Document:

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                           PF NET COMMUNICATIONS, INC.
                       c/o Odyssey Investment Partners LLC
                                 280 Park Avenue
                                New York New York

                                                                    May 12, 2000

Mr. Robert Annunziata
95 Minisink Road
Short Hills, NJ 07078

Dear Bob,

         This letter ("Letter Agreement") will confirm the terms of your
affiliation with PF Net Communications, Inc. (the "Company"), where you will
serve as non-executive Chairman of the Board of Directors of the Company (the
"Board") commencing upon approval of this Letter Agreement by the Board of
Directors of the Company (the "Commencement Date"). It is your intent (but not
legal obligation) to serve as Chairman for a period of three (3) years (the
"Service Period"). You will devote such time as reasonably requested by the
Company, recognizing your activities as a director of 5 companies disclosed to
the Company, Chairman of Corean and as sole owner of Atlantic Telecommunications
Enterprise Fund Inc. and GCT (both of which we understand from you are purely
entities for investments) (the "Activities"), to serving as Chairman. In such
role you will provide strategic guidance and advice (including consistent with
your Contractual Obligations, opportunities for expansion and introductions to
industry opportunities), advising in connection with offerings and other capital
markets and assisting in recruiting Company management. You agree that during
the first eighteen (18) months of the Service Period (the "Initial Period"), the
Chairmanship of the Company will be your primary obligation and you will not
increase Activities without the Company's written consent, which consent shall
not be unreasonably withheld so long as the activity is not a Chairmanship, is
noncompetitive and does not change the primary nature of your commitment to the
Company. In addition, you will not be involved in any activity that is
competitive with those of the Company (the restrictions specified in this
paragraph are hereinafter referred to as the "Priority Provisions"). The
Activities are not competitive.

         During the Initial Period and thereafter while you continue to be
Chairman and continue to abide by the Priority Provisions, you will receive a
fee at the rate of $400,000 per annum payable in semi-monthly installments. For
the duration of the Service Period that you do not abide by the Priority
Provisions but continue as Chairman, you will receive a fee at the rate of

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$150,000 per annum payable in semi-monthly installments. You will not be
eligible for the fees or other compensation paid to outside directors, but
nothing contained herein shall prevent the Company from paying bonuses or
granting additional options for your achievement in the Company's discretion. In
the event that you and the Company agree at any time to continue your
relationship with the Company as director (and not as Chairman), you will be
paid mutually agreed upon amounts and execute an appropriate agreement.

OPTION GRANT

         Effective on the Commencement Date hereof you will receive nonstatutory
exercisable options ("Options") to purchase 4,200,000 shares of the Company's
par value one cent common stock at a price of $6.40 per share under the
Company's 2000 Equity Incentive Plan (the "Plan").

VESTING OF OPTIONS

The Options shall vest as following: twenty percent (20%) on the Commencement
Date; twenty percent (20%) on the first anniversary of the Commencement Date
(subject to acceleration as provided below); ten percent (10%) as of the end of
the Initial Period; twenty five percent (25%) on the second anniversary of the
Commencement Date; and twenty five percent (25%) of the third anniversary of the
Commencement Date; provided, in all cases, that you are still providing service
to the Company on the relevant date and subject to the provisions below. In the
event that during the first six (6) months that you are providing services to
the Company, the Company hires a chief executive officer, one half of the
portion of options that are to vest on the first anniversary shall vest upon
such chief executive officer commencing employment. Furthermore, in the event
that during the first twelve (12) months that you are providing service to the
Company, the Company either has an initial public offering or closes an
investment of at least $100 million in it based on a valuation of at least $1.5
billion, upon the first to occur of the foregoing one half of the portion of the
Options that are to vest on the first anniversary shall vest.

DEATH; DISABILITY; TERMINATION WITHOUT CAUSE; TERMINATION FOR GOOD REASON

Upon termination of Service for Termination without Cause or Termination for
Good Reason, there shall be immediate vesting of the greater of (I) the number
of Options that would have vested during the 18 month period following your
termination had your Service continued through that date or (II) seventy five
percent (75%) of the Options that are unvested immediately prior to your
termination. Upon Termination of Service as a result of death or Disability,
there shall be immediate vesting of the greater of (I) the number of Options
that would have vested at the next vesting date or (II) fifty percent (50%) of
the Options that are unvested immediately prior to your termination. All vested
Options will remain exercisable for a period of 5 years from your termination as
Chairman (or, if later as director or consultant), subject to the ten (10) year
Option term and the general terms of the Plan not inconsistent with this letter
(for example, it is acknowledged that it would not be inconsistent with this
letter to cease exercisability of options on a merger). All non-vested Options
will be forfeited and canceled immediately upon termination.

TERMINATION WITHOUT GOOD REASON OR TERMINATION FOR CAUSE

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If you terminate Service as Chairman without Good Reason or the Company
terminates your Service as Chairman for Cause (I) all your non-vested Options
will be forfeited and canceled immediately upon termination and (II) your vested
options will remain exercisable for a period of 5 years from your termination as
Chairman (or if later, director or consultant), subject to the ten year Option
Term and the general terms of the Plan not inconsistent with this letter (for
example, it is acknowledged that it would not be inconsistent with this letter
to cease exercisability of options on a merger).

Notwithstanding the foregoing as to termination of vesting on a Termination of
Service, if you and the Company agree that you will thereafter provide services
as a director or consultant upon mutual agreement of the Company and you (and
subject to a Company right to remove you as such at any time), your vesting
shall continue while you are in such capacities and the additional vesting or
cutoff of exercisability referred to above shall only occur when you cease to
provide services as a director or consultant and, while the type of termination
shall not change, the measurement shall be from such later date or as you and
the Company may otherwise agree at such time.

"Disability" means (I) a determination made by a physician chosen by the Board
and you that it can reasonably be expected that you will be unable to perform
your duties due to a physical or mental infirmity for more than six (6)
consecutive months or (II) your inability to perform your duties due to a
physical or mental infirmity for one hundred eighty (180) days in any twelve
(12) month period.

"Cause" means (I) your willful misconduct or gross negligence that has material
adverse effect on the Company; (ii) your willful failure after notice by the
Board to attempt in good faith to perform the duties required (other than a
result of your incapacity due to physical or mental illness); (iii) your
conviction of, or pleading of nolo contendre to, a felony; or (iv) your
violation of the Priority Provisions. For these purposes, no act or failure to
act will be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that action or omission was in the best interests of
the Company.

"Good Reason" means your removal from the position of Chairman of the Company or
any material violation of the Agreement without your written consent that is not
cured within thirty (30) days after you have given written notice thereof to the
Company.

In any proposed termination for Cause you shall have the right to appear before
the Board with counsel before any notice is given and the right to cure any
breach within fifteen (15) days.

IMPACT OF CHANGE IN CONTROL

Upon a Change in Control all options and stock awards made to you shall be one
hundred percent (100%) vested and shall be exercisable after termination for
five (5) years after you cease to be Chairman (or, if later, a director or
consultant), subject to the ten (10) year Option Term and the general provisions
of the Plan not inconsistent with this letter (for example, it is acknowledged
that it would not be inconsistent with this letter to cease exercisability of
options

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on a merger). Change in Control means: (I) any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing more than: fifty percent (50%) of the combined voting power of the
Company's then outstanding voting securities; (ii) a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation in substantially the same proportions as their
ownership of the Company; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person (other than those covered by the exceptions in clause (I)
above) acquires more than fifty percent (50%) of the combined voting power of
the Company's then outstanding securities shall not constitute a Change in
Control of Company, or (iii) the consummation of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
(or any transaction having a similar effect), other than a sale or disposition
by the Company of all or substantially all of the Company's assets to its
stockholders or to an entity, at least fifty percent (50%) of the combined
voting power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the Company
immediately prior to such sale.

"Affiliate" means an affiliate of the Company, as defined in Rule 12b-2
promulgated under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").

"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the Exchange
Act;

"Person" has the meaning set forth in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (1) the Company, (2) so long as the Company is not publicly
owned, any current shareholder of Common Stock of the Company's preferred stock
on the date of this Letter Agreement, (3) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, (4) an underwriter
temporarily holding securities pursuant to an offering of such securities or (5)
a corporations owned, directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of shares of Common
Stock of the Company.

MISCELLANEOUS OPTION PROVISIONS (TO BE MORELY FULLY DELINEATED BY MUTUAL
AGREEMENT IN THE OPTION GRANT AGREEMENT)

Options are nontransferable prior to vesting. Vested Options are nontransferable
(other than to immediate family members, trusts or family limited partnerships
entirely for the benefit of you and such immediate family members or, provided
an offering of the Option to it (or exercise of the option by it) would not be
in violation of the applicable securities laws without further Company action, a
corporation beneficially owned by the Chairman and his immediate family). Option
Shares are nontransferable (other than on the same basis as the options) while
the Company is private.

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Sales of Option Shares shall be subject to same lock-up restriction imposed on
major shareholders upon the Company becoming public if required by underwriters.

The Company and other shareholders shall have bring along rights (proportionate)
on sale of more than 50% of the Company stock.  The Option grant will permit you
to exercise  options prior to vesting in order to receive  Restricted Stock that
will be subject to forfeiture on the same basis as the vesting.

Any grants of stock options made to you by the Company will be subject to the
terms of the applicable option agreement except as provided herein.  The Company
shall consider making additional optional grants at least annually,  but without
imposing any legal obligation to do so.

         Your service as Chairman, unless extended by the mutual written
agreement of you and the Company, will terminate at the end of the Service
Period or, if earlier, on the earliest to occur of your death, termination by
the Company for Disability, termination by the Company with or without Cause or
your voluntary termination with or without Good Reason.

         In the event your service with the Company is terminated during the
Service Period by you or by the Company for any reason (i) The Company will pay
you (or your survivors, if applicable) your earned retainer through the date of
termination, to the extent not yet paid, (ii) your Options and any shares of
Company common stock transferred to you on exercise of your Options ("Option
Shares") will be treated as provided here and, (iii) any other equity awards
will be treated in accordance with the terms of the applicable award agreement
and (iv) if the termination of service as Chairman is by the Company without
Cause or by you for Good Reason, Four Hundred Thousand Dollars ($400,000) . Upon
such payments the Company shall have no further obligations under this
Agreement.

         Miscellaneous provisions:

         (a) You will be reimbursed for all reasonable business expenses
incurred in connection with the Chairmanship and other requested activities in
accordance with the Company's customary policy.

         (b) You will keep all information you receive in connection with, or as
a result of,  your  service  with the  Company  (and not in the  public  domain)
Confidential (the "Confidentiality Provision"). You will not identify for
solicitation,  solicit or hire  employees  of the Company,  or assist  others in
doing so, during the Service Period or for a period of two (2) years thereafter
(the "Non-Solicitation Provision"). Your activities will be limited as provided
above during the Initial Period and if you continue as Chairman. The Company
will be entitled to injunctive relief to enforce the provisions of this
paragraph (b).

         (c) You will be reimbursed for reasonable fees and costs incurred in
connection with the negotiation and preparation of this Letter Agreement in an
amount not to exceed Thirty-Five Thousand Dollars ($35,000).

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         (d) This Letter Agreement may be amended only by a written document and
supersedes all prior understandings.

         (e) This Letter Agreement shall be governed by the laws of New York.
Any dispute shall be settled by arbitration under the rules of the American
Arbitration Association in New York City, New York. The decision of the
arbitrator shall be final and binding and may be entered in any court of
competent jurisdiction. All your reasonable fees and expenses in such
arbitration will be paid by the Company if the arbitrator determines that you
have prevailed on substantially all items. Otherwise each party shall bear its
own costs and expenses and equally share the charges of the AAA and the
arbtirator.

         (f) The Company and you will issue a mutually agreed upon press release
and other activities designed to indicate your appointment and your affiliation;
provided, that the Company must, in any event, comply with applicable securities
law.

         (g) You will abide by all restrictions imposed by Federal Securities
law including those related to inside information.

         (h) You will be covered by the directors and officers liability
insurance of the Company and be indemnified by the Company in the same manner as
the outside directors or senior officers are so covered or indemnified by the
Company.

         Please sign this Letter Agreement in the space provided below. This
will constitute a binding agreement upon, and only upon, its approval by the
Board of Directors of the Company on or prior to May 30, 2000.

                                                     Sincerely,

                                                     PF Net Communications, Inc.

                                                     /s/  Muzzi Mirza
                                                     --------------------------

                                                     Agreed To:

                                                     /s/  Robert Annunziata
                                                     --------------------------
                                                     Robert Annunziata<PAGE>

                                                                   Exhibit 10.20

                              EMPLOYMENT AGREEMENT

PARTIES:                   PF.NET CORP.                          (the "Company")
                           a Delaware corporation

                           JOHN WARTA                               ("Employee")

DATED EFFECTIVE:           November 1, 1999

                                  R E C I T A L

         The Company desires to employ and retain the unique experience,
abilities and services of Employee.

                                A G R E E M E N T

         The parties agree as follows:

1.       EMPLOYMENT

         1.1 TERM. Subject to Section 6, the Company agrees to employ Employee
for a term commencing on the effective date of this Agreement and terminating
December 31, 2000.

         1.2 DUTIES. Employee accepts employment with the Company on the terms
and conditions set forth in this Agreement. Employee agrees to devote
substantially all of Employee's working time during the term of this Agreement
to the performance of Employee's duties under this Agreement. Employee shall be
responsible for exercising primary management direction and control of the
activities associated with the construction of the AT&T System (as defined in
the Fiber Optic System Agreement No. 4569177 between AT&T Corp. and PF.Net
Corp.), and performing such other duties consistent with prior duties as may be
determined by the Board of Directors of the Company. In performing duties,
Employee shall be subject to the direction and control of the Board of Directors
of the Company. Employee acknowledges that all policy making functions will be
determined by the Board of Directors of the Company and executive officers of
the Company and that Employee's authority will be limited to the implementation
of the policies. Employee shall perform Employee's duties faithfully,
intelligently, diligently, to the best of Employee's ability and in the best
interests of the Company. The Company acknowledges that, to the extent not
inconsistent with Section 5, Employee may serve on the boards of directors or
other governing body of other companies, including charitable entities; provided
that if a company is a competitor of the Company, Employee will not serve on the
board of directors of that competitor without obtaining the prior written
consent of the Company. In addition, the Company acknowledges (a) that Employee
shall have the right to (i) pursue Employee's investments with respect to Hawaii
ISP/Services, (ii) pursue Employee's investments with respect to Mitsubishi or
its affiliates and (iii) monitor and pursue Employee's private investments, and
(b) that provided Employee does not spend more than 20% of Employee's working
time during the term of this Agreement with respect to such ventures, the

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pursuit of either or both of such ventures by Employee shall not be a breach of
this Agreement. Finally, the Company acknowledges that Employee may be required
to devote time and attention to certain matters related to GST
Telecommunications, Inc. and its affiliates, limited solely to litigation
matters, and agrees that the pursuit of such matters shall not be a breach of
this Agreement.

2.       COMPENSATION

         2.1 BASE COMPENSATION. In consideration of all services to be performed
by Employee for the Company, the Company shall pay to Employee base compensation
of $37,500 monthly, payable in equal semi-monthly installments.

         2.2 BONUS COMPENSATION. With respect to the period ending December 31,
2000, Employee shall be eligible to receive a performance-based bonus which
shall be payable in an amount, if any, determined by the Board of Directors of
the Company in its sole discretion.

         2.3 OTHER BENEFITS. The Company shall pay Employee a car allowance of
$600 per month, payable on the first day of each calendar month and shall pay
for the benefit of Employee and Employee's spouse, during the term of this
Agreement, medical and dental insurance and life insurance on Employee in the
amount of $1,000,000. Further, in the event the Employee's employment with the
Company is terminated without Cause or at the expiration of the term (including
any extensions of this Agreement), the Company shall pay for the benefit of
Employee and Employee's spouse full medical and dental insurance coverage and
life insurance coverage on the Employee in the amount of $1,000,000, during the
period commencing on the date of termination without Cause or the expiration of
this Agreement and ending on the later of (a) the last day of the Severance
Period (as defined in Section 6.3.3), (b) the last day of the Consulting Term
(as defined in Section 7.1) or (c) the date Employee violates any of the
covenants set forth in Section 5.

         2.4 VACATION. Employee shall be entitled to one or more vacations
totaling 30 working days annually accruing ratably during the term of this
Agreement.

         2.5 CHANGE OF CONTROL. Notwithstanding anything to the contrary in
Section 6, if on or within the first 60 days following the date of a Change of
Control during the term of this Agreement, Employee voluntarily terminates his
employment with the Company, the Company shall continue to pay Employee, in
accordance with the Company's customary payroll practices, (a) base compensation
described in Section 2.1 through the last day of the term of this Agreement as
set forth in Section 1.1 (b) any accrued but unpaid bonus compensation payable
pursuant to Section 2.2, and (c) the consulting fee described in Section 7.3
through the last day of the Consulting Term as set forth in Section 7.1. For
purposes of this Agreement, a Change of Control means (i) the direct or indirect
sale, exchange or other transfer of all or substantially all (60% or more) of
the assets of the Company or of PF.Net Holdings, Limited, a Delaware corporation
("Holdings"), to any person or entity or group of persons or entities acting in
concert which does not include any stockholder or member prior to any such
transfer (a "Group of Persons"), (ii) the merger, consolidation or other
business combination of the Company or Holdings with the effect that the members
or shareholders of the Company, as the case may be, immediately following the
merger, consolidation or other

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business combination, hold 50% or less of the combined voting power of the
then-outstanding ownership interests or securities of the surviving entity of
such merger, consolidation or other business combination, (iii) the replacement
of three-fourths or more of the Board of Directors of the Company or the Board
of Directors of Holdings in any given 12-month period as compared to the
directors at the beginning of such 12-month period, and such replacement(s)
shall not have been approved by the Board of Directors of the Company or the
Board of Directors of Holdings, as applicable, as constituted at the beginning
of such 12-month period, or (iv) a person or Group of Persons other than the
Permitted Holders or a Permitted Group shall have become the beneficial owner of
ownership interests or securities of the Company or Holdings representing 60% or
more of the combined voting power of the Company or Holdings. For purposes of
this Section 2.5, the terms "Permitted Holders" and "Permitted Group" shall have
the meanings set forth in the Form of Description of Notes of Holdings attached
as Exhibit XI to that certain Bridge Loan Agreement dated as of October 29,
1999.

3.       EXPENSES.

         Employee shall be entitled to reimbursement from the Company for
reasonable expenses incurred by Employee in the performance of Employee's duties
under this Agreement in accordance with the Company's applicable expense and
travel policies upon presentation of vouchers or other required documentation
indicating in reasonable detail the amount and business purpose of each such
expense.

4.       FACILITIES AND LOCATION.

         Employee shall be provided a private office, secretarial services and
such other facilities, supplies and services as shall be required for the
performance of Employee's duties under this Agreement. Employee shall perform
Employee's duties in the principal office of the Company located in Washougal,
Washington.

5.       CONFIDENTIALITY; COVENANT NOT TO COMPETE

         5.1 AFFILIATES. For purposes of this Section 5, the term "Company"
shall include the Company and any and all affiliates of the Company.

         5.2 CONFIDENTIALITY.

                  5.2.1 CONFIDENTIALITY. Employee acknowledges and agrees that
all trade secrets, information, lists of customers and vendors, product planning
information, marketing research, marketing plans and strategies, pricing
strategies, financial information, data of the Company or any other information
proprietary to the Company ("Confidential Information") are valuable assets of
the Company.

                  5.2.2 OWNERSHIP. Employee acknowledges and agrees that all
Confidential Information is and shall continue to be the exclusive property of
the Company, whether or not

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conceived, discovered or developed, in whole or in part, by Employee and whether
or not disclosed or entrusted to Employee in connection with Employee's
employment by the Company.

                  5.2.3 ACKNOWLEDGMENT OF RECEIPT OF CONFIDENTIAL INFORMATION.
Employee acknowledges that in the course of performing employment services for
the Company, Employee will have access to Confidential Information, the
ownership and confidential status of which are highly important to the Company,
and Employee agrees, in addition to the specified covenants contained in the
Agreement, to comply with all policies and procedures of the Company for the
protection of Confidential Information.

                  5.2.4 COVENANT OF NONDISCLOSURE. Except for disclosure of
Confidential Information to other employees or consultants of the Company on a
"need to know" basis in the course of performing employment services for the
Company, Employee agrees not to disclose Confidential Information, directly or
indirectly, under any circumstances or by any means, to any person or enterprise
without the prior written consent of the Company, which consent may be granted
or withheld by the company in its sole discretion.

                  5.2.5 COVENANT OF NONUSE. Employee agrees not to copy,
transmit, reproduce, summarize, quote or make any commercial or other use
whatsoever of Confidential Information, except as may be necessary to perform
the duties of employment for the Company.

                  5.2.6 SAFEGUARD OF CONFIDENTIAL INFORMATION. Employee agrees
to exercise the highest degree of care in safeguarding Confidential Information
against loss, theft or other inadvertent disclosure and agrees generally to take
all steps necessary to ensure the maintenance of confidentiality.

         5.3 RETURN OF DOCUMENTS. Employee agrees that all originals and copies
of records, data, reports, documents, lists, plans, correspondence, memoranda,
notes and other materials related to or containing any confidential information,
in whatever form they exist, whether written, film, tape, computer disk or other
form of media, shall be the sole and exclusive property of the Company and shall
be returned promptly to the Company on the termination of this Agreement.

         5.4      COVENANT NOT TO COMPETE.

                  5.4.1 COVENANT. Employee covenants and agrees that for the
Restriction Period (defined in Section 5.4.2), Employee shall not:

                  (a) Directly or indirectly in any manner or capacity (e.g., as
         an advisor, principal, agent, partner, officer, director, stockholder,
         employee, member of any association or otherwise) without in each
         instance obtaining prior written consent of the Company, which consent
         may be granted or withheld by the Company in its sole discretion,
         engage in, work for, consult, provide advice or assistance or otherwise
         participate within or with respect to North America in the business of
         providing dark fiber, conduit and bandwidth on long haul fiber optic
         network telecommunicating systems, or in any other business which may
         be in

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<PAGE>

         competition with the business conducted by the Company on the date of
         this Agreement or commenced at any time during the Restriction Period
         or the subject of any agreement, plan or proposal approved by the Board
         of the Directors of Holdings or the Board of Directors of any affiliate
         of Holdings during such period; provided, however, that Employee may
         (i) own up to three percent (3%) of the outstanding shares or other
         equity securities of any enterprise that is a reporting company under
         the Securities Exchange Act of 1934, as amended, and (ii) own any
         shares of common stock of GST Telecommunications, Inc. held by Employee
         as of the effective date of this Agreement. Employee further agrees
         that during the Restriction Period he will not assist or encourage any
         other person in carrying out any activity that would be prohibited by
         this Section 5.4 if such activity were carried out by Employee.

                  (b) For the benefit of Employee or any other person or
         enterprise (i) solicit any business whatsoever from any vendor or
         customer of the business conducted by the Company, (ii) induce or cause
         any vendor to cease providing or selling any service or product to the
         Company or to terminate or change such vendor's business relationship
         with the Company in any manner or (iii) induce or cause any customer to
         cease purchasing any product or service from the Company or to
         terminate or change such customer's relationship with the Company in
         any manner.

                  (c) For the benefit of Employee or any other person or
         enterprise (i) induce or solicit any person (other than Clint Warta,
         Greg Warta, Geoff Warta or George Warta) who is then employed by the
         Company, or has been employed by the Company at any time during the
         one-year period preceding such inducement or solicitation, to leave
         that person's employment or other position with the Company or to
         accept any other employment or position or (ii) otherwise assist any
         person or enterprise in hiring or otherwise engaging such person (other
         than Clint Warta, Greg Warta, Geoff Warta or George Warta).

                  (d) Violate any Conflict of Interest Policy of the Company.

                  5.4.2 RESTRICTION PERIOD. The covenant set forth in Section
5.4.1 shall be binding on Employee for a period (the "Restriction Period")
commencing on the date of this Agreement and ending on the later of (a) the
first anniversary of the date Employee's employment with the Company is
terminated or (b) the last day of the Consulting Term (as defined in Section
7.1); provided, however, that the latest the Restriction Period shall terminate
in any event is December 31, 2005.

         5.5 REASONABLENESS OF RESTRICTIONS. Employee acknowledges and confirms
that the agreements, acknowledgements and covenants set forth in this Section 5
(a) do not impose unreasonable restrictions or work a hardship upon Employee,
(b) are essential to the willingness of the Company to employ Employee, (c) are
necessary and fundamental to the protection of the business conducted by the
Company and (d) are reasonable as to scope, duration and territory. Employee
waives any and all defenses to the enforcement of the covenants set forth in
this Section 5. Employee specifically acknowledges the payments under this
agreement and shares of equity securities of the Company that he has or will
receive are being provided by the Company in consideration of the covenants set
forth in this Section 5 and that such payments and equity

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<PAGE>

securities constitute good, valuable and adequate consideration for such
covenants. If it is determined by any court of competent jurisdiction that any
restriction in this Section 5 is excessive in duration or scope or is
unreasonable or unenforceable under any applicable law, it is the intention of
the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by applicable law.

         5.6 NO RELEASE. Employee agrees that the termination of this Agreement
shall not release Employee from any obligations under this Section 5.

6.       TERMINATION OF EMPLOYMENT

         6.1 CAUSES OR GROUND FOR TERMINATION OF EMPLOYMENT. The Company shall
have the right to terminate the employment of Employee at any time, without
notice and without payment of compensation in lieu of notice, under either of
the following conditions:

                  6.1.1 For cause ("Cause"), including, but not limited to, (i)
any form of dishonesty, criminal conduct or conduct involving moral turpitude
connected with the employment of Employee or which otherwise reflects adversely
upon the Company's reputation or operations, (ii) the refusal of Employee to
comply with the Company's written instructions, policies or rules as approved or
mandated by the Board of Directors of the Company, (iii) continuing or repeated
problems with Employee's performance or conduct or Employee's inattention to
duties after Employee has been provided written notice and a reasonable
opportunity to cure, (iv) any material breach of Employee's obligations under
this Agreement after Employee has been provided written notice and a reasonable
opportunity to cure or (v) any violation of any Conflict of Interest Policy of
the Company; provided, however, that "Cause" shall not include any conduct
related to Employee's litigation with GST Telecommunications, Inc. and its
affiliates unless there is a final judicial determination that such conduct
constituted fraud or intentional malfeasance; or

                  6.1.2 Employee has suffered a disability as a result of
illness, accident or other cause and is unable to perform a substantial portion
of Employee's usual duties of employment for a total (consecutive or cumulative)
of 90 days in any 12-month period after the date the disability commenced.

         6.2 DEATH. This Agreement and Employee's employment with the Company
shall terminate automatically upon Employee's death.

         6.3 EFFECT OF TERMINATION.

                  6.3.1 IN GENERAL. Upon the termination of employment, Employee
(or Employee's estate in the event of Employee's death) shall receive Employee's
base compensation prorated through the effective date of termination of
employment and any other payments, including, but not limited to, earned
vacation pay, to which Employee is entitled under the Company's policies. Any
termination of employment shall automatically terminate Employee's right to any
additional

                                       6
<PAGE>

compensation or to other benefits paid by the Company except as provided in
Section 6.3.2 and 6.3.3.

                  6.3.2 TERMINATION UPON DISABILITY. In the event Employee's
employment is terminated as a result of a disability as provided in Section
6.1.2, the Company shall pay Employee, in accordance with the Company's
customary payroll practices, his base compensation during the period beginning
on the date of termination and ending on the earlier of (a) the first
anniversary of the date of termination or (b) the last day of the term of this
Agreement as set forth in Section 1.1.

         6.3.3 TERMINATION BY COMPANY WITHOUT CAUSE. In the event the employment
of Employee is terminated by the Company for any reason other than for Cause, in
addition to the compensation payable under Section 6.3.1, the Company shall pay
Employee, in accordance with the Company's customary payroll practices, his base
compensation during the period (the "Severance Period") beginning on the date of
termination and ending on the earliest of (a) the last day of the term of this
Agreement as set forth in Section 1.1 or (b) the date Employee violates any of
the covenants set forth in Section 5.

7.       CONSULTING SERVICES

         7.1 RETENTION AS CONSULTANT. The Company shall retain Employee as a
consultant ("Consultant") for a term of five years commencing on the later of
(a) the date of Employee's termination of employment with the Company or (b) the
last day of any period following the date of such termination of employment
during which any amounts are payable to Employee pursuant to Section 6.3;
provided, however, that in the event of a Change in Control Employee at his
election may terminate his consulting relationship with the Company at any time
following the second anniversary of such Change in Control (the "Consulting
Term"). Consultant shall be an independent contractor and shall not be
considered an employee or agent of the Company. The Company shall not have and
shall not exercise any control over the manner and means used by Consultant to
perform services.

         7.2 CONSULTING SERVICES. During the Consulting Term, Consultant shall
provide services to the Company on the following terms:

                  7.2.1 HOURS AND SERVICES. The services provided shall be not
more than 20 hours per month. If the Company does not request 20 hours of
services in any month, Consultant shall nevertheless be paid for 20 hours during
that month.

                  7.2.2 NOTICE. The Company shall advise Consultant, at least
one month in advance, of the number of hours of Consultant's time that will be
required during the calendar month in question. Consultant's services shall be
provided on dates and at times reasonably convenient to both parties.

         7.3 CONSULTING FEES; EXPENSES. Consultant shall be paid $10,000 per
month for services provided under this Agreement. During the Consulting Term,
Consultant shall be paid

                                       7
<PAGE>

$2,500 per month as an allowance for office, secretarial services and other
facilities, supplies and services. Additionally, Consultant shall be reimbursed
for reasonable travel and business expenses incurred in connection with the
Company's business approved in advance by the Company.

         7.4 TERMINATION. The Consulting Term shall terminate automatically on
the death of Consultant.

         7.5 OTHER PROVISIONS. During the Consulting Term, Sections 1, 2, 3, 4
and 6 of this Agreement shall not be applicable except with respect to the
provision of medical, dental and life insurance as provided in Section 2.3.

8.       MISCELLANEOUS PROVISIONS

         8.1 BINDING NATURE. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective legal representatives, successors
and assigns.

         8.2 MODIFICATION. This Agreement may not be changed or modified except
by the written agreement of the parties. No change, termination, or attempted
waiver of any of the provisions of this Agreement shall be binding unless in
writing. This Agreement may not be modified or terminated orally.

         8.3 WAIVER. The waiver by either the Company or Employee of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by either party and shall in no way affect the enforcement
of the other provisions of this Agreement.

         8.4 APPLICABLE LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, except to the
extent governed by federal law.

         8.5 ATTORNEYS' FEES. If any suit or action is filed by any party to
enforce this Agreement or otherwise with respect to the subject matter of this
Agreement, each party shall be responsible to pay the attorney fees and costs
incurred by such party in preparation or in prosecution or defense of such suit
or action and the court or adjudicator is not authorized to allocate attorney
fees and costs between the parties or to one party.

         8.6 INJUNCTIVE AND OTHER RELIEF. If any party breaches or threatens
breach of any provision of this Agreement, the other party shall be entitled to
damages. The parties agree that damages for any breach or threatened breach by a
party may, by its nature, be inadequate, and that the other party shall be
entitled, in addition to damages, to a restraining order, temporary and
permanent injunctive relief, specific performance and other appropriate
equitable relief, without showing or proving that any actual damage has been
sustained.

         8.7 NOTICES. Any notice or other communication required or permitted to
be given under this Agreement shall be in writing and shall be delivered
personally or mailed by certified mail, return receipt requested, postage
prepaid, addressed to the parties as follows:

                                       8
<PAGE>

                           If to Employee:    John Warta
                                              P.O. Box 1088
                                              Camas, WA 98607

                           If to the Company: PF.Net Corp.
                                              1625 B Street
                                              Washougal, WA 98671

Any notice or other communication shall be deemed to be given at the expiration
of the third day after the date of deposit in the United States Mail. The
addresses to which notices or other communications shall be mailed may be
changed from time to time by giving written notice to the other party as
provided in this Section 8.7.

                            [signature page follows]

                                       9
<PAGE>

COMPANY:                                           EMPLOYEE:

PF.NET CORP.                                       JOHN WARTA

By:    /s/  STEPHEN IRWIN                          /s/  JOHN WARTA
    ---------------------------                    --------------------------

Title: Vice Chairman and Executive Vice President
      -------------------------------------------

                                       10

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