<PAGE>

EXHIBIT 10.4


                               SECURITY AGREEMENT

     As of the 26th day of March, 2001, in connection with the execution and
delivery of that certain 15% Convertible Promissory Note of even date (as
amended, restated, supplemented or otherwise modified from time to time, the
"Note") by TELEHUBLINK CORPORATION, a Delaware corporation (the "Company"), to
CFE, INC. (the "Holder"), which Note evidences a loan made by the Holder to the
Company in the aggregate amount of $2,500,000, the Company hereby
unconditionally grants and assigns to the Holder a continuing security interest
in and to (hereinafter referred to as the "Security Interest") all of the
Company's property and assets and all additions thereto and replacements
thereof, and all other property whether now owned or hereafter created, acquired
or reacquired by the Company, including:

Inventory
---------

     All inventory and supplies of whatsoever nature and kind and wheresoever
situated, including, without limitation, raw materials, components, work in
process, finished goods, goods in transit and packing and shipping materials,
accretions and accessions thereto, trust receipts and similar documents covering
the same products (collectively, the "Inventory");

Accounts
--------

     All right to payment for goods sold or leased or for services rendered,
expressly including, without limitation, the provision of competitive local
exchange carrier telephony service, data transport, internet access and other
related services, whether or not earned by performance, including, without
limitation, all agreements with and sums due from customers and other persons,
and all books and records recording, evidencing or relating to such rights or
any part thereof (collectively, the "Accounts");

Equipment
---------

     All machinery, equipment and supplies (installed and uninstalled) not
included in Inventory above, including motor vehicles and accretions and
accessions thereto; and any other equipment used in connection with the
Company's business (collectively, the "Equipment");
<PAGE>

Contracts and Leases
--------------------

     All (a) construction contracts, subscriber contracts, customer service
agreements, management agreements, rights of way, site agreements, equipment
purchase agreements, transmission capacity agreements, public utility contracts
and other agreements to which the Company is a party, whether now existing or
hereafter arising, including, without limitation, those listed on Exhibit A
                                                                  ---------
hereto (collectively, the "Contracts"); (b) lease agreements for real or
personal property to which the Company is a party, whether now existing or
hereafter arising, including, without limitation, those listed on Exhibit B
                                                                  ---------
hereto (collectively, the "Leases"); and (c) other contracts and contractual
rights, remedies or provisions now existing or hereafter arising in favor of the
Company (collectively, the "Other Contracts");

General Intangibles
-------------------

     All general intangibles including personal property not included above,
including, without limitation, all goodwill, trademarks, trademark applications,
trade names, trade secrets, patents, patent applications, industrial designs,
other industrial or intellectual property or rights therein, whether under
license or otherwise, all right to receive payment on property upon or in
connection with any transfer of any license, claims for tax refunds, and tax
refund amounts (collectively, the "Intangibles");

Furniture and Fixtures
----------------------

     All furniture and fixtures in which the Company has an interest
(collectively, the "Furniture and Fixtures");

Miscellaneous Items
-------------------

     All goods, investment property, chattel paper, documents, instruments,
supplies, choses in action, claims, money, deposits, certificates of deposit,
stock or share certificates, and licenses and other rights in intellectual
property not included above (collectively, the "Miscellaneous Items"); and

Proceeds
--------

     All proceeds of any of the above, and all proceeds of any loss of, damage
to or destruction of the above, whether insured or not insured, and all other
proceeds of any sale, lease or other disposition of any property or interest
therein referred to above, together with all proceeds of any policies of
insurance covering any or all of the above, the proceeds of any award in
condemnation with respect to any of the property of the Company, any rebates or
refunds, whether for taxes or otherwise, together with all proceeds of any such
proceeds (collectively, the "Proceeds").

                                       2
<PAGE>

     The Inventory, Accounts, Equipment, Contracts, Other Contracts, Leases,
Intangibles, Furniture and Fixtures, Miscellaneous Items, and Proceeds, as
described above, are hereinafter collectively referred to as the "Collateral."

     This Security Agreement (this "Agreement") and the Security Interest secure
payment and performance of all obligations of the Company to the Holder under
this Agreement, the Note, that certain 15% Convertible Promissory Note and
Warrant Purchase Agreement, dated of even date herewith, by the Company to the
Holder (the "Note Purchase Agreement") and any extensions, renewals or
amendments thereto, however created, acquired, arising or evidenced, whether
direct or indirect, absolute or contingent, now or hereafter existing, or due or
to become due, together with all other Liabilities (as defined in the Note
Purchase Agreement) (all of the foregoing obligations being hereinafter
collectively referred to as the "Obligations").

     1.   The Company hereby authorizes the Holder to file such financing
statements and such other documents as the Holder may deem necessary or
desirable to protect or perfect the interest of the Holder in the Collateral,
and appoints the Holder as the Company's attorney-in-fact, with a power of
attorney to execute on behalf of the Company such UCC financing statement forms
and other similar instruments as the Holder may from time to time deem necessary
or desirable to protect or perfect such interests in the Collateral. Such power
of attorney is coupled with an interest and shall be irrevocable. In addition,
the Company agrees to make, execute, deliver or cause to be done, executed and
delivered all such further acts, documents and things as the Holder may
reasonably require for the purpose of perfecting or protecting the rights of the
Holder hereunder or otherwise giving effect to this Agreement, all promptly upon
request therefor.

     2.   The Company represents and warrants to the Holder that:

          (a)  the execution of this Agreement and the fulfillment of the terms
     hereof will not result in a breach of any of the terms or provisions of, or
     constitute a default under, the Company's Certificate of Incorporation or
     other organizational documents, as applicable, as presently in effect, or
     any order, rule or regulation, applicable to the Company, of any court or
     of any federal or state regulatory body or administrative agency or other
     governmental body having jurisdiction over the Company, or result in the
     termination or cancellation or breach of any indenture, mortgage, deed of
     trust, deed to secure debt, lease or other agreement or instrument to which
     the Company is a party or by which it is bound or affected;

          (b)  the Company has taken all necessary corporate action, as
     applicable, to authorize the execution and delivery of this Agreement, and
     this Agreement, when executed and delivered, will be the valid and binding
     obligation of the Company enforceable against the Company in accordance
     with its terms, subject only to the following qualifications:

                                       3
<PAGE>

               (i)  certain equitable remedies are discretionary and, in
          particular, may not be available where damages are considered an
          adequate remedy at law, and

               (ii) enforcement may be limited by bankruptcy, insolvency,
          liquidation, reorganization, reconstruction and other similar laws
          affecting enforcement of creditors' rights generally (insofar as any
          such law relates to the bankruptcy, insolvency or similar event of the
          Company).

          (c)  Exhibit A attached hereto and incorporated herein by this
     reference sets forth a complete and accurate list of the Contracts in
     effect on the date hereof which provide for aggregate payments over the
     life of each such Contract in excess of $100,000 or which are otherwise
     material to the Company, and the Company will furnish copies thereof to the
     Holder; and

          (d)  Exhibit B attached hereto and incorporated herein by this
     reference sets forth a complete and accurate list of all Leases providing
     for aggregate payments over the life of any single Lease in excess of
     $100,000 to which the Company is a party in effect on the date hereof, and
     the Company will furnish copies thereof to the Holder.

     3.   The Company further represents and warrants that, upon the filing of
UCC-1 financing statements in the jurisdictions set forth on Exhibit C attached
                                                             ---------
hereto, the Security Interest in the Collateral granted hereunder shall
constitute at all times a valid first priority security interest, perfected with
respect to all Collateral for which the filing of the UCC-1 financing statements
is a valid method of perfection, vested in the Holder, in and upon the
Collateral, free of any Liens (as defined in the Note Purchase Agreement) except
for Permitted Liens(as defined in the Note Purchase Agreement). The Company
shall take or cause to be taken such acts and actions as shall be necessary or
appropriate to assure that the Security Interest in the Collateral shall not
become subordinate or junior to the security interests, liens or claims of any
other Person, and that the Collateral shall not otherwise be or become subject
to any Lien, except for Permitted Liens.

     4.   The Company further represents and warrants that it now keeps all of
its records concerning its Accounts, Contracts, Leases, Other Contracts,
Intangibles and other Collateral at its chief executive office, which is at the
address set forth with respect to the Company in Section 7 of the Note. The
Company covenants and agrees that it shall not change its chief executive
offices or keep any of such records at any other address, unless written notice
thereof is given to the Holder at least thirty (30) calendar days prior to the
creation of any new address for the keeping of such records. The Company further
agrees that it shall give the Holder, in writing making reference to this
Section 4 of this Agreement, prior written notice of the opening of any new
material place of business, the closing of any existing material place of
business or any change in

                                       4
<PAGE>

the location of the place where it keeps the Collateral. The Company further
represents and warrants that all names and addresses under and at which it has
operated and owned the Collateral for the five (5) year period prior to the date
hereof are listed on Exhibit D attached hereto.

     5.   The parties intend that the Collateral shall remain personal property
irrespective of the manner of its attachment or affixation to realty.

     6.   Any and all injury to, or loss or destruction of, the Collateral shall
be at the Company's risk and shall not release the Company from its obligations
hereunder. The Company agrees not to sell, transfer, assign, dispose of,
mortgage, grant a security interest in or encumber any of the Collateral, except
as may be permitted under the Note or the Note Purchase Agreement. The Company
agrees to maintain in force insurance with respect to the Collateral. The
Company agrees to pay all required taxes, liens and assessments upon the
Collateral, its use or operation. The Company further agrees that the Holder
may, but shall in no event be obligated to, insure any of the Collateral in such
form and amount as the Holder may deem necessary or desirable if the Company
fails to obtain insurance, and that the Holder may pay or discharge any taxes or
liens on any of the Collateral, and the Company agrees to pay any such sum so
expended by the Holder and such sums and such interest shall be deemed to be a
part of the Obligations secured by the Collateral under the terms of this
Agreement.

     7.   The Company shall (a) give prompt notice to the Holder of any claim of
default under any Contract, Other Contract or Lease given to the Company or by
the Company, and (b) appear in and defend any action growing out of or in any
manner connected with any Contract, Other Contract or Lease. The rights and
interests granted to the Holder hereunder include all of the Company's rights
and title (i) to modify the Contracts, the Other Contracts and the Leases, (ii)
to terminate the Contracts, the Other Contracts and the Leases, and (iii) to
waive or release the performance or observance of any obligation or condition of
the Contracts, the Other Contracts and the Leases.

     8.   (a) The Holder shall have such (i) rights and remedies as are set
forth in the Note and herein, (ii) all the rights, powers and privileges of a
secured party under the Uniform Commercial Code of the State of New York or any
other applicable jurisdiction and (iii) all other rights and remedies available
to the Holder at law or in equity. The Company covenants and agrees that any
notification of intended disposition of any Collateral, if such notice is
required by law, shall be deemed reasonably and properly given if given in the
manner provided for in Section 18 hereof at least ten (10) calendar days prior
to such disposition. (b) The Holder shall have the right to the appointment of a
receiver for the properties and assets of the Company, and the Company hereby
consents to such rights and to such appointment and hereby waives any objection
the Company may have thereto and hereby waives the right to have a bond or other
security posted by the Holder or any other Person in connection therewith. The
Company agrees to take any actions that the Holder may reasonably request in
order to enable the Holder to obtain

                                       5
<PAGE>

and enjoy the full rights and benefits granted to the Holder under this
Agreement, the Note and the Note Purchase Agreement.

     9.   The Holder (or its designee) may proceed to perform any and all of the
obligations of the Company contained in any of the Contracts, Other Contracts or
Leases and exercise any and all rights of the Company therein contained as fully
as the Company itself could. The Company hereby appoints the Holder its
attorney-in-fact, with power of substitution, to take such action, execute such
documents, and perform such work, as the Holder may deem appropriate in exercise
of the rights and remedies granted the Holder herein. The powers herein granted
shall include, but not be limited to, the power to: (i) sue on the Contracts,
the Other Contracts or the Leases; (ii) seek all governmental approvals required
for the operation of the business of the Company; (iii) modify or terminate the
Contracts, the Other Contracts and the Leases; and (iv) waive or release the
performance or observance of any obligation under any of the Contracts, Other
Contracts or Leases. The power of attorney granted herein is coupled with an
interest and shall be irrevocable.

     10.  Should the Company fail to perform or observe any covenant or comply
with any condition contained in any of the Contracts, the Other Contracts or the
Leases in any material respect, then the Holder may, but without obligation to
do so and without releasing the Company from its obligation to do so, perform
such covenant or condition and, to the extent that the Holder shall incur any
costs or pay any expenses in connection therewith, including any costs or
expenses of litigation associated therewith, such costs, expenses or payments
shall be included in the Obligations secured hereby. The Holder shall not be
obliged to perform or discharge any obligation of the Company under any of the
Contracts, the Other Contracts or the Leases, and the Company agrees to
indemnify and hold the Holder harmless from and against any and all liability,
loss or damage which the Holder may incur under any of the Contracts, the Other
Contracts or the Leases or under or by reason of this Agreement, and any and all
claims and demands whatsoever which may be asserted against the Company by
reason of an act of the Holder under any of the terms of this Agreement or under
the Contracts, the Other Contracts or the Leases.

     11.  The Company hereby further appoints the Holder as its attorney-in-
fact, with power of substitution, with authority to collect all Accounts, to
endorse the name of the Company on any note, acceptance, check, draft, money
order or other evidence of debt or of payment which constitutes a portion of the
Collateral and which may come into the possession of the Holder, and generally
to do such other things and acts in the name of the Company with respect to the
Collateral as are necessary or appropriate to protect or enforce the rights
hereunder of the Holder. The Company further authorizes the Holder to compromise
and settle or to sell, assign or transfer or to ask, collect, receive or issue
any and all claims possessed by the Company which constitute a portion of the
Collateral, all in the name of the Company. After deducting all reasonable
expenses and charges (including the Holder's reasonable attorneys' fees) of
retaking, keeping, storing and selling the Collateral, the Holder may apply the
proceeds in payment of any of the

                                       6
<PAGE>

Obligations in any order of application determined by the Holder. The power of
attorney granted herein is coupled with an interest and shall be irrevocable.
The Company agrees that if steps are taken by the Holder to enforce its rights
hereunder, or to realize upon any of the Collateral, the Company shall pay to
the Holder the amount of the Holder's costs, including reasonable attorneys'
fees, and the Company's obligation to pay such amounts shall be deemed to be a
part of the Obligations secured hereunder.

     12.  The Company shall indemnify and hold harmless the Holder and any other
person acting hereunder for all losses, costs, damages, fees and expenses
whatsoever associated with the exercise of the powers of attorney granted with
respect to its Collateral herein; and shall release the Holder and any other
person acting hereunder from all liability whatsoever for the exercise of the
foregoing powers of attorney and all actions taken pursuant thereto, except for
actions involving gross negligence and willful misconduct.

     13.  The Company agrees that the rights of the Holder under this Agreement,
the Note or any other contract or agreement now or hereafter in existence
between the Holder and the Company and the other obligors thereunder, or any of
them, shall be cumulative, and that the Holder may from time to time exercise
such rights and such remedies as such person or persons may have thereunder and
under the laws of the United States or any state, as applicable, in the manner
and at the time that the person or persons in its or their sole discretion
desire, subject to the terms of such agreements. The Company further expressly
agrees that the Holder shall in no event be under any obligation to resort to
any Collateral secured hereby prior to exercising any other rights that the
Holder may have against the Company or its property, nor shall the Holder be
obliged to resort to any other collateral or security for the Obligations, other
than the Collateral, prior to any exercise of the Holder's rights against the
Company and its property hereunder.

     14.  The Company hereby acknowledges that the Obligations arose out of a
commercial transaction and agrees that upon the occurrence or during the
continuation of a payment default or breach by the Company under any agreement
between the Company and the Holder, including, without limitation, the Note and
the Note Purchase Agreement (any such occurrence may be referred to hereafter as
a "Default"), the Holder shall have the right to immediate possession without
notice or a hearing, and hereby knowingly and intelligently waives any and all
rights it may have to any notice and posting of a bond by the Holder prior to
seizure by the Holder, or any of its transferees, assigns or successors in
interest, of the Collateral or any portion thereof.

     15.  No transfer or renewal, extension, assignment or termination of this
Agreement or of the Note or the Note Purchase Agreement, or of any instrument or
document executed and delivered by the Company or any other obligor to the
Holder nor additional advances made by the Holder to the Company, nor the taking
of further security, nor the retaking or re-delivery of the Collateral to the
Company by the Holder nor any other act of the Holder shall release the Company
from any Obligation, except a

                                       7
<PAGE>

release or discharge executed in writing by the Holder with respect to such
Obligation or upon full payment and satisfaction of all Obligations. The Holder
shall not, by any act, delay, omission or otherwise, be deemed to have waived
any of its rights or remedies hereunder, unless such waiver is in writing and
signed by the Holder and then only to the extent therein set forth. A waiver by
the Holder of any right or remedy on any occasion shall not be construed as a
bar to the exercise of any such right or remedy which it would otherwise have
had on any other occasion.

     16.  The Company agrees that this Agreement and the rights hereunder may in
the discretion of the Holder, as applicable, be assigned in whole or in part in
connection with any assignment of the Note and the Note Purchase Agreement, or
either of them, or the indebtedness evidenced thereby, as permitted thereunder.

     17.  This Agreement shall apply to and bind the respective successors and
permitted assigns of the Company and inure to the benefit of the successors and
permitted assigns of the Holder.

     18.  All notices and other communications required or permitted hereunder
shall be in writing and shall be given in a fashion and at the addresses
prescribed in Section 7 of the Note.

     19.  This Agreement shall be construed and interpreted in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed wholly within the State of New York. This Agreement, together with
all documents referred to herein, constitutes the entire agreement among the
Company and the Holder with respect to the matters addressed herein and may not
be modified except by a writing executed by the Holder and the Company.

     20.  If any paragraph or part thereof of this Agreement shall for any
reason be held or adjudged to be invalid, illegal or unenforceable by any court
of competent jurisdiction, such paragraph or part thereof so adjudicated
invalid, illegal or unenforceable shall be deemed separate, distinct and
independent, and the remainder of this Agreement shall remain in full force and
effect and shall not be affected by such holding or adjudication.

     21.  This Agreement may be executed in any number of counterparts, each of
which, including counterparts delivered by facsimile, shall be deemed to be an
original, but all such separate counterparts shall together constitute but one
and the same instrument. Delivery of an executed counterpart of this Agreement
by facsimile transmission shall be effective as delivery of an originally
executed counterpart hereto.

     22.  The Company and the Holder intend this Agreement to remain in full
force and effect until the later of (a) such time as the Note may be converted
pursuant to Section 2 of the Note or (b) payment in full by the Company of all
amounts owing to Holder under the Note, the Note Purchase Agreement or this
Agreement; provided that

                                       8
<PAGE>

the Holder shall take no action with respect to Sections 9, 10, 11 and 14 of
this Agreement except upon the occurrence or during the continuation of a
Default.

                 [Remainder of Page Intentionally Left Blank]

                                       9
<PAGE>

          IN WITNESS WHEREOF, the undersigned parties hereunto have executed
this Agreement by and through their duly authorized officers, as of the day and
year first above written.


BORROWER:                      TELEBHUBLINK CORPORATION


                               By: /s/ Bruce W. Young
                                   ---------------------------------------------
                                    Name: Bruce W. Young
                                          --------------------------------------
                                    Title: Chief Executive Officer and President
                                           -------------------------------------



HOLDER:                        CFE, INC.


                               By: /s/ Kenneth M. Gacevich
                                   ---------------------------------------------
                                    Name: Kenneth M. Gacevich
                                          --------------------------------------
                                    Title: Vice President
                                           -------------------------------------