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                                                                   Exhibit 10.4



                  PLEDGE AND SECURITY AGREEMENT-B (REFINANCING)


     THIS PLEDGE AND SECURITY AGREEMENT-B (REFINANCING), dated as of October 31,
1997 (this "Agreement"), is made by FORE SYSTEMS HOLDINGS CORPORATION, a
Delaware corporation (the "Pledgor"), FORE Systems, Inc., a Delaware corporation
("FORE"), MELLON FINANCIAL SERVICES CORPORATION #4 (the "Tranche B Lender"),
together with its successors and assigns from time to time, in its capacity as
secured party hereunder (the "Pledgee"), and MELLON BANK, N.A., as custodian (in
such capacity, the "Custodian"). Capitalized terms used but not otherwise
defined in this Agreement have the respective meanings specified in (i) Appendix
1 to that certain Participation Agreement, dated as of December 13, 1995 (as
amended, supplemented or otherwise modified from time to time, the
"Participation Agreement"), among FORE Systems, Inc., Brush Creek Business
Trust, a statutory Delaware business trust (the "Trust") acting through
Wilmington Trust Company, not in its individual capacity except as expressly
stated therein, but solely as Certificate Trustee, Mellon Financial Services
Corporation #4 and Mellon Bank, N.A. and the rules of interpretation stated in
such Appendix 1 shall be applicable to this Agreement and (ii) in the First
Amendment to such Participation Agreement dated as of October 31, 1997.

                             PRELIMINARY STATEMENTS

                                    (1)     The Tranche B Lender has entered
                                            into the Amended and Restated Term
                                            Loan Agreement, pursuant to which
                                            the Tranche B Lender has agreed to
                                            make the Tranche B Loan to the
                                            Trust, to be evidenced by the
                                            Tranche B Note.

                                    (2)     Pledgor will deliver, or
                                            cause to be delivered from
                                            time to time, to the
                                            Custodian in accordance
                                            with the terms hereof and
                                            of that certain agreement
                                            between the 

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                                            Pledgor and the
                                            Custodian (the "Custody
                                            Agreement-B"), Pledged
                                            Property with a Collateral
                                            Value in an amount not less
                                            than the Collateral
                                            Requirement and at all
                                            times until all obligations
                                            of the Guarantor and the
                                            Borrower created under the
                                            Refinancing Documents, with
                                            respect to the Tranche B
                                            Loan, have been fully
                                            satisfied or discharged in
                                            accordance with the terms
                                            thereof, to maintain, or
                                            cause to be maintained from
                                            time to time, Pledged
                                            Property with the Custodian
                                            in an amount not less than
                                            the Collateral Requirement
                                            from time to time
                                            thereafter, for the purpose
                                            of securing all
                                            obligations, with respect
                                            to the Tranche B Loan under
                                            the Guaranty Agreement as
                                            amended (whether for
                                            principal, interest,
                                            Make-Whole Premium or other
                                            amounts due and payable
                                            thereunder); provided,
                                            however, the maximum
                                            liability of the Pledgor
                                            hereunder and under the
                                            Guaranty Agreement (and of
                                            FORE under the Guaranty) is
                                            limited to Pledged Property
                                            required hereby to be
                                            pledged and the "Pledged
                                            Property" required to be
                                            pledged under the Pledge
                                            and Security Agreement - A
                                            (Refinancing), however such
                                            obligations are created,
                                            arising or evidenced,
                                            whether direct or indirect,
                                            joint or several, absolute
                                            or contingent, or now or
                                            hereafter existing, or due
                                            or to become due (including
                                            all amounts which would
                                            become due but for the
                                            operation of the automatic
                                            stay under Section 362(a)
                                            of the United States
                                            Bankruptcy Code, and 



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                                            the operation of Sections 502(b) and
                                            506(b) of the United States
                                            Bankruptcy Code) (all of the
                                            foregoing, collectively, the
                                            "Secured Obligations").

                                    (3)     Pledgor acknowledges and
                                            agrees that it will derive
                                            substantial benefits from
                                            the execution and delivery
                                            of this Agreement, and each
                                            of the Refinancing Loan
                                            Documents to which it is a
                                            party, and the transactions
                                            contemplated thereunder.

     NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the Pledgor, the Custodian and the Pledgee, intending to
be legally bound, hereby agree as follows:


SECTION 1. Pledge and Assignment. As collateral security for the due and
punctual payment of all of the Secured Obligations, the Pledgor hereby pledges,
assigns, conveys, transfers, delivers and grants to the Pledgee a security
interest in and continuing lien on all of the following property, whether now
owned or existing or hereafter acquired or arising, and wherever located
(collectively, the "Collateral"), subject to the terms and conditions contained
herein:

     (a)  the Collateral Account (as hereinafter defined) and all moneys, funds,
          instruments, and securities, including, Pledged Property, now in or
          from time to time credited to or on deposit in the Collateral Account,
          including, all Pledged Property deposited in the Collateral Account
          pursuant to Sections 3 and 4(a) hereof;

     (b)  all interest, profit (whether of cash or securities) and distributions
          of any of the foregoing; and

     (c)  all proceeds (as defined in the Uniform Commercial Code) of the
          foregoing.


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     Notwithstanding anything to the contrary contained herein, in any other
Refinancing Loan Document, or in any other Operative Document, Mellon Financial
Services Corporation #4 (in its capacity as Pledgee under this Agreement) shall
only have rights in and to the Pledged Property until the repayment in full of
the Secured Obligations.

     SECTION 2. Collateral Account; Transfer of Collateral; Definitions. (a)
Concurrently herewith the Pledgor has established at the branch of the
Custodian located at Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, a collateral account designated on the records of the
Custodian as "FORE Systems Holding Corp. Collateral Account, Mellon Financial
Services Corporation #4, as Secured Party," account number 856-37247-9 (herein,
together with any substitution therefor, the "Collateral Account"). The
Collateral Account shall be segregated from any and all other accounts or other
property of the Pledgor, and subject to Section 4 hereof (with respect to
permitted withdrawals) and Section 7 hereof (with respect to investment at the
direction of Pledgor), the Pledgee shall have sole dominion and control over the
Collateral Account. Without limiting the generality of the foregoing, so long as
an Event of Default (as hereinafter defined) has occurred and is continuing the
Pledgee shall have the sole right to make withdrawals from the Collateral
Account. Except as expressly provided in Section 4, until the Secured
Obligations are paid in full, the Pledgor shall have no right to make
withdrawals from the Collateral Account or to otherwise exercise any control
with respect to any securities or other property from time to time on deposit in
or credited to the Collateral Account, or provide substitute Collateral.

     (b) Intentionally Omitted.

     (c) The Pledgor shall deliver with any securities transferred hereunder all
appropriate undated bond powers, duly executed in blank and any and all other
forms related to transfer requested by the Custodian, completed or executed so
to make such transfer valid under applicable law and the rules of any securities
exchange or otherwise.

     (d) The Pledgor and the Pledgee agree to do or take all actions (or omit
from taking actions) in order to make all 



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transfers contemplated hereby valid under applicable law and the rules of any
securities exchange or otherwise.

     (e) (i) For the purpose of this Agreement, "Pledged Property" shall mean
Marketable Collateral-B and any undistributed Earnings thereon delivered and
duly pledged in accordance with Section 1 and maintained in accordance with
Section 3.

         (ii) For the purpose of this Agreement, the "Collateral Requirement"
shall be an amount equal to 50% of the aggregate principal amount outstanding
from time to time under the Tranche B Notes; and if Lessee refinances or refunds
the Tranche A Loans in accordance with Section 3.8 of the Participation
Agreement, the "Collateral Requirement" shall be as of the date the Tranche A
Loan is repaid or assigned pursuant to Section 3.8 thereof an amount equal to
the sum of 50% of the aggregate principal amount outstanding from time to time
under the Tranche B Note plus an amount equal to the value of the Pledged
Property in the Collateral Account had Earnings not been distributed at any time
after the Refinancing Funding Date minus the value of the Pledged Property in
the Collateral Account on the date upon which the Tranche A Loan is refinanced
pursuant to Section 3.8 of the Participation Agreement (such amount shall be
calculated by FORE and will be verified by Mellon Bank N.A.)

         (iii) For the purposes of establishing the Collateral Value of Pledged
Property held in accordance with Sections 1, 3 and 4(a) in the Collateral
Account, the term "Fair Market Value" shall mean, in the case of cash, the
amount of such cash, and otherwise, the market value of the applicable Pledged
Property as determined by reference to market quotes provided on the date of
valuation by Bloomberg Financial Market Service, or if such rate is unavailable,
by Interactive Data Services Inc., Telerate, Reuters and/or any major daily
financial publication such as the Wall Street Journal or The New York Times.

         (iv) For the purpose of this Agreement "Collateral Value" shall mean
(i) in the case of cash 100% of the amount of such cash, (ii) in the case of a
certificate of deposit issued by Mellon Bank, 100% of the Fair Market Value, and
(iii) in the case of Pledged Property, other than cash and a certificate of
deposit issued by Mellon Bank, 90% of the Fair Market Value of the 



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Pledged Property properly delivered and perfected hereunder.

     SECTION 3. Maintaining Pledged Property; Additional Deposits to Collateral
Account. Subject to Section 4, the Pledgor shall maintain at all times until the
Secured Obligations have been fully satisfied and discharged in accordance with
the Refinancing Loan Documents Pledged Property in the Collateral Account having
a Collateral Value equal to or greater than the Collateral Requirement. All such
Pledged Property shall be unrestricted and shall not be subject to any Lien,
except for the Liens created by the Refinancing Loan Documents. On the date, if
any, the Tranche A Loans are repaid or assigned pursuant to Section 3.8 of the
Participation Agreement, it is a condition precedent to such refinancing that
the Pledgor transfer and assign to the Collateral Account sufficient additional
Pledged Property so that the Collateral Value (after taking into account such
transfer) is at least equal to the new Collateral Requirement.

     SECTION 4. Valuation; Required Collateral Level; Substitutions and Release.
(a) On the first Business Day of each calendar month during the Collateral Term,
the Custodian shall determine the aggregate Collateral Value of the Pledged
Property in the Collateral Account. Such determination shall be promptly
furnished, in writing, to the Pledgor and the Pledgee. To the extent the
Collateral Value of the Pledged Property in the Collateral Account is less than,
at any time prior to the full satisfaction and discharge of the Secured
Obligations in accordance with the terms of the Refinancing Loan Documents, the
Collateral Requirement, the Pledgor promptly, but in any event within seven days
after receipt of notice of such determination, shall transfer Pledged Property
to such account in an amount equal to or exceeding the Collateral Value
shortfall amount so that the Collateral Requirement is maintained at all times
prior to the full satisfaction and discharge of the Secured Obligations in
accordance with the terms of the Refinancing Loan Documents. To the extent the
Collateral Value of the Pledged Property in the Collateral Account exceeds the
Collateral Requirement on the first Business Day of any calendar month prior to
the full satisfaction and discharge of the Secured Obligations in accordance
with the terms of the Refinancing Loan Documents and no Event of Default (as
hereinafter defined) or Default shall have occurred and be continuing, the
Pledgor may request the 



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Pledgee, with a copy to the Custodian, to release such excess Collateral to the
Pledgor or upon its order or the order of its designee, and the Pledgee shall
release and direct the Custodian to release such excess Collateral to the
Pledgor or upon its order in accordance with the release procedures set forth in
Section 4(b) below.

     (b) During such time as Pledged Property is held in the Collateral Account,
upon delivery of prior notice to the Custodian, the Pledgor may, at any time and
so long as no Event of Default shall have occurred and be continuing, substitute
for any Collateral subject to this Agreement, other Pledged Property having in
the aggregate at least equivalent Collateral Value, and such substitute Pledged
Property shall be Collateral for all purposes hereunder. All such substitute
Pledged Property shall be deposited in and credited to the Collateral Account,
and shall be accompanied by proper instruments of assignment and/or bond powers
executed in blank or to the Pledgee by the Pledgor in accordance with the
instructions of the Pledgee. Collateral for which the Custodian has received
substituted Collateral to the extent permitted hereunder or Collateral which is
to be otherwise released in accordance with 4(a) above shall be promptly
released by the Pledgee and shall be redelivered and retransferred to the
Pledgor or transferred to such Pledgor's account by the Custodian upon the
instructions of the Pledgor and shall be accompanied by proper instruments of
reassignment and/or bond powers (as appropriate) executed by the Custodian (or
its nominee) or the Pledgee, as applicable, as the Pledgor shall direct, all at
the expense of the Pledgor and without recourse, representation or warranty by
the Pledgee or the Custodian or any of their nominees (except for the
representation that the released Collateral is free and clear of all Liens
created by, through or under the Pledgee or the Custodian).

     (c) The delivery of a written notice pursuant to clause (a) above by the
Pledgor to the Custodian, prior to effecting any sale, substitution, or
additional pledge of Collateral as contemplated by this Section 4(c) shall
constitute a representation and warranty by the Pledgor that, to Pledgor's
knowledge, no violation of the rules and regulations of the Federal Reserve
Board exists with respect to the Tranche B Loan and such sale, substitution or
pledge of Collateral will not result in a violation of any rule or regulation of
the Federal 



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Reserve Board.

     SECTION 5. The Custodian. (a) The Pledgee hereby appoints the Custodian as
the Pledgee's agent (i) for retaining physical possession of any cash included
in the Collateral and any physical certificates or instruments or other physical
representation or evidence of any Collateral in accordance with the provisions
of this Agreement and (ii) for holding the interest of the Pledgee in all
book-entry securities in accordance with the provisions of this Agreement. All
Collateral shall be credited to the Collateral Account and segregated from all
other property, including, without limitation, that of the Pledgor and the
Pledgee. The Custodian hereby accepts such appointment.

     (b) The Custodian shall retain physical possession of the certificates or
instruments representing or evidencing the Collateral if the Collateral is
issued in physical form; provided that the Custodian may have such Collateral
credited to the Custodian's account at The Depository Trust Company ("DTC"). If
the Collateral is in book-entry form, the Collateral shall be (i) credited to
the Custodian or its nominee in the Custodian's account at DTC or (ii)
registered on the books of the issuer thereof in the name of the Custodian. The
Custodian shall mark its books and records with respect to the Collateral to
indicate security interests of the Pledgee in the Collateral. Certificated
securities may be held (in the discretion of the Pledgee) in the name of the
Pledgor, endorsed or assigned in blank, or endorsed or assigned to the Pledgee,
the Custodian or DTC (or its nominee).

     (c) All book-entry obligations of the United States Government issued in
the form of an entry on the records of the Federal Reserve Bank of New York
shall be (1) identified on the records of the Federal Reserve Bank of New York
for the account of Mellon Financial Services Corporation #4, or its agent and
(2) identified on the records of Mellon Bank, N.A. as part of the Collateral
Account. The Custodian shall mark its books and records with respect to the
Collateral to indicate the security interests of the Pledgee in the Collateral.

     (d) In addition, subject to Section 7 hereof, the Custodian shall at all
times have the right to exchange certificates or 



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instruments representing or evidencing Pledged Property for certificates or
instruments for Pledged Property of smaller or larger denominations for any
purpose consistent with its performance of this Agreement; provided that the
aggregate principal amount of the certificates or instruments received upon such
an exchange shall not be less than the aggregate principal amount of the
certificates or instruments tendered for exchange.

     (e) The Custodian acknowledges receipt of this Agreement, certifies that no
notice of any other security agreement or claim affecting the Collateral has
been received by it, states that the Collateral will be held in the Collateral
Account for the benefit of the Pledgee and agrees to hold the Collateral solely
for the benefit of the Pledgee and subject to the control of the Pledgee, as
provided in this Agreement. The Custodian agrees to exercise the same degree of
care as exercised by banks generally for similar property in exercising its
duties under this Agreement. The duties of the Custodian under this Agreement
shall only be those set forth in this Agreement. Notwithstanding any other
provision contained herein, Pledgor, Pledgee and Custodian agree that Custodian
shall comply with entitlement orders originated by Pledgee with respect to any
or all of the Collateral, without further consent from Pledgor. Pledgee agrees
with and for the benefit of Pledgor, however, that Pledgee will not originate
any such entitlement orders except if an Event of Default has occurred and is
continuing or in order to release Collateral to Pledgor in accordance with the
terms hereof. Custodian also shall comply with entitlement orders originated by
Pledgor with respect to the Collateral to the extent provided herein. To the
extent that the Custody Agreement-B is inconsistent with this Pledge and
Security Agreement-B, this Pledge and Security Agreement-B shall control.

     SECTION 6. Interest, Distributions, etc. on Collateral. If, at any time on
or after the Tranche A Loan is assigned or repaid pursuant to Section 3.8 of the
Participation Agreement, the Pledgor shall become entitled to receive or shall
receive any interest or other cash payments or property paid in respect of the
Pledged Property (to the extent such property or other proceeds, profits, or
other property is cash or is reduced to cash, the "Earnings") whether as an
addition to, in substitution of, or in exchange for any security included in the
Pledged Property, or otherwise, subject to Sections 4(a) and 4(b) the 



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Pledgor agrees to accept the same as the Pledgee's agent and to hold the same in
trust on behalf of and for the benefit of Pledgee and to convert the same to
Pledged Property, as necessary, and to deliver the same forthwith to the
Custodian with the endorsement of the Pledgor when necessary and/or appropriate
undated bond powers, duly executed in blank, or to the Pledgee, as the Pledgee
may direct, to be deposited in the Collateral Account.

     SECTION 7. Investment of Collateral. (a) The Custodian shall invest all
moneys on deposit from time to time (including moneys on deposit upon the sale
or maturity of securities) in the Collateral Account so long as no Event of
Default or Default shall have occurred and be continuing, at the direction of
the Pledgor, in Pledged Property having an equal or greater Collateral Value
than the sold or matured security. Such investments, shall be maintained in the
Collateral Account and shall be reinvested as provided in this paragraph. The
Custodian shall collect so much of the moneys payable on account of interest as
it is able to collect in the ordinary course and shall distribute the Earnings
upon the written request of the Pledgor, no more frequently than once per fiscal
quarter (unless an assignment or repayment of the Tranche A Loan is made under
Section 3.8 of the Participation Agreement, in which event such Earnings shall
be held in the Collateral Account, subject to Section 4), provided that in no
event shall the provisions hereof impose on the Custodian the obligation to
institute any collection proceedings, judicial or otherwise, in respect of
investments comprising the Collateral. Neither the Custodian nor the Pledgee
shall be liable or responsible for any loss resulting from any such investments,
except for any such loss resulting from the gross negligence or willful
misconduct of such person.

     SECTION 8. Rights of the Custodian. Neither the Custodian nor the Pledgee
shall be liable or responsible for any loss resulting from any such investments,
except for any such persons loss resulting from the gross negligence or willful
misconduct of such person. Any or all of the Collateral may, if an Event of
Default has occurred and is continuing, without notice, be registered in the
name of the Custodian or its nominee or the Pledgee or its nominee, if not then
so registered, and the Custodian or its nominee or the Pledgee or its nominee
may thereafter without notice, exercise all rights, privileges or 



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options pertaining to any of the securities included in the Collateral, if
appropriate, as if it were the absolute owner thereof, all without liability
except to account for property actually received by it, and the Pledgor shall
execute and deliver (or cause to be executed and delivered) to the Custodian all
powers of attorney, interest coupons and other instruments for the purpose of
enabling the Custodian to exercise the rights and powers which the Custodian is
entitled to exercise pursuant to this Section.

     SECTION 9. Application of Collateral by Custodian Prior to an Event of
Default. At the Maturity Date if the Lessee shall have elected to purchase the
Property pursuant to the Lease, so long as no Event of Default or Default shall
have occurred and be continuing the Custodian shall, upon 10 days written notice
from the Lessee and the Pledgor, liquidate the Pledged Property in the
Collateral Account and apply the proceeds to any purchase of the Property
pursuant to the Lease; provided, however, that the Custodian shall transfer the
proceeds of such Pledged Property only upon receipt of a certification of Lessor
stating that the Lessor has received or has made arrangements satisfactory to it
to receive in connection with any such purchase an amount which, together with
the proceeds of the Pledged Property, will be sufficient to pay the Lease
Balance.

     SECTION 10. Events of Default. Each of the following events shall
constitute an event of default under this Agreement (each, an "Event of
Default"):

          (a) The failure of Pledgor to pay, after three days prior written
     notice by means of invoice, the reasonable fees and expenses of the
     Custodian;

          (b) The failure of Pledgor to comply with any of the terms or
     provisions of this Agreement, which (except as provided in (a) above)
     failure shall have continued for a period of five (5) days after written
     notice to FORE or Pledgor; or

          (c) A Lease Event of Default, or Refinancing Loan Agreement Event of
     Default shall occur and be continuing.

     SECTION 11. Remedies upon Default. If an Event of Default 



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shall have occurred and be continuing, then the Pledgee shall have all the
rights and remedies of a secured party under the Uniform Commercial Code (the
"UCC") and other applicable law, and, in addition, the Pledgee, upon written
notice to FORE, may direct the Custodian from time to time to:

          (a) deliver and pay over all or any portion of the Collateral in the
     Collateral Account to the Pledgee, to be applied to satisfy accrued and
     unpaid Secured Obligations;

          (b) sell the Collateral, or any part thereof, at any public or private
     sale or on any securities exchange, for cash, upon credit or for future
     delivery, as the Pledgee shall deem appropriate. The Pledgee shall be
     authorized at any such sale to restrict the prospective bidders or
     purchasers to persons who will represent and agree that they are purchasing
     the Collateral for their own account for investment and not with a view to
     the distribution or sale thereof, and upon consummation of any such sale,
     the Pledgee shall have the right to assign and transfer and have the
     Custodian transfer and deliver to the purchaser or purchasers thereof the
     Collateral so sold. Each such purchaser at any such sale shall hold the
     property sold absolutely free from any claim or right on the part of the
     Pledgor and FORE, and each of the Pledgor and FORE hereby waives (to the
     extent permitted by law) all rights of redemption, stay and/or appraisal
     which it now has or may at any time in the future have under any rule or
     law or statute now existing or hereafter enacted. The Pledgee shall give
     the Pledgor at least ten (10) days' written notice of the Pledgee's
     intention to make any such public or private sale or sales at any broker's
     board or on any such securities exchange. Such notice, in case of public
     sale, shall state the time and place fixed for such sale. Any such public
     sale shall be held at such time or times within ordinary business hours and
     at such place or places, as the Pledgee may fix in the notice of such sale.
     At any such sale, the Collateral, or portion thereof, to be sold may be
     sold in one sale as an entirety or in separate sales, as the Pledgee may
     (in its sole and absolute discretion) determine and the Pledgee may bid
     (which bid may be in whole or in part, in the form of cancellation of
     indebtedness) for and purchase for the account of the Pledgee the whole or
     any part of the 



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     Collateral. The Pledgee shall not be obligated to make any sale of
     Collateral if it shall determine not to do so, regardless of the fact that
     notice of sale of Collateral may have been given. The Pledgee may, without
     notice or publication, adjourn any public or private sale or cause the same
     to be adjourned from time to time by announcement at the time and place
     fixed for sale, and such sale may, without further notice, be made at the
     time and place to which the same was so adjourned. In case a sale of all or
     any part of the Collateral is made on credit or for future delivery, the
     Collateral so sold may be retained by the Pledgee until the sale price is
     paid by the purchaser or purchasers thereof, but the Pledgee shall not
     incur any liability in case any such purchaser or purchasers shall fail to
     take up and pay for the Collateral so sold and, in case of any such
     failure, such Collateral may be sold again upon like notice; or

          (c) proceed by a suit or suits at law or in equity to foreclose the
     security interest granted under this Agreement and to sell the Collateral,
     or any portion thereof, pursuant to a judgment or decree of a court or
     courts of competent jurisdiction.

     In addition, the Pledgee shall have all of the rights granted to the
Pledgee under this Agreement upon the occurrence of an Event of Default.

     FORE (but not the Pledgor) shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all amounts to which the Pledgee is entitled, and the fees and disbursements
of any attorneys employed by the Pledgee to collect such deficiency.

     SECTION 12. Application of Proceeds of a Sale. The cash or proceeds of sale
of Collateral sold pursuant to Section 11 of this Agreement shall be paid to the
Pledgee until the Secured Obligations are paid in full; thereafter all such
proceeds shall be delivered to the Pledgor.

     SECTION 13. Conditions of Effectiveness. This Agreement shall become
effective when the Pledgee shall have received a counterpart of this Agreement
duly executed and delivered by 


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Pledgor.


     SECTION 14. Disposition, etc. Without the prior written consent of the
Pledgee, the Pledgor agrees not to sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Pledged Property
held in the Collateral Account, except as provided in Section 4, and Sections 11
and 12, of this Agreement, nor will it create, incur or permit to exist any Lien
with respect to any of the Pledged Property held in the Collateral Account, or
any interest therein, or any proceeds thereof, except for the lien and security
interest provided for by this Agreement.

     SECTION 15. Exoneration; Indemnity. Neither the Custodian, the Pledgee, nor
any director, officer or employee of the Custodian or the Pledgee, shall be
liable to the Pledgor or FORE for any action taken or omitted to be taken by
them or any one of them, pursuant to this Agreement, except to the extent
arising from its or their own gross negligence or willful misconduct; nor shall
the Custodian or the Pledgee be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished pursuant hereto or
in connection herewith. The Custodian and the Pledgee shall be entitled to rely
on any communication, instrument or document believed by them to be genuine and
correct and to have been signed or sent by the proper person or persons. FORE
agrees to indemnify and hold harmless the Custodian and the Pledgee, and/or the
directors, officers, employees, agents or nominees of the Custodian or the
Pledgee, from and against any and all liability incurred by the Custodian or the
Pledgee (or such agent or nominee) hereunder or in connection herewith, except
to the extent such liability shall be due to willful misconduct or gross
negligence on the part of the Custodian or the Pledgee or such directors,
officers, employees, agents or nominees. In furtherance hereof, FORE
acknowledges and agrees that the Custodian and the Pledgee may act on the
instructions of the Pledgor acting alone with respect to all matters related
hereto, including the receipt, release, transfer, substitution or investment of
any Collateral or the transfer of any amounts pursuant hereto. Any liability of
the Custodian and the Pledgee under this Agreement shall be several and not
joint.

     SECTION 16. The Pledgee Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Pledgee and the Custodian, acting 



                                     - 14 -
<PAGE>   15


either individually or jointly, as the Pledgor's attorney-in-fact for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument which they may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest. Without limiting the generality of the foregoing, both the
Pledgee and the Custodian, acting either individually or jointly, shall have the
right and power to receive, endorse and correct all checks, drafts and other
orders for the payment of money made payable to the Pledgor representing any
interest payment or other distribution payable or distributable in respect of
the Collateral or any part thereof and to give full discharge for the same.

     SECTION 17. Change of Custodian. No change in Custodian may occur without
the express written consent of the Pledgee and the Pledgor. The Custodian may
resign by giving thirty (30) days' notice to the parties to this Agreement. The
Pledgee may then appoint a successor Custodian with the prior written consent of
the Pledgor, which shall not be unreasonably withheld or delayed, whereupon the
successor Custodian shall succeed to the rights, powers and duties of the
Custodian.

     SECTION 18. No Waiver; Cumulative Remedies. No failure on the part of
Custodian or the Pledgee to exercise, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy by the Custodian
or the Pledgee preclude any other further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law or in equity.

     SECTION 19. Termination. This Agreement shall terminate on the payment in
full of the Secured Obligations or the exercise and consummation of the
Remarketing Option by the Lessee pursuant to Article XX of the Lease, and the
payment of all other amounts owing to the Tranche B Lender under the Refinancing
Loan Documents, at which time the Pledgee shall execute and deliver to the
Pledgor an appropriate release and shall reassign, retransfer and redeliver (or
cause to be reassigned, retransferred and redelivered) to the Pledgor, or to
such person or persons as the Pledgor shall designate, against receipt, such of
the Collateral 



                                     - 15 -
<PAGE>   16


pledged by the Pledgor as shall have not been sold or otherwise
applied pursuant to the terms hereof and shall still be held by the Custodian
pursuant to this Agreement, together with proper instruments of reassignment and
retransfer. Any such reassignment and retransfer shall be without recourse,
representation or warranty by the Pledgee or the Custodian (except for the
representation that the released Pledged Property is free and clear of all Liens
created by, through or under the Pledgee or the Custodian) and shall be at the
expense of the Pledgor.

     SECTION 20. Notices. All communications and notices hereunder shall be in
writing, unless otherwise specifically provided herein, and delivered or mailed
by first-class mail, postage prepaid, registered or certified, return receipt
requested, by overnight courier, or by facsimile transmission, to the address of
the Pledgor (which shall be the same address as the address of FORE) and Pledgee
set forth in the Participation Agreement, or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
parties hereto complying as to delivery with the terms of this Section. All
notices, requests, demands and other communications provided for hereunder shall
be effective upon deposit in the United States mail or upon facsimile
transmission during business hours.

     SECTION 21. Further Assurances; etc. Each of the Pledgor, Pledgee and
Custodian agrees to do such further acts and things, and to execute and deliver
such additional conveyances, assignments, agreements and instruments, including
the filing of any financing or continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with respect to the security
interests created hereby as may be reasonably required to effect the terms and
provisions of this Agreement. The Pledgor also hereby irrevocably authorizes the
Pledgee to file any such financing or continuation statement, without the
signature of the Pledgor to the extent permitted by applicable law, as the
Pledgee may at any time reasonably request in connection with the administration
or enforcement of this Agreement in order better to assure and confirm unto the
Pledgee its rights, powers and remedies hereunder. The Pledgor hereby consents
and agrees that the issuers of or obligors in respect of the Collateral or any
registrar or transfer agent or trustees for 



                                     - 16 -
<PAGE>   17


any of the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of the Pledgee to effect any transfer pursuant
to this Agreement, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by the Pledgor or any other person to any of such
issuers or obligors or to any such registrar or transfer agent or trustees. The
Pledgor further covenants that it will defend the Pledgee's right, title and
interest in the Collateral, from time to time pledged by the Pledgor, against
the claims and demands of all Persons.

     SECTION 22. Assignment. This Agreement, and the terms, covenants and
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that neither Pledgor
nor Pledgee shall be permitted to assign this Agreement except in connection
with an assignment permitted under the Participation Agreement.

     SECTION 23. Amendments. Neither this Agreement nor any provisions hereof
may be amended, modified, waived or terminated, except by an instrument in
writing signed by a duly authorized officer of the Pledgee and the Pledgor.

     SECTION 24. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to conflicts of law principles.

     SECTION 25. Costs, Expenses and Taxes. FORE agrees to pay on demand all
reasonable costs and expenses of, and all stamp and other taxes payable
(including any penalties) incurred by the Custodian or the Pledgee in connection
with the preparation, execution, delivery, administration and enforcement of
this Agreement.

     SECTION 26. Fees and Expenses of Custodian. The fees and expenses of the
Custodian shall be payable by FORE as set forth in a separate agreement between
the Custodian and FORE, which fees shall be those fees customarily charged by
custodians performing the foregoing services.

     SECTION 27. Headings. The headings in this Agreement are for convenience
only and shall not be deemed or construed to 



                                     - 17 -
<PAGE>   18


affect the meaning or construction of any of the provisions of this Agreement.

     SECTION 28. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be deemed to be
an original and all of which taken together shall constitute one and the same
instrument.

     SECTION 29. SUBMISSION OF JURISDICTION. TO THE FULLEST EXTENT PERMITTED BY
LAW, THE PLEDGOR, PLEDGEE AND CUSTODIAN HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
PENNSYLVANIA AND ANY COURT OF THE COMMONWEALTH OF PENNSYLVANIA FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY. THE PLEDGOR, PLEDGEE AND CUSTODIAN
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBLIGATION WHICH
SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDINGS BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.



                                     - 18 -
<PAGE>   19



     IN WITNESS WHEREOF, the parties hereto have caused this PLEDGE AND SECURITY
AGREEMENT-B (REFINANCING) to be duly executed by their duly authorized officers
on the dates specified below with effect from the date first above written.


                                   FORE SYSTEMS HOLDING CORPORATION
                                   as Pledgor
Attest:
/s/ CHRISTOPHER H. GEBHARDT        By:    /s/ THOMAS J. GILL
---------------------------            -----------------------------------
                                       Name:  Thomas J. Gill
                                       Title: Treasurer



                                   FORE SYSTEMS, INC.

Attest:
/s/ CHRISTOPHER H. GEBHARDT        By:    /s/ THOMAS J. GILL
---------------------------            -----------------------------------
                                       Name:  Thomas J. Gill
                                       Title: Chief Operating Officer



                                   MELLON FINANCIAL SERVICES CORPORATION #4
                                   as Pledgee
Attest:
/s/ MICHAEL J. TIESI               By:    /s/ STEPHEN R. VIEHE
---------------------------            -----------------------------------
                                       Name:  Stephen R. Viehe
                                       Title: Vice President


                                   MELLON BANK, N.A.,
                                   as Custodian
Attest:
/s/ JEFFREY T. RECKER              By:    /s/ CHRISTINA HITCHINS
---------------------------            -----------------------------------
                                       Name:  Christina Hitchins
                                       Title: Officer



                                     - 19 -
<PAGE>   20


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        Page
                                                                                        ----
<S>         <C>                                                                         <C> 
SECTION 1.  Pledge and Assignment..........................................................2

SECTION 2.  Collateral Account; Transfer of Collateral; Definitions........................3

SECTION 3.  Maintaining Pledged Property; Additional Deposits to Collateral
                     Account...............................................................4

SECTION 4.  Valuation; Required Collateral Level; Substitutions and Release................4

SECTION 5.  The Custodian..................................................................6

SECTION 6.  Interest, Distributions, etc. on Collateral....................................7

SECTION 7.  Investment of Collateral.......................................................7

SECTION 8.  Rights of the Custodian........................................................8

SECTION 9.  Application of Collateral by Custodian Prior to an Event of Default............8

SECTION 10. Events of Default..............................................................8

SECTION 11. Remedies upon Default..........................................................9

SECTION 12. Application of Proceeds of a Sale.............................................10

SECTION 13. Conditions of Effectiveness...................................................10

SECTION 14. Disposition, etc..............................................................10

SECTION 15. Exoneration; Indemnity........................................................10
</TABLE>




                                       i
<PAGE>   21
<TABLE>
<CAPTION>
                                                                                        Page
                                                                                        ----
<S>         <C>                                                                          <C> 

SECTION 16. The Pledgee Appointed Attorney-in-Fact........................................11

SECTION 17. Change of Custodian...........................................................11

SECTION 18. No Waiver; Cumulative Remedies................................................12

SECTION 19. Termination...................................................................12

SECTION 20. Notices.......................................................................12

SECTION 21. Further Assurances; etc.......................................................12

SECTION 22. Assignment....................................................................13

SECTION 23. Amendments....................................................................13

SECTION 24. Governing Law.................................................................13

SECTION 25. Costs, Expenses and Taxes.....................................................13

SECTION 26. Fees and Expenses of Custodian................................................13

SECTION 27. Headings......................................................................13

SECTION 28. Counterparts..................................................................14

SECTION 29. SUBMISSION OF JURISDICTION....................................................14
</TABLE>



                                       ii