  or  circumstances  shall to any  extent be  invalid  or
unenforceable,  the  remainder of this  Agreement,  or the  application  of such
provision to persons or circumstances other than those as to



                                      -32-
<PAGE>

which it is invalid or unenforceable,  shall not be affected  thereby,  and each
provision of this Agreement  shall be valid and shall be enforced to the fullest
extent permitted by law.

     17.9  Survival.  Each  provision  of this  Agreement  that may  require the
payment of money by, to or on behalf of Colonial or PTI or third  parties  after
the expiration of the Term hereof or its earlier  termination shall survive such
expiration or earlier termination.

     17.10 Amendment. This Agreement may be modified or amended only in writing,
signed by a duly authorized officer of both Colonial and PTI.

     17.11 Attorneys' Fees. In any proceeding or controversy  associated with or
arising out of this Agreement or a claimed or actual breach  thereof,  or in any
proceeding  to recover the  possession  of the property  leased  hereunder,  the
prevailing  party shall be entitled to recover from the other party as a part of
the prevailing  party's costs,  reasonable  attorney's fees, the amount of which
may be fixed by the court and may be made a part of any judgment  rendered.  For
the purposes of this Agreement, the term "reasonable attorneys' fees" shall mean
legal fees actually incurred by a party at the normal and customary hourly rates
of  attorneys  experienced  in the area of law in dispute and shall not be based
upon a percentage of any amount of any judgment,  notwithstanding  any statutory
or other presumption to the contrary.

     17.12  Interest.  Except as otherwise  specifically  provided  herein,  any
amounts due from one party to the other pursuant to the terms of this Agreement,
including  amounts to be reimbursed  one to the other,  shall bear interest from
the due date or the date the  right  to  reimbursement  accrues  at (a) the rate
published or publicly  announced  most recently prior to such date as the lowest
rate charged by Citibank,  N.A., or its successor,  for  commercial,  short-term
unsecured loans, plus (b) two percent (2%) (such sum being referred to herein as
the "Default Rate"); provided, however, that such Default Rate shall not exceed,
in any event, the highest rate of interest which may be charged under Applicable
Law  without the  creation of  liability  for  penalties  or rights of offset or
creation of defenses.  For purposes of interest  calculations  unless  otherwise
provided  herein,  the due date of any  amount or the date from which a right to
reimbursement  accrues  shall be  deemed  to be the  date  from  which  interest
accrues.

     17.13 Governing Law. This Agreement shall be construed according to and
governed by the laws of the State of Georgia.

     17.14 Business Days. For the purposes of this  Agreement,  a "Business Day"
shall mean a day on which banks are  required to open for the conduct of banking
business at their principal  offices under the laws of the State of Georgia.  If
this Agreement  provides for the performance of any obligation or the expiration
of any time  period on or no later than a day that is not a Business  Day,  then
the  applicable  day of  performance  or  expiration of the time period shall be
extended until the next succeeding Business Day.

     17.15. Reference Date of Agreement. For reference purposes, the date of
this Agreement shall be the date on the first page hereof, irrespective of the
date Colonial or PTI actually executes this Agreement.



                                      -33-
<PAGE>

     17.16 Counterparts. This Agreement may be executed in several counterparts,
each of which  shall be  deemed  to be an  original,  and all such  counterparts
together shall constitute one and the same agreement.

     17.17 Exhibits. The Exhibits to this Agreement are:

              EXHIBIT                       DESCRIPTION
              -------                       -----------
              Exhibit A               System Map
              Exhibit B               Form of Segment Lease
              Exhibit C               Form of Right-of-Way Permit
              Exhibit D               Currently Perfected Segments
              Exhibit E               General Colonial Construction Standards






                                      -34-
<PAGE>


     IN WITNESS WHEREOF, Colonial and PTI have executed this Agreement as of the
day and year first above written.

                                    COLONIAL:

                                    COLONIAL PIPELINE COMPANY,
                                    a Delaware corporation


                                       By:/s/ D.L. Lemmon
                                         ----------------------------------
                                         Name: D.L. Lemmon
                                               ----------------------------
                                         Its:  President and Chief Executive
                                                  Officer
                                               ----------------------------


                                                           [CORPORATE SEAL]


                                      PTI:

                                    PATHNET TELECOMMUNICATIONS, INC.,
                                    a Delaware corporation


                                       By: /s/ Richard Jalkut
                                         ----------------------------------
                                         Name:    Richard Jalkut
                                               ----------------------------
                                         Its:     CEO
                                               ----------------------------






                                      -35-
<PAGE>


                                    EXHIBIT A

                                   SYSTEM MAP

                            (Map of Colonial System)



                                      -35-

<PAGE>



                                    EXHIBIT B

                              FORM OF SEGMENT LEASE

- ------------------------------------------------------------------------------

                                  SEGMENT LEASE

         THIS SEGMENT LEASE (the "Segment Lease"), made this ____ day of
____________, ____, between COLONIAL PIPELINE COMPANY ("Lessor") and PATHNET
TELECOMMUNICATIONS, INC. ("Lessee").

                              W I T N E S S E T H:

         WHEREAS,  Lessor and Lessee  heretofore  have entered into that certain
Master Right-of-Way Lease Agreement (the "Master Lease Agreement"),  dated as of
March 30, 2000;

         WHEREAS,  pursuant to the Master Lease  Agreement,  Lessee has executed
and delivered to Lessor a "Designation Notice", conforming in form and substance
to the requirements of said Master Lease Agreement;

         WHEREAS, said Designation Notice describes a "Segment" of the "Colonial
Rights-of-Way",  which  Segment  is more  particularly  described  on  Exhibit A
attached hereto and incorporated herein; and

         WHEREAS,  Lessor and Lessee  desire to enter  into this  Segment  Lease
Agreement,  in accordance with the terms of the Master Lease Agreement, in order
to evidence  the  leasing of the Segment to Lessee,  subject to all of the terms
and conditions hereof and in the Master Lease Agreement.

         NOW,  THEREFORE,  for and in consideration  of the covenants  contained
herein, the sum of Ten and No/100 Dollars ($10.00),  and other good and valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Lessor and Lessee hereby agree as follows:

         1. All capitalized  terms used herein and not otherwise  defined herein
shall have the same  meaning  as  ascribed  to such  terms in the  Master  Lease
Agreement.

         2.  Subject to  Section 4 hereof,  Lessor  hereby  leases to Lessee the
Segment on the terms and  conditions  contained  herein and in the Master  Lease
Agreement.

         3. The term of this  Segment  Lease  shall  commence on the date hereof
and, if not otherwise  terminated in accordance  herewith or in accordance  with
the Master Lease Agreement, shall terminate at the expiration of the "Term".

<PAGE>

         4.  The  parties  hereto  acknowledge  that,  after  completion  of the
"Perfection  Process"  with  respect to the Segment,  Lessor  shall  execute and
deliver to Lessee a "Permit"  for the  Segment,  in  substantially  the form set
forth on  Exhibit C to the Master  Lease  Agreement.  Notwithstanding  any other
provision  herein to the contrary,  the parties hereto further  acknowledge  and
agree  that,  upon the  issuance  of such  Permit  with  respect to the  Segment
described herein, this Segment Lease shall terminate automatically,  without the
requirement  of any  additional  action or  documentation  on the part of either
party,  with  respect to all  portions of the  Segment  for which  Lessee is not
granted specific rights to use under the terms of the applicable Permit.

         5. The Master Lease  Agreement  shall govern and control the use of the
Segment and,  upon the  issuance of the Permit,  the  applicable  portion of the
Segment described  therein.  Lessor and Lessee shall comply with all obligations
contained  in the  Master  Lease  Agreement  that  apply to the  Segment  or the
applicable  portion  thereof  and Lessor  and  Lessee  shall have all rights and
remedies  contained in the Master Lease Agreement with respect thereto.  Without
limiting in any way the  foregoing,  Lessee shall not have the right to commence
any "PTI Work" until  compliance  by Lessee with the  applicable  provisions  of
Sections 3.1 and 3.2 of the Master Lease Agreement.

         6. In the event of any  inconsistency  between any of the terms  hereof
and any of the terms of the Master Lease Agreement,  the applicable terms of the
Master Lease Agreement shall govern and control.

         IN WITNESS WHEREOF, the parties hereto have set their hands and seals
this ___ day of _______________, _______________.


                                     LESSOR:

                                     COLONIAL PIPELINE COMPANY

                                     By:      __________________________________
                                     Its:     __________________________________

                                                                [CORPORATE SEAL]
                                       -2-

<PAGE>


                                     LESSEE:

                                     PATHNET TELECOMMUNICATIONS, INC.

                                     By:      __________________________________
                                     Its:     __________________________________

                                                                [CORPORATE SEAL]
                                       -3-

<PAGE>


                       EXHIBIT A TO FORM OF SEGMENT LEASE

                             Description of Segment


                        [to be agreed to by the Parties]

                                       -4-

<PAGE>



                                    EXHIBIT C

                           FORM OF RIGHT-OF-WAY PERMIT


LEGAL DESCRIPTION OF RIGHT-OF-WAY

Colonial  right-of-way of  ________________  (INSERT ACCURATE LEGAL DESCRIPTION)
referenced in Segment Lease dated  __________ (the "Segment  Lease").  Beginning
approximately at Colonial Location No.  ___________ and ending  approximately at
Colonial Location No.  ___________ for a total distance of approximately  ______
miles and as further  described on attached as-built survey drawings provided by
PTI.

SPECIAL CONDITIONS ON USE OF RIGHT-OF-WAY

Notwithstanding  the terms of the Segment Lease, PTI shall have the right to use
only such  portions of the Segment that are the subject of the Segment  Lease as
are specifically  described  hereinbelow.  PTI telecommunication  lines, cables,
conduits  and other  similar  equipment  and  facilities  shall be  installed in
conformity   with  the  plans   mutually   approved  by  the  parties  prior  to
construction.  In general, the specifications anticipate a minimum separation of
ten feet (10')  between the  telecommunications  lines and the nearest  Colonial
pipeline.  Where the existing right-of-way provides more than fifteen feet (15')
between the Colonial  right-of-way  boundary and the nearest Colonial  pipeline,
the  telecommunication  lines shall be built five feet (5') from the edge of the
Colonial  right-of-way.  Said  routing  is  preliminarily  depicted  as shown on
attached  construction drawings and as-built survey drawings provided by PTI. It
is understood that PTI will need as workspace a strip of land approximately ____
feet  (____')  in width in which to  perform  construction  work and that,  upon
completion of such work, PTI will restore the  right-of-way  in accordance  with
the agreements  between  Colonial and the Landowners and in accordance  with the
Colonial post-construction  grassing specifications,  but under no circumstances
shall  restoration  result in the  condition  of the  subject  land  being  less
favorable to the underlying  Landowner than the condition existing prior to such
work.  Depth of installation,  which shall be at least thirty-six  inches (36"),
and the  determination  as to the  side of the  Colonial  right-of-way  on which
installation  shall occur must be addressed and PTI must give advance  notice to
Colonial  of the time and place of any  construction.  Colonial  shall  have the
right to observe and inspect all construction within any Colonial  right-of-way.
All  construction  work shall be completed  within  _________ (____) days of the
date hereof and shall be performed lien free and upon completion of construction
PTI shall  deliver a final  affidavit  and lien  waivers  from all  contractors,
subcontractors  and other  persons  performing  work or  supplying  material  or
equipment.

<PAGE>

ACKNOWLEDGMENT

Colonial and PTI acknowledge that they intend for this Permit to be incorporated
into  the  Master   Right-of-Way  Lease  Agreement  between  the  parties  dated
March 30, 2000 and that this Permit hereby modifies the aforesaid  Segment Lease
by limiting the description of the  right-of-way  leased thereby to the specific
property described herein. The effective date of this Permit is the last date on
which this Permit was signed by either party, as indicated below.

COLONIAL PIPELINE COMPANY,                  PATHNET TELECOMMUNICATIONS,
a Delaware corporation                      INC., a Delaware corporation

By:                                         By:
   -------------------------                   -------------------------
Its:                                        Its:
    ------------------------                    ------------------------
Date:                                       Date:
     -----------------------                     -----------------------

                                       -2-

<PAGE>



                                    EXHIBIT D

                          Currently Perfected Segments

Listed  below are the  segments  of Colonial's  right of way  that have been
perfected(1) for telecommunications  purposes:

1.   Americus  Delivery  Facility to Bainbridge  Deliver  Facility (common name)
     more  particularily  described  as  that  segment  of the  Colonial  System
     referenced  as  Location  Locations  0515:001  to  0515:098  in Sumter  and
     Dougherty  Counties,   Georgia,  and  Locations  0516:001  to  0516:114  in
     Dougherty, Mitchell, Baker and Decatur County, Georgia.

2.   Dorsey Junction to:

     (a)  South  Baltimore  Delivery  Facility - Location  1007:001 to 1007:176;
          Location  1008:001 to  1008:069;  and  Location  1010:070 to 1010:176,
          Carroll, Howard, Anne Arundel and Baltimore Counties, Maryland;

     (b)  Curtis Bay Delivery Facility - Location 1007:001 to 1007:171, Carroll,
          Howard and Anne Arundel Counties;

     (c)  Baltimore-Washington Airport Delivery Facility - Location 1008:001 to
          1008:069 and Location  1012:001 to  1012:011, Carroll,  Howard and
          Anne Arundel Counties;

     (d)  Washington  Delivery  Facility - Location  1009:001  to  1009:026  and
          Locations  1501:026A  to 1501:163,  Carroll,  Howard,  Montgomery  and
          Prince  George's  Counties,  Maryland and in the District of Columbia;
          and

     (e)  Finksburg  Delivery Facility - Location  1009:001 to 1009:052,  Howard
          and Carroll  Counties,  Maryland.

3.   Atlanta Junction to Chattanoogo  Delivery  Facility - l=Locations 504, 505,
     506,  507 & 508.  Project was halted 2 1/2 weeks after start of  perfection
     acquisition.  During  this  2 1/2  period,  21  easement  perfections  were
     acquired  (16 in Cobb  County,  Georgia -  Location  504;  and 5 in Pauling
     County, Georgia - Location 505).


- -----------------

(1) The "perfected segments" in segment 1 above are substantially  perfected. In
some cases,  parcels  were omitted  because of  unreasonable  difficulties  that
suggested alternate routing within road rights-of-way that were left unpermitted
until construction was scheduled. In segment 2, 140 out of 257 parcels contained
telecommunications provisions.


<PAGE>



                                    EXHIBIT E

                     GENERAL COLONIAL CONSTRUCTION STANDARDS

A.       GENERAL DESCRIPTION OF PROJECT - PROTECTION OF UNDERGROUND PIPELINES
         FROM FIBER OPTICS INSTALLATION

This project consists of the protection of underground  petroleum pipelines from
a third  party's  installation  of fiber  optics  cables and related  facilities
within  the  pipeline  right  of  way.  These  specifications  govern  all  such
installations  regardless of their location,  rural or urban,  regardless of the
width of the right of way,  the depth or size of the  pipelines,  or the size of
the proposed fiber optic conduits.

These  specifications  are designed to be made a part of any  agreement  between
Colonial and the fiber optic party encroaching on the pipeline right of way, its
construction contractor and any entity contracted to perform utility location or
inspection  services  for  the  benefit  of  either  party  (collectively,   the
"Company").

B.       THE PARTIES ARE CAUTIONED AS FOLLOWS

         B.1. The  underground  pipeline  which is the subject of the protective
measures described herein is a carrier of a hazardous and highly volatile liquid
under high pressure. Damage to the pipeline must be avoided in all circumstances
and at any cost.  Personal  injury  and loss of life are not  unlikely  if fiber
optic construction equipment comes in contact with the pipeline.  Serious damage
to property and the  environment  in the  magnitude  of the highest  order are a
certainty if a leak results from damage to the pipeline. Damage to the pipelines
from such third party  installation  might result in an immediate rupture or are
likely to weaken the pipeline to the extent that a leak is inevitable. In either
event the  resulting  damage to the  property  and the  environment  is  usually
catastrophic.

         B.2. The Company,  its  contractors,  agents and  subcontractors  shall
indemnify,  defend and hold  Colonial  harmless for all injury to all persons or
property,  loss and damage  resulting from a leak caused  directly or indirectly
from installation of the fiber optic facilities contemplated hereunder,  and any
direct or indirect consequences  therefrom,  whether such injury to the pipeline
was caused by negligence, recklessness, or willful misconduct or by a failure to
protect the pipeline as described in these specifications.

         B.3. The herein  obligations  of the Company shall continue for so long
as a  pipeline  remains  within  the  right of way  easement,  and  shall not be
extinguished upon the sale, assignment or removal of the fiber optic facilities,
and such obligations  shall be binding upon up the successors and assigns of the
Company

                                       -i-

<PAGE>


C.       PRE-CONSTRUCTION REQUIREMENTS

         C.1.  Subsequent to Colonial  providing  data  regarding its easements,
title,   pipeline  location  and  survey,  the  Company  shall  coordinate  with
Colonial's  Right  of Way  and  Engineering  departments  throughout  its  title
confirmation, route survey and rights acquisition activities.

         C.2.  Upon  completion  of work  in  C.1,  the  Company  shall  prepare
alignment  sheets,  ownership  and  construction  line  lists,  and  work  plans
necessary to prosecute the work described below.

         C.3. Among other things,  the line lists shall include landowner names,
tenants,  special  construction  provisions,  and  Colonial  shall  preview  all
instrument  forms used to perfect the rights required to install the fiber optic
facilities.

         C.4. Among other things, the alignment sheets shall include:  the width
of  Colonial's  easement,  the location of  Colonial's  pipelines,  the proposed
location of the Company's  facilities and the proposed  construction  work space
limits  and  distances  of  separation  of  same  with  pipelines  and  easement
boundaries.

         C.5.  Among other things,  the work plans shall include a detailed list
of construction procedures,  contractors and equipment.  Colonial shall be given
the  opportunity  to preview  the  Company's  proposed  construction  contracts,
provide comments and recommendations, whereupon the Company shall cooperate with
Colonial  to remove  all  items  denoted  as "in  conflict"  with the  safety of
Colonial's pipelines,  as determined in Colonial's sole and absolute discretion.
Colonial shall inspect and approve all final  installations,  specifications and
route maps prior to commencing fiber optic installation  within its right of way
easements.

         C.7. Prior to  commencement  of  construction  activities,  the Company
shall  provide  Colonial  with a list of all  successful  bidders  contracted to
perform  any and all work in  prosecution  of its  construction,  as well as the
names of employees  and  personnel  in  supervisory  positions  assigned to such
activity.

         C.8. Upon approval of the specifications, Colonial shall furnish a copy
of its  detailed  encroachment  requirements  for all phases of fiber optic line
co-location  within Colonial's  easements.  These requirements shall include but
not be limited to:  ditching;  placement of backfill,  replacement  of backfill;
tamping and  compaction;  rock  excavation;  blasting;  road,  railroad or water
crossings by  trenching,  boring,  jacking  and/or  directional  drilling;  soil
erosion and sedimentation  control;  equipment traffic  paralleling and crossing
the pipeline(s),  including  requirements for earthen padding, when and how much
is needed; notification;  inter-Company communication and landowner relations. A
guided boring head shall be used when boring, jacking or directional drilling is
performed.

                                      -ii-
<PAGE>

         C.9.  Colonial and the Company shall compare  operating and maintenance
manuals,  and  revisions  shall be made to include the  presence of each other's
facilities and what measures  shall be taken to protect the other's  facilities,
including emergency response procedures and notification instructions.

         C.10. All inspectors used to ensure that the  installation is performed
to  Colonial's  standards  as  expressed  herein  shall be chosen and trained by
Colonial.  Colonial  shall  provide  the Company  with a list of its  inspection
personnel,  and the Company shall submit any objections or suggestions about the
deployment of such personnel and their roles as described below.

D.       COMPANY EQUIPMENT EMPLOYED TO INSTALL THE FIBER OPTIC FACILITIES

         D.1. The Company shall list and describe all equipment and machinery
which shall be used to construct and install the fiber optic facilities.

         D.2.  Colonial  shall be given the  opportunity to review the impact of
the proposed  equipment and machinery and amend these  specifications to account
for any equipment not anticipated at the time of this Agreement.

         D.3.  The  Company  shall  make its best  efforts  to  comply  with any
Colonial  suggestions  regarding the use of said equipment and suggested  safety
procedures,  and  cooperate  with  Colonial  to resolve  any  conflicts  ensuing
therefrom.

E.       LANDOWNER RELATIONS

         E.1. The Company shall include the following landowner relations
activities in prosecution of its construction activities:

                  (a)      Provide personnel to conduct courtesy notifications
                           to landowners of impending construction activities;

                  (b)      Make arrangements to protect and contain livestock
                           and other landowner animals and pets;

                  (c)      Take down fences and replace same, repairing any
                           damage resulting therefrom;

                  (d)      Conduct   post   construction   cleanup   activities,
                           including  the  reseeding  of the  construction  work
                           space  area with  ground  cover and  erosion  control
                           devices;

                  (e)      Settlement of all off right of way damages, and the
                           payment of all construction damages not paid in
                           advance of construction.

                                      -iii-

<PAGE>

F.       SURVEYS AND MAPPING

         F.1. The Company shall provide as-built survey personnel during
construction to document actual placement of all underground and above-ground
facilities.

         F.2. Alignment sheets of the proposed routing shall be updated monthly
during construction and distributed to designated Colonial offices.

G.       APPROVAL OF INSPECTOR

         G.1.  No fiber  optic  installation  will be allowed to commence in any
Colonial right of way easement without the presence of a Colonial  inspector and
such inspector's approval to proceed.  Daily work permits shall be obtained from
Colonial  for  all  crews  performing  excavation  or  installation  within  the
easement.

         G.2. The inspector is charged with the responsibility of protecting the
pipelines, and any construction activity observed in violation of this Agreement
shall be communicated to the offending equipment operator or other person acting
in violation of this  Agreement,  whereupon the person  performing the offending
activity shall immediately refrain from such activity.

         G.3.  Failure to refrain from the activity in violation of the terms of
this Agreement shall result in an immediate shut down of such activity until the
Company provides adequate  reassurances that corrections have been made to avoid
further occurrence of said activity.

         G.4. Failure to observe a shut down order by an inspector shall result
in a breach of this Agreement and subject the Company to the penalties
described in this Agreement under Article XII.

H.       LOCATING AND FLAGGING THE FACILITIES, AND MARKING THE CONSTRUCTION
         LIMITS

No fiber optic installation will be allowed to commence in any Colonial right of
way  easement  without  the  marking  of the  centerlines  of all of  Colonial's
existing  pipelines and  appurtenances,  as well as the flagging of the route of
the fiber optics lines and the limits of the construction work space.

         H.1.  Locating  the  pipelines  shall be  accomplished  by  utilizing a
Metrotech  model 810 inductive  type finders or  equivalent,  in the  conductive
mode,  supported by metal rods probing at the placement of every stake, and then
confirming the location by finding the top of the pipe with a probe rod. Probing
shall only be performed by Colonial personnel,  unless approved and inspected by
Colonial's inspector.

                                      -iv-

<PAGE>

         H.2. Flagging stakes on the centerline of the nearest pipeline shall be
made of  three-foot  (3') wood  lathing  with red ribbon  flagging  and shall be
placed at  intervals  not  exceeding  fifty  feet  (50')  separation  and at all
pipeline P.I. all fence  crossing,  road and railroad right of way limits and at
all waterway high water marks, along with spray painting of the ground where the
stake enters the earth's  surface.  Pipeline  centerline  stakes and fiber optic
line stakes  shall be labeled with  station  numbers at foreign line  crossings,
property  lines,  and the limits of all  crossing  easements  and flagged with a
contrasting  color from  interval  stakes.  If pipeline  station  numbers do not
correspond  with Colonial  alignment  sheets,  the route  surveyor  shall notify
Colonial's  inspector  and  make  note  of  discrepancies  on a set of  Colonial
alignment sheets  designated for changes in surface  observations.  The pipeline
right of way  shall be clear  cut or  mowed  to  allow  visibility  of  staking.
Replacement  of all stakes is  mandatory  should they  disappear  prior to fiber
optic installation.

         H.3. The boundary of the work space closest to the  pipelines  shall be
staked with optic  yellow,  continuous  police-type  ribbon draped from stake to
stake, each stake exceeding three feet (3') above ground.

         H.4.  The  centerline  of the  fiber  optic  lines  shall be  staked at
intervals not  exceeding  fifty feet (50')  separation  and shall be marked with
optic orange flagging.

         H.5. All pipelines must be located to ensure that the pipeline  closest
to the proposed installation is identified,  however, the Company is required to
flag only the closest pipeline.

I.       CONSTRUCTION AND SAFETY

         I.1.  Placement - All linear fiber optic lines shall be installed  near
the outer  limits of  Colonial's  easements,  and  under no  circumstances  will
Colonial  approve the  installation  of linear fiber optic lines within ten feet
(10') of the centerline of any of its pipelines.

         I.2. If the existing width of Colonial's easement is insufficient to
provide a 10-foot separation, then an easement modification or an new easement
must be acquired.

         I.3. Copies of any easement modification or new easements shall be
provided to Colonial prior to commencing installation of the fiber optic lines.

         I.4.  Machinery and equipment  shall only be allowed to cross or travel
across  Colonial's  pipelines  within  designated  crossing lanes that have been
built up with extra  earth  padding  and/or  other  protection  as  approved  by
Colonial's  inspector.  No  other  work  shall be  permitted  on top of or above
Colonial's pipelines without a written work variance  authorization  executed by
Colonial's chief engineer,  and accompanied by a written description of the work
to be performed.

                                       -v-

<PAGE>

         I.5. No longitudinal vehicle and equipment traffic over Colonial's
pipelines will be permitted.

         I.6. Colonial does not require the installation of fiber optic lines be
at a certain depth,  provided,  however,  that where a crossover is necessary (a
crossover  meaning  the  need to move the  fiber  optic  lines  from one side of
Colonial's  easement  to the other) the fiber  optic  lines  shall be encased in
steel the entire  distance of the  crossover,  and they shall always cross below
Colonial's lines at a minimum clearance of 24 inches. When crossing any Colonial
pipeline,  the pipeline  crossing location shall be excavated to the extent that
the crossing can be observed without obstruction, and all excavation within five
feet (5') of the outer  wall of a pipeline  shall be  performed  by hand  tools,
unless  authorized by the Colonial  inspector.  All crossovers  shall be made as
near as practical to the  perpendicular  (90 degrees).  The number of crossovers
shall be held to an absolute minimum.

         I.7. Any surface altering  equipment  necessary for the installation of
the communication  facilities will only be permitted  subsequent to the approval
of individual site plans. All  installations  within Colonial  facility property
shall be permitted subsequent to locating all underground pipeline facilities by
Metrotech  pipe  finders,   probing  and  hand  digging  to  visually  spot  the
facilities.  Any  clearing and grading  within the  easement  area shall only be
performed in the presence of a Colonial inspector.

         I.8.  The  installation  of  cables,   conduits,   fibers,   equipment,
appurtenances and all other facilities,  whether above or below ground, shall be
located no less than ten feet (10') from the centerline of any Colonial pipeline
in its right of way,  which shall be  extended to a minimum  distance of no less
than  twenty  feet  (20')  at all  road  and  water  crossings  or in any  other
circumstance  where  installation  requires  boring or  drilling  or where  soil
conditions dictate.

         I.9. No installation shall proceed without the presence of a Colonial
inspector on site and in a position to observe the installation activity.

         I.10. No installation shall proceed without the presence of staking
and flagging as described in Section H above.

J.       POST-CONSTRUCTION DELIVERABLES

         J.1. Within six months of completion of the installation contemplated
herein the Company shall provide Colonial:

                  (a) "as built"  alignment  sheets and survey,  indicating  the
location of fiber optic  installations,  the depth of the fiber optic facilities
were  buried,  the  distances  to  the  nearest  Colonial  pipelines,   Colonial
stationing and reference to Colonial's alignment sheets; and

                  (b) updated title information and line lists.

                                      -vi-