Document:

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                                                                  Exhibit 10.11

                                    $10,000,000
                                   NONNEGOTIABLE
                                 SUBORDINATED NOTE

                                 October 29, 1999

     FOR VALUE RECEIVED, PF.Net Holdings, Limited, a Delaware corporation
(the "COMPANY", which term shall include any entity which shall succeed to or
assume the obligations of the Company), promises to pay to Koch Telecom
Ventures, Inc., a Delaware corporation, its successors or assigns (the
"HOLDER"), the principal sum of Ten Million Dollars ($10,000,000.00) plus
such additions to such principal amount as may be added thereto pursuant to
the terms and conditions hereof, in lawful money of the United States of
America and in immediately available funds, on the Note Maturity Date (as
defined below), together with interest on the outstanding principal balance
payable in like money or securities as provided below, at the then Applicable
Rate (as defined below) per annum (subject to increase as set forth below
with respect to overdue interest) which interest shall accrue from the date
hereof until paid in full, and which interest shall be compounded quarterly.
Subject to the terms of Sections 3 and 4(ii) hereof, interest shall be
payable semi-annually in arrears on February 1 and November 1 in each year
and on the Note Maturity Date (each, an "INTEREST PAYMENT DATE") commencing
on February 1, 2000, until paid in full. All payments of interest due on the
outstanding principal amount of this Note as of each Interest Payment Date
(which principal amount shall include all conversions of interest into
additional principal made prior to each Interest Payment Date), including,
without limitation, all overdue interest, if any, shall be converted into
additional principal hereunder and shall be recorded by the Holder on the
schedule attached hereto and made part of this Note (or on a continuation of
such schedule attached hereto) or on the Holder's records as principal
balance of this Note as of such Interest Payment Date. Subject to the terms
of Sections 3 and 4(ii) hereof, after maturity of any amount due under this
Note (whether by acceleration or otherwise) such overdue amount shall be
payable on demand.

     As used herein, (i) "APPLICABLE RATE" means (w) at any time Bridge Loans
are outstanding, the rate of interest applicable to such Bridge Loans from
time to time, (x) at any time Term Loans or Exchange Notes are outstanding,
the rate of interest applicable to such Term Loans and/or Exchange Notes from
time to time, (y) following repayment in full of Bridge Loans, the Term Loans
and the Exchange

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Notes and so long as Take-Out Securities are outstanding, the rate of
interest applicable to the Take-Out Securities on the date of issuance
thereof, and (z) at all other times, the rate at which this Note accrued
interest pursuant to clause (w), (x) or (y) above, as applicable, immediately
prior to the time the last of clause (w), (x) or (y) ceased to be applicable,
and (ii) "NOTE MATURITY DATE" means (a) if no Take-Out Securities are issued,
January 31, 2010, (b) if Take-Out Securities are issued, the date which is
the earlier to occur of (I) ten (10) years and ninety-one (91) days after the
initial issuance of such Take-Out Securities and (II) January 31, 2011.

     To the extent permitted by law, overdue interest shall bear interest at
the then Applicable Rate plus two percent (2%) per annum. Interest shall be
computed on a 360-day-year, 30-day-month basis. All conversions of interest
into additional principal made pursuant to this Note shall constitute payment
by the Company of all such interest due as of the date of such conversion and
all amounts of interest so converted into additional principal shall
constitute principal for all purposes hereunder. Any such recordation of
additional principal amount by the Holder on the schedule attached hereto and
made a part of this Note (or a continuation of such schedule attached hereto)
or on the Holder's records shall constitute PRIMA FACIE evidence of the
accuracy of the information so recorded in the absence of manifest error;
PROVIDED, HOWEVER, that the failure by the Holder to make any such
recordation shall not limit or otherwise affect any of the obligations of the
Company under this Note, or the calculation of principal or interest due
hereunder. The Company hereby covenants and agrees to provide the Holder with
all information reasonably requested by the Holder from time to time to
enable the Holder to determine the then Applicable Rate, including without
limitation information with respect to interest rate calculations under the
Bridge Loan Agreement.

     Notwithstanding anything to the contrary contained in this Note, the
Company and the Holder hereby agree that all agreements between the Company and
the Holder are expressly limited so that in no contingency or event
whatsoever shall the amount paid, or agreed to be paid, to the Holder as
evidenced hereby exceed the maximum nonusurious interest rate that at any
time may be contracted for, taken, reserved, charged or received on such
amounts under the laws of the State of New York (or the laws of any other
jurisdiction whose laws may be mandatorily applicable notwithstanding any
other provision of this Note) (such rate, the "HIGHEST LAWFUL RATE"). If due
to any circumstance whatsoever, fulfillment of any provision of this Note at
the time performance of such provision shall be due shall exceed the Highest
Lawful Rate, then automatically, the obligation to be fulfilled shall be
modified or reduced to the extent necessary to limit such interest to the
Highest Lawful Rate.

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    1.   This Note is delivered to the initial Holder by the Company in
accordance with the terms of the Amended and Restated Fiber Networks
Development Agreement, dated October 29, 1999 (as may be further amended or
otherwise modified from time to time, the "DEVELOPMENT AGREEMENT"), by and
between PF.Net Corp., a Delaware corporation ("PF.NET CORP."), and Sea
Breeze Communication Company, a Delaware corporation. Terms defined and used
in the Development Agreement shall have the same meanings in this Note unless
otherwise defined herein. The Company has no right to withhold and set-off
against any amount due hereunder the amount of any claim for
indemnification, payment of damages, or otherwise under the Development
Agreement.

    2.   All payments of (a) principal and interest (if payable hereunder in
immediately available funds) shall be payable by wire transfer to an account
designated in writing by the Holder to the Company (provided that the Holder
shall provide the Company written notice at least three (3) business days
notice before a payment is due of any new wiring instructions) and (b)
interest paid by conversion into principal shall be so converted without any
action by the Company on the date that such interest payment is due.

    3.   Except with respect to any mandatory prepayment of this Note
pursuant to Section 4(ii) hereof, the Company and the Holder, by its
acceptance of this Note, agree that (x) the payment of the principal of
and interest on this Note and (y) any other payment in respect of this Note,
is expressly made and shall be subordinated in right of payment, to the
extent and in the manner provided in this Section 3, to the prior payment in
full of all existing and future Senior Debt of the Company, and that these
subordination provisions are for the benefit of the holders of Senior Debt.

         This Section 3 shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to
hold, Senior Debt, and such provisions are made for the benefit of the
holders of Senior Debt, and such holders are made obligees hereunder and any
one or more of them may enforce such provisions.

              (1)  Except with respect to any mandatory prepayment pursuant
to Section 4(ii) hereof or as otherwise permitted by this Note, until all of
the Senior Debt has been paid in full, (i) the Company shall not, directly or
indirectly, make any payment or other distribution with respect to any of the
payments due

                                       3

<PAGE>

under this Note nor shall any property or assets of the Company be applied to
the acquisition or retirement of any of the payments due under this Note
(except, in any case, for the regularly scheduled payments of interest by the
conversions of such amounts of interest into principal); (ii) the Company
shall not allow a lien on any of its assets to secure or satisfy any of the
payment obligations under this Note; and (iii) the Holder shall not demand or
accept from the Company or any other person any payments (except, in any
case, for the regularly scheduled payments of interest by the conversions of
such amounts of interest into principal) or other distributions or collateral
with respect to any payment obligations under this Note.

              (2)  (i) Notwithstanding the provisions of paragraph (a) above,
but subject to the provisions of Section 3(c) below, the Company may pay, and
the Holder may receive, the principal amount outstanding under this Note
together with accrued interest, if any, thereon at the maturity of this Note.

                   (ii) Notwithstanding the provisions of any agreements and
instruments governing Senior Debt (the "SENIOR DEBT DOCUMENTS") or this
Section 3, the Company shall pay, and the Holder may receive, the principal
amount outstanding under this Note together with accrued interest thereon
upon the occurrence of any of the events set forth in Section 4(ii) hereof.

               (c) (i) In the event the Company shall default in the payment
of any principal or interest on the Senior Debt when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise, then, unless and until such default shall have been
remedied or waived or shall have ceased to exist, no direct or indirect
payment (in cash, property or securities or otherwise, but excluding
regularly scheduled payments of interest by conversions of such amounts of
interest into principal) shall be made or agreed to be made on account of
this Note.

                   (ii) Upon the happening of an Event of Default (as defined
in any Senior Debt Document) (a "SENIOR EVENT OF DEFAULT"), other than under
circumstances when the terms of Section 3(c)(i) hereof are applicable, then,
unless and until such Senior Event of Default shall have been remedied or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, or securities or otherwise, but excluding regularly scheduled
payments of interest by conversions of such amounts of interest into
principal) shall be made or agreed to be made on account of this Note, during
any period:

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                        (1)  of one hundred seventy-nine (179) days after the
written notice of such Senior Event of Default (such period of 179 or fewer
days being hereinafter referred to as the "PAYMENT BLOCKAGE PERIOD") shall
have been given to the Company and to the Holder from any agent (or
equivalent) under any Senior Debt Document (a "BLOCKAGE NOTICE"); or

                        (2)  a notice of acceleration of the maturity of the
Senior Debt shall have been transmitted to the Company and to the Holder from
any agent (or equivalent) under any Senior Debt Document in respect of such
Senior Event of Default and such acceleration shall not have been rescinded.

         The foregoing provisions of this Section 3(c) to the contrary
notwithstanding, (i) not more than one Blockage Notice shall be given (in
the aggregate) within one calendar year, and (ii) no Senior Event of Default
that existed upon the date of delivery of such Blockage Notice shall be made
the basis for the commencement of any other Payment Blockage Period.

         During the existence of a Payment Blockage Period, the Holder may
not exercise any of its rights to declare this Note to be in default or
accelerate or exercise any other remedies available to it unless and until any
Senior Debt outstanding shall have been accelerated.

         In the event that, notwithstanding the foregoing provisions of this
Section 3, any payment or distribution of assets in respect of this Note,
including principal of or interest on this Note for cash, property or
securities, shall be made by the Company and received by the Holder, at a time
when such payment or distribution was prohibited by the provisions of this
Section 3, then, unless such payment or distribution is no longer prohibited
by this Section 3, such payment or distribution shall be received and held in
trust by the Holder for the benefit of the holders of Senior Debt of the
Company, and shall be paid or delivered by the Holder to the holders of
Senior Debt of the Company remaining unpaid or their representative or
representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing such Senior Debt of the Company may have
been issued, ratably according to the aggregate amounts unpaid on account of
such Senior Debt held or represented by each, for application to the payment
of all Senior Debt in full in cash or otherwise to the extent each of the
holders of such Senior Debt accept satisfaction of amounts due by settlement
in other than cash after giving effect to all concurrent payments and
distributions to or for the holders of such Senior Debt.

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               (d)  Upon any distribution of assets of the Company or upon
any dissolution, winding up, total or partial liquidation or reorganization
of the Company, whether voluntary or involuntary, in bankruptcy, insolvency,
receivership or a similar proceeding or upon assignment for the benefit or
creditors or any marshalling of assets or liabilities, but only until all
Senior Debt has been paid in full:

                         (1)  the holders of all Senior Debt of the Company
      shall first be entitled to receive payments in full of all amounts of
      Senior Debt in cash or otherwise to the extent each of such holders
      accepts satisfaction of amounts due by settlement in other than cash
      before the Holder is entitled to receive any payment or distribution on
      account of the principal of, premium, if any, and any interest on, or
      other amounts with respect to, this Note (except, in any case, for the
      payments of interest due hereunder by the conversion of such amounts of
      interest into principal);

                         (2)  any payment or distribution of assets of the
      Company of any kind or character from any source, whether in cash,
      property or securities (except, in any case, for the payments of
      interest due hereunder by the conversion of such amounts of interest
      into principal), to which the Holder would be entitled except for the
      provisions of this Section 3, shall be paid by the liquidating trustee
      or agent or other person making such a payment or distribution,
      directly to the holders of such Senior Debt or their representative to
      the extent necessary to make payment in full on all such Senior Debt
      remaining unpaid, after giving effect to all concurrent payments and
      distributions to the holders of such Senior Debt;

                         (3)  any agent (or equivalent) under the Senior Debt
      Documents shall have the right to file proofs of claim in respect of
      this Note to the extent not filed by the Holder; and

                         (4)  in the event that, notwithstanding the
      foregoing, any payment or distribution of assets of the Company shall
      be received by the Holder at a time when such payment or distribution
      shall be prohibited by the foregoing provisions, such payment or
      distribution shall be held in trust for the benefit of the holders of
      such Senior Debt, and shall be paid or delivered by  the

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     Holder to the holders of such Senior Debt remaining unpaid or to
     their representative or representatives, or to the trustee or
     trustees under any indenture pursuant to which any instruments
     evidencing any such Senior Debt may have been issued, ratably
     according to the aggregate principal amounts remaining unpaid on
     account of such Senior Debt held or represented by each, for
     application to the payment of all such Senior Debt in full in cash
     or otherwise to the extent each of the holders of such Senior Debt
     accept satisfaction of amounts due by settlement in other than cash
     after giving effect to any concurrent payment or distribution to
     the holders of such Senior Debt.

              (e)  The Holder shall not be entitled to be subrogated to the
rights of the holders of the Senior Debt to receive payments or distributions
of assets of the Company applicable to the Senior Debt until the payment in
full of the Senior Debt, and for the purpose of such subrogation no such
payments or distributions to the holders of such Senior Debt by or on behalf
of the Company, or by or on behalf of the Holder by virtue of this Section 3,
which otherwise would have been made to the Holder shall, as between the
Company and the Holder, be deemed to be payment by the Company on account of
such Senior Debt, it being understood that the provisions of this Section 3
are and are intended solely for the purpose of defining the relative rights
of the Holder, on the one hand, and the holders of such Senior Debt, on the
other hand.

         If any payment or distribution to which the Holder would otherwise
have been entitled but for the provisions of this Section 3 shall have been
applied, pursuant to the provisions of this Section 3, to the payment of
amounts payable under Senior Debt of the Company, then the Holder shall be
entitled to receive from the holders of such Senior Debt any payments or
distributions received by such holders of Senior Debt in excess of the amount
sufficient to pay all amounts payable under or in respect of such Senior Debt
in full in cash or otherwise to the extent each of such holders accepts
satisfaction of amounts due by settlement in other than cash.

              (f)  For purposes of this Note:

         "BRIDGE LOAN AGREEMENT" means the Bridge Loan Agreement, dated as of
October 29, 1999, among the Company, the financial institutions party
thereto, and WARBURG DILLON READ LLC, as joint lead arranger and syndication
agent, and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of
Swit-

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zerland, acting through its New York Branch, as joint lead arranger and
administrative agent, as amended, modified, restated or increased from time
to time.

         "BRIDGE LOANS" has the meaning given such term in the Bridge Loan
Agreement as in effect on the date hereof.

         "EXCHANGE NOTES" has the meaning given such term in the Bridge Loan
Agreement as in effect on the date hereof.

         "SENIOR DEBT" means all obligations with respect to all (a) Bridge
Loans, Term Loans, Exchange Notes, Take-Out Securities and any other
indebtedness of the Company which by its terms is expressly senior in right
of payment to this Note and (b) principal, interest, premium, penalty,
indemnities, fees and expenses in respect thereof or under the agreements or
instruments governing the indebtedness described in clause (a) hereof,
including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided in the Senior Debt Documents with respect
thereto, whether or not such interest is an allowed claim under applicable
law.

         "TAKE-OUT SECURITIES" has the meaning given such term in the Bridge
Loan Agreement as in effect on the date hereof.

         "TERM LOANS" has the meaning given such term in the Bridge Loan
Agreement as in effect on the date hereof.

    4.   The Company covenants that (i) neither the documents evidencing any
Senior Debt nor any other agreement, instrument or document to which the
Company is a party, shall restrict the payment or repayment of this Note at
maturity other than upon the occurrence of the conditions set forth in
Section 3 hereof and (ii) notwithstanding the provisions of Section 3 hereof,
it shall prepay the entire amount outstanding under this Note, with interest
prorated up to the date of any such prepayment, simultaneously with either
(A) the consummation of a Qualified Equity Offering or (B) any Change of
Control. Notwithstanding the foregoing, if a Qualified Equity Offering is
consummated at a time when the Bridge Loans are still outstanding, the
Company's obligation to prepay the entire amount under this Note, with
interest prorated as set forth in the preceding sentence, shall be deferred
until the earlier to occur of the date on which (i) there are no Bridge
Loans outstanding or (ii) either Term Loans, Exchange Notes or the Take-Out
Securities are outstanding. For purposes of this Section 4, (I) "QUALIFIED
EQUITY OFFERING" means an equity

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offering or series of equity offerings of the Company, whether pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "ACT"), or pursuant to a private placement of equity securities exempt
from registration under the Act, that after giving effect to the offering or
series of offerings result in aggregate cash proceeds to the Company or any
of its subsidiaries of at least $50 million, exclusive of underwriter's fees,
discounts and other expenses, and (II) "CHANGE OF CONTROL" has the meaning
given such term in (w) the Bridge Loan Agreement as in effect on the date
hereof, for so long as the Bridge Loans are outstanding, (x) the Term Loan
Agreement (as such term is defined in the Bridge Loan Agreement as in effect
on the date hereof) and, in addition, in any indenture relating to any
Exchange Notes, for so long as any Term Loans or Exchange Notes are
outstanding, (y) as defined in the indenture relating to the Take-Out
Securities, for so long as any Take-Out Securities are outstanding and no
Bridge Loans, Term Loans or Exchange Notes are outstanding and (z) if no
Bridge Loans, Term Loans, Exchange Notes or Take-Out Securities are
outstanding, the applicable Bridge Loan, Term Loan, Exchange Notes or
Take-Out Securities Senior Debt Document which was applicable immediately
prior to the date on which no Bridge Loans, Term Loans, Exchange Notes or
Take-Out Securities were outstanding.

    5.   If either (i) the Company shall fail to pay any principal of or
interest on this Note when due and payable whether at maturity or prepayment
or otherwise, and such amount shall remain unpaid for three (3) business days
after the due date thereof; or (ii) if any Cross Default Event occurs; or
(iii) the Company shall default in the due performance or observance of any
term or covenant contained within this Note (other than with respect to the
payment of principal or interest on this Note referred to in (i) above), and
such default shall remain unremedied for a period of ten (10) business days
after written notice thereof is provided to the Company; or (iv) the
Company shall admit in writing its inability to pay its debts; or suffer a
receiver or custodian (or other person performing a similar function) for it
or substantially all of its property to be appointed and, if appointed
without its consent, not to be discharged within ninety (90) days; or (v)
make a general assignment for the benefit of its creditors, or suffer
proceedings under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors to be instituted by or against it and if contested by
it not to be dismissed or stayed within ninety (90) days; or (vi) suffer any
judgment, writ of attachment, or execution of any similar process to be
issued or levied against a substantial part of its property (but in no event
$10 million or less) which is not released, stayed, bonded, or vacated within
thirty (30) days after its issue or levy, then, and in every such event (each
of which is referred to herein as a "NOTE EVENT OF DEFAULT"), the Holder
hereof may declare this Note to be in default and all principal

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(which principal amount shall include all conversions of interest into
additional principal), interest and other amounts owing to the Holder to be
due and payable (PROVIDED that the Holder may not so declare with respect to
any Note Event of Default referred to in clauses (i), (ii) or (iii) above so
long as a Payment Blockage Period is then in effect), and it shall, at the
Holder's election, thereupon forthwith become due and payable in full,
without presentment, demand, protest, or any notice of any kind (other than
notice of such election), all of which are hereby expressly waived.
Notwithstanding the foregoing, if a Note Event of Default specified in
clauses (iv), (v) or (vi) above shall occur, then all principal (which
principal amount shall include all conversions of interest into additional
principal), interest and other amounts owing to the Holder hereunder shall
immediately become due and payable without the giving of any notice or other
action by the Holder, which notice or other action is expressly waived by the
Company. If a Note Event of Default specified in clauses (i), (ii) or (iii)
above shall occur, the Holder may declare amounts hereunder to be due and
payable by notice in writing to the Company and to any agent (or equivalent)
under the Senior Debt Documents for the holders of Senior Debt (to the extent
the identity of any such agent (or equivalent) is provided to the Holder by
the Company or is otherwise known to the Holder) specifying the applicable
Note Event of Default and that it is a "notice of acceleration", and the same
(x) shall become immediately due and payable or (y) if any Senior Debt is
then outstanding, shall become due and payable upon the first to occur of an
acceleration of the Senior Debt or the date which is five business days after
receipt by the Company and such holders of such notice of acceleration. For
purposes of this Section 5, "CROSS DEFAULT EVENT" means any default, event of
default or other occurrence with respect to the Senior Debt (or any portion
thereof) relating to the payment of any monies by the Company to any other
person or entity, or any other indebtedness or other obligation with an
aggregate principal amount of $10,000,000 or more, occurs and continues after
the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure; PROVIDED, HOWEVER, that if any Senior
Debt Document contains a cross default provision with respect to indebtedness
requiring cross acceleration of such indebtedness as a condition to the
occurrence of a default under such cross default provision, then such cross
acceleration provision shall be deemed to be applicable to the definition of
"Cross Default Event" hereunder so long as such cross acceleration provision
with respect to such Senior Debt Document remains in full force and effect.

     6.  In any case where the date of payment or any prepayment of the
principal of or interest on this Note shall be at any place of payment a
Saturday, Sunday, a legal holiday, or a day on which banking institutions are
authorized or

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obliged by law or regulation to close, then payment of principal or interest
need not be made on such date at such place but may be made on the next
succeeding day that is not at such place of payment a Saturday, Sunday, a
legal holiday or a day on which banking institutions are authorized or
obligated by law or regulation to close, with the same force and effect as if
made on the date of maturity or the date fixed for payment, and no interest
shall accrue for the period after such date; PROVIDED that in any event the
final payment on the Note Maturity Date shall include all unpaid principal
and accrued and outstanding interest on this Note in immediately available
funds.

     7.   The Holder shall not be deemed to have waived or amended any of the
Holder's rights hereunder unless such waiver or amendment is in writing and
signed by the Holder.  This Note shall not be amended or otherwise modified
except by an instrument in writing executed by the Company and the Holder;
PROVIDED, HOWEVER, that any amendment of Section 3 hereof or to any other
section hereof that would adversely affect the holders of the Senior Debt
shall require the written consent of the holders of such Senior Debt having
or holding more than 50% of the sum of the aggregate principal amount of the
Senior Debt outstanding.  No delay or omission on the part of the Holder in
exercising any such right shall operate as a waiver of such right or any
other right.  A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.

     8.   Notwithstanding Section 4(ii) hereof but subject to the terms of
Section 3 hereof, the principal sum of this Note may be prepaid by the
Company in whole or in part at any time and from time to time without penalty
or premium, with interest prorated up to the date of any such prepayment.

     9.   This Note shall bear the legend attached hereto, the provisions of
which are incorporated herein by reference.

     10.  The obligations of the Company under this Note may not be assigned
or otherwise transferred by the Company without the prior written consent of
the Holder.  The Holder may (i) assign or transfer and (ii) pledge,
hypothecate or otherwise encumber this Note, in each case in its discretion.

     11.  Any notice, request, instruction or other document to be given
hereunder by either party to the other shall be in writing and shall be
delivered either by hand or by certified mail, postage prepaid, and certified
return receipt requested to

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the following address or such other address as the parties hereto may provide
to each other in writing:

          To PF.Net:                    Chief Financial Officer
                                        PF.Net Holdings, Limited
                                        c/o PF.Net Corp.
                                        1701 Broadway Street
                                        Suite 358
                                        Vancouver, WA 98663

          To Koch Telecom:              Koch Telecom Ventures, Inc.
                                        4111 E. 37th St. N
                                        Wichita, KS  67220
                                        Attn: President

            with a copy to:             Koch Telecom Ventures, Inc.
                                        4111 E. 37th St. N
                                        Wichita, KS  67220
                                        Attn: Tye G. Darland

     12.  This Note shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to
any conflicts of laws principles thereof that would otherwise require the
application of the law of any other jurisdiction. Any legal action or
proceeding with respect to this Note may be brought in the courts of the
State of New York or of the United States for the Southern District of New
York, and, by execution and delivery of this Note, the Company and Holder
hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts.

     This Note has been executed by the Company under seal as of the day,
month and year first above written.

                                            PF.NET HOLDINGS, LIMITED

[SEAL]

Attest: /s/ Clint Warta                     By:  /s/ Stephen Irwin
        -------------------                       ------------------

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                               LEGEND

         This Note has not been registered under the Securities Act of 1933
or qualified under any state securities laws. This Note may not be sold,
assigned or transferred in the absence of an effective registration statement
under such Act and qualification under such laws or pursuant to a transaction
in which such registration and qualification are not in the circumstances
required.

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              Note Schedule Attached to Non-Negotiable
                   $10,000,000 Subordinated Note
                 payable by PF.Net Holdings, Limited

               INTEREST PAYMENTS CONVERTED TO PRINCIPAL

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Date         Payment          Balance                     Made By

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                                      14<PAGE>

                                                                  EXHIBIT 10.12

                  MASTER SECONDMENT BORROWED SERVANT AGREEMENT

     This Master Secondment Borrowed Servant Agreement (this "Agreement") is
entered into as of this 1st day of November, 1999, by and between PF Telecom
LLC, a Delaware Corporation ("PFT") and PF.Net Corp., a Delaware
Corporation ("PF").

     WHEREAS, PFT currently owns approximately 32% of the outstanding equity
interests in PF;

     WHEREAS, from time to time PF may have the need for additional personnel to
assist in the operation of the business of PF and the facilities owned by PF;
and

     WHEREAS; from time to time PFT may be able to supply personnel skilled in
the operation of businesses and the type of facilities owned by PF.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:

     1.   TERM. The term of this Agreement shall begin as of November 1, 1999
          and end on August 1, 2000. This Agreement may be extended on a
          month-to-month basis thereafter upon the mutual written consent of PFT
          and PF.

     2.   "AFFILIATES" DEFINED. The term "Affiliates" as used herein shall mean
          any individual, corporation, partnership, limited liability company,
          joint venture, or any other form of organization not specifically
          listed herein that is directly or indirectly controlling, controlled
          by or under common control with either party, provided that, in no
          case, shall PF be deemed an Affiliate of PFT, nor shall PFT be deemed
          an affiliate of PF. As used in this definition, the term "control" and
          all of its derivatives shall mean the possession, direct or indirect
          of the power to cause the direction of or direct the management and
          policies of an individual, corporation, partnership, limited liability
          company, joint venture, or any form of organization not specifically
          listed herein, whether through ownership of voting securities, by
          contract or otherwise.

     3.   SECONDED EMPLOYEES BORROWED SERVANTS. For the term of this Agreement,
          PFT agrees to loan or to take the steps necessary to have its
          Affiliates loan to PF on a full-time basis the individuals
          (hereinafter the "Seconded Employees") listed in Exhibit "A" attached
          hereto, as such exhibit may be amended from time to time with the
          mutual consent of PFT and PF and for the term listed on such Exhibit
          "A". Such Seconded Employees shall be "borrowed servants" of PF as the
          term is defined by any applicable workers' compensation statute,
          decision, regulation, or program, but shall remain employees of PFT or
          its Affiliates as the general employer. PF shall provide to the
          Seconded Employees sufficient office space,

<PAGE>

               supplies, and support to enable the Seconded Employees to perform
               the tasks and duties assigned to them by PF ("Employee
               Resources").

          4.   EMPLOYEES CONSENT. No Seconded Employee shall be allowed to
               perform any task for PF unless that Seconded Employee previously
               has acknowledged his or her consent to work for PF on a temporary
               basis as a borrowed servant. Such acknowledgment shall be in the
               form of the Employee Acknowledgment attached to this Agreement as
               Exhibit "B".

          5.   CONTROL. All Seconded Employees shall be subject to the exclusive
               direction and control of the management of PF throughout the term
               and while seconded, shall otherwise be acting as employees loaned
               to PF by PFT. PF shall have the right to assign a Seconded
               Employee to work for an Affiliate of PF with the prior consent
               of PFT. PFT shall have no right to direct or control the
               Seconded Employees while such Seconded Employees are performing
               duties for PF or its Affiliates under this Agreement.

          6.   CHANGE OF STATUS. PF may terminate the secondment relationship
               with a Seconded Employee at any time upon providing PFT and the
               Employee with 30 days prior written notice. With the consent of
               PFT, PF may hire an Employee at any time to be an employee of PF
               or its Affiliates.

          7.   WORKERS' COMPENSATION COVERAGE. PF shall supply workers'
               compensation coverage for all employees performing services under
               this Agreement. PF shall be responsible for the payment or
               defense of all workers' compensation claims arising out of the
               performance of services under this Agreement.

          8.   INDEMNIFICATION. PF shall be solely responsible for and shall
               defend, indemnify and hold PFT, its Affiliates and all of their
               officers and directors, employees, agents, representatives and
               insurers and the Seconded Employees harmless from and against any
               and all claims, demands, debts, fines, damages, judgments, loss,
               expense, causes of action, regulatory actions, suits, attorneys'
               fees, costs and liability of every kind including, but not
               limited to, all special, indirect or consequential damages,
               expenses of litigation, court costs and reasonable attorneys'
               fees of PF, PFT, Seconded Employees or third parties imposed upon
               or incurred by PFT and arising directly or indirectly out of the
               performance of services under this Agreement or PF's business or
               operations and, including, but not limited to claims of
               discrimination, harassment, workers' compensation or any other
               claim regarding the Seconded Employee's secondment to PF. PF
               shall maintain liability insurance in an amount sufficient to
               cover the above-described undertaking and shall name PFT, its
               Affiliates and all of their officers and directors, employees,
               agents, representatives and insurers and the Seconded Employees
               as additional insureds.

                                      -2-
<PAGE>

          9.   CHARGE FOR SERVICE. PF shall reimburse PFT within 30 days after
               receipt by PF of a PFT invoice for all Employment Costs incurred
               by PFT with respect to each Employee providing services under
               this Agreement and for all travel and incidental costs incurred
               by an Employee in accordance with the policies and procedures of
               PF while performing his or her duties for PF and paid by PFT.
               "Employment Costs" means an (either hourly, daily, weekly, or
               monthly) agreed upon by PFT and PF in advance which shall
               approximate the actual costs directly incurred by PFT or its
               Affiliates, as the case may be, in respect of the employment of
               each Seconded Employee, including the salary, benefits, bonuses,
               payroll and payroll-related taxes, employer's pension
               contributions, health insurance and other customary employee
               benefits. PFT or its Affiliates, as the case may be, shall not
               increase a Seconded Employee's Employment Costs except for
               customary increases made in the ordinary course of business
               consistent with past practice; provided, however, PFT shall give
               PF at least 10 days prior written notice. For sake of clarity,
               the amount of any bonuses and/or incentive compensation to be
               paid to a Seconded Employee for such employee's contribution to
               PF shall be determined at the sole discretion of PF and shall be
               paid in a lump sum in the month awarded and not subject to the
               monthly rate and PF agrees to reimburse PFT for such lump sum
               payment. At the election of PFT and upon 30 days prior written
               notice to PF, PF shall directly bear payroll and payroll-related
               taxes for each Employee.

               PF agrees to apply its best efforts in securing Employee
               Resources as soon as possible, and in no event, shall the time to
               secure Employee Resources exceed 60 days from the execution of
               this Agreement. Until such time as PF is able to provide such
               Employee Resources, PFT agrees to cooperate with PF in providing
               General Offices Resources; provided, however, PFT shall be
               entitled to reimbursement of General Office Resources Costs.
               "General Office Resources" shall include, but not be limited to,
               office space, telecommunication services, computer services,
               secretarial support, access to general office equipment, and
               office supplies. "General Offices Resources Costs" means a
               monthly rate agreed upon by PFT and PF in advance which shall
               approximate the actual expense directly incurred PFT or its
               Affiliates, as the case may be, with respect to providing each
               Employee with General Office Resources needed to perform the
               tasks and duties assigned to him or her by PF.

          10.  EXCLUSIVE AGREEMENT. This Agreement shall supersede any prior
               agreements between any of the parties dealing with the subject
               contained herein.

          11.  COUNTERPARTS. This Agreement may be executed by the parties
               simultaneously in one or more counterparts, each of which shall
               be

                                      -3-
<PAGE>

               deemed an original, but all of which shall constitute one and the
               same instrument.

          12.  ASSIGNMENT. No assignment or transfer by either party of its
               rights and obligations under this Agreement will be made except
               with the prior written consent of the other party to this
               Agreement. This Agreement will be binding upon and will inure to
               the benefit of the parties and their successors and permitted
               assigns.

          13.  GOVERNING LAW. This agreement shall be governed by and construed
               in accordance with the laws of the State of Washington.

          14.  MISCELLANEOUS. This Agreement may not be amended, modified, or
               supplemented except by written agreement of all of the parties.
               Any provision of this Agreement which is prohibited or
               unenforceable in any jurisdiction will, as to such jurisdiction,
               be ineffective to the extent of such prohibition or
               unenforceability without invalidating the remaining provisions of
               this Agreement, and any such prohibition or unenforceability in
               any jurisdiction will not invalidate or render unenforceable such
               provision in any other jurisdiction. To the extent permitted by
               law, the parties waive any provision of law which renders any
               such provision prohibited or unenforceable in any respect.

                                      -4-
<PAGE>

IN WITNESS WHEREOF, the parties hereto has caused this Agreement to be executed
as of the date first above written.

PF TELECOM LLC

By: /s/ John Warta
    ----------------------

Print Name: John Warta
            --------------

Title: Managing Member
       -------------------

PF.NET CORP.

By: /s/ David L. Taylor
    ---------------------------

Print Name: David L. Taylor
           --------------------

Title: Vice President, Finance,
       and Chief Financial Officer
       ---------------------------

                                      -5-
<PAGE>

                                   EXHIBIT "A"

NAME OF EMPLOYEE                    TERM OF SECONDMENT

Brandon Drake                       November 1, 1999 to October 30, 2000

Clint Warta                         November 1, 1999 to October 30, 2000

Donald Branscome                    November 1, 1999 to October 30, 2000

Geoffrey Warta                      November 1, 1999 to October 30, 2000

George Warta                        November 1, 1999 to October 30, 2000

Greg Warta                          November 1, 1999 to October 30, 2000

Jinger Jacobson                     November 1, 1999 to October 30, 2000

Lauren Lahman                       November 1, 1999 to October 30, 2000

Lisa Chow                           November 1, 1999 to October 30, 2000

Matthew Wetzel                      November 1, 1999 to October 30, 2000

Mona Chambers                       November 1, 1999 to October 30, 2000

Nate Stiles                         November 1, 1999 to October 30, 2000

Paul Macri                          November 1, 1999 to October 30, 2000

                                      -6-
<PAGE>

                                   EXHIBIT "B"

                             EMPLOYEE ACKNOWLEDGMENT

     I am an employee of PF Telecom LLC ("PFT") or one of its subsidiaries
or divisions ("PFT"). I understand that, while performing work for PF.Net Corp.
or its Affiliates ("PF"), I will be a "borrowed servant" (as the term is defined
by any applicable workers' compensation statute, decision, regulation or
program) of PF. As a "borrowed servant," I understand that, if I am injured on
the job, I will have the right to file a claim for worker's compensation
benefits with PF. However, I understand that my compensation and employment
benefits will be paid by PFT and reimbursed by PF and that I will not
participate in any employee benefit plan maintained by PF.

     I further understand that persons within the employ of PF (or their agents)
will supervise and control my actions while I am performing work for PF.

     I also understand that this acknowledgment is not an employment contract or
a guarantee of continued employment, nor does it change my status as an
employee-at-will. This acknowledgment supersedes and replaces any similar
acknowledgment or employment agreement that I may have previously signed. I
understand, further, that PF has the right to terminate my "borrowed servant"
status upon providing me with at least 30 days prior written notice.

     I understand that I will be required to execute a confidentiality
agreement with PF.

                                   Signature:___________________________________

                                   Printed Name:________________________________

                                   Date:________________________________________

                                         -7-

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