Document:

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                                                                    Exhibit 10.7

              AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT
                                 (LOCAL FIBER)

     This AMENDED AND RESTATED SUBSIDIARY SECURITY AGREEMENT (as amended,
supplemented, amended and restated or otherwise modified from time to time, this
"Security Agreement"), is entered into as of February 9, 2001 by LOCAL FIBER,
L.L.C., a New York limited liability company (the "Grantor"), in favor of
DEUTSCHE BANK AG NEW YORK BRANCH, as administrative agent (together with any
successor(s) thereto in such capacity, the "Administrative Agent") for each of
the Secured Parties, and amends and restates in its entirety that certain
Subsidiary Security Agreement (as amended prior to the date hereof, the
"Original Subsidiary Security Agreement"), dated as of April 11, 2000 between
the Grantor and the Administrative Agent.

                                   RECITALS
                                   --------

     A.   Pursuant to the Amended and Restated Credit Agreement, dated as of
February 9, 2001 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Credit Agreement"), among Devnet L.L.C., a
Delaware limited liability company ("Devnet"), FiberNet Operations, Inc., a
Delaware corporation ("FiberNet" and, together with Devnet, the "Borrowers"),
the financial institutions from time to time parties thereto as lenders (each
individually referred to herein as a "Lender" and, collectively, as the
"Lenders"), the Administrative Agent, Toronto Dominion (USA) Securities Inc., as
syndication agent for the Lenders, and First Union Investors, Inc., as
documentation agent for the Lenders, the Lenders have extended commitments to
make Loans and to issue Letters of Credit (each as defined in the Credit
Agreement) to, and for the benefit of, the Borrowers;

     B.   The Grantor has duly authorized the execution, delivery and
performance of this Security Agreement; and

     C.   It is in the best interests of the Grantor to execute this Security
Agreement as the Grantor will derive substantial direct and indirect benefits
from the Loans made to the Borrowers, and the Letters of Credit issued for the
benefit of the Borrowers, by the Lenders from time to time pursuant to the
Credit Agreement.

                                   AGREEMENT
                                   ---------

     For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to induce the Lenders to make Loans and
issue Letters of Credit to or for the benefit of the Borrowers pursuant to the
Credit Agreement, and to induce the Secured Parties to enter into any Interest
Rate Agreements, the Grantor agrees, for the benefit of each Secured Party, as
follows:
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                                  ARTICLE I.
                                  DEFINITIONS

     Section 1.1    Defined Terms.
                    --------------

     The following terms when used in this Security Agreement shall have the
following meanings:

          "Administrative Agent" shall have the meaning set forth in the
          preamble.
          --------

          "Borrowers" shall have the meaning set forth in the first recital.
                                                              -------------

          "Collateral" shall have the meaning set forth in Section 2.1.
                                                           -----------

          "Credit Agreement" shall have the meaning set forth in the first
                                                                     -----
          recital.
          -------

          "Devnet" shall have the meaning set forth in the first recital.
                                                           -------------

          "FiberNet" shall have the meaning set forth in the first recital.
                                                             -------------

          "Grantor" shall have the meaning set forth in the preamble.
                                                            --------

          "Lenders" shall have the meaning set forth in the first recital.
                                                            -------------

          "Permits" shall have the meaning set forth in Section 2.1.
                                                        -----------

          "Receivables" shall have the meaning set forth in Section 2.1.
                                                            -----------

          "Related Contracts" shall have the meaning set forth in Section 2.1.
                                                                  -----------

          "Security Agreement" shall have the meaning set forth in the preamble.
                                                                       --------

     Section 1.2    Credit Agreement Definitions; Principles of Interpretation.
                    ----------------------------------------------------------

     Unless otherwise defined herein or unless the context otherwise requires,
terms used in this Security Agreement, including its preamble and recitals, have
the meanings provided in the Credit Agreement (including the principles of
interpretation set forth in Section 1.3 of the Credit Agreement).  All
                            -----------
references herein to the security interest granted to, assignment or pledge to
or other rights or interests granted hereby to the Administrative Agent shall be
deemed to be rights or interests granted to the Administrative Agent for the
benefit of each of the Secured Parties, whether or not specifically so stated.

     Section 1.3    UCC Definitions.
                    ---------------

     Unless otherwise defined herein or in the Credit Agreement or unless the
context otherwise requires, terms for which meanings are provided in the UCC are
used in this Security Agreement, including its preamble and recitals, with such
meanings.

                                       2
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                                  ARTICLE II.

     Section 2.1    Creation of Security Interest.
                    -----------------------------

     As security for the due and punctual payment in full in cash and
performance in full of the Obligations, the Grantor hereby assigns and pledges
to the Administrative Agent for the benefit of the Secured Parties, and grants
to the Administrative Agent for the benefit of the Secured Parties a security
interest in and lien on, all of the Grantor's right, title and interest in and
to the following, whether now owned or hereafter existing or acquired by the
Grantor (collectively, the "Collateral"):

                    (a)  all "accounts" (as defined in the UCC), contracts
             (including the Contracts) and contract rights (including (i) rights
             of the Grantor to receive moneys due and to become due under or
             pursuant to any contract (whether as contractual obligations,
             damages or otherwise), (ii) all rights of the Grantor to receive
             any proceeds of any insurance, indemnity, warranty, or guarantee
             with respect to any contract, (iii) all rights of the Grantor with
             respect to claims, rights, powers, or privileges under any
             contract, (iv) all rights of the Grantor to terminate, amend,
             supplement or modify any contract, to perform thereunder and to
             compel performance and otherwise exercise all remedies thereunder,
             (v) all rights of the Grantor under each contract to make
             determinations, to exercise any election (including, but not
             limited to, the election of remedies) or option or to give or
             receive any notice, consent, waiver, or approval, together with
             full power and authority with respect to any contract to demand,
             receive, enforce, collect or provide receipt for any of the
             foregoing rights or any property the subject of any of the
             contracts, to enforce or execute any checks, or other instruments
             or orders, to file any claims and to take any action which may be
             necessary or advisable in connection with any of the foregoing, and
             (vi) the rights of the Grantor to payment for goods or other
             property (including, the sale of capacity or any other use of the
             System or a portion thereof) sold or leased or services performed
             by the Grantor) (the "Contracts"), chattel paper, documents, and
             instruments of the Grantor, in all cases whether or not arising out
             of or in connection with the sale or lease of goods or the
             rendering of services, and all of the Grantor's right, title and
             interest in and to any goods, services or property represented by
             the foregoing prior to the sale thereof, and all rights of the
             Grantor now or hereafter existing in and to all security
             agreements, guaranties, leases, letters of credit, guarantees and
             other contracts securing or otherwise relating to any such
             accounts, contracts, contract rights, chattel paper, documents, and
             instruments (any and all such accounts, contracts, contract rights,
             chattel paper, documents and instruments being the "Receivables,"
             and any and all such security agreements, guaranties, leases and
             other contracts being the "Related Contracts");

                                       3
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                    (b)  all "general intangibles" (as defined in the UCC),
             including, to the extent assignable, all rights relating to design,
             development, operation, and use of the System, all certificates of
             occupancy, zoning variances, building, use or other permits,
             approvals, authorizations, licenses and consents obtained from any
             governmental agency in connection with the development, use,
             operation or management of the System (the "Permits"), all
             construction, service, engineering, consulting, architectural and
             other similar contracts concerning the design, construction,
             operation, occupancy and/or use of the System, all architectural
             drawings, plans, specifications, soil tests, appraisals, route
             surveys, engineering reports and similar materials relating to all
             or any portion of the System, and all payment and performance bonds
             or warranties or guarantees relating to the System; all rights
             under and in patents, patent licenses, rights in intellectual
             property, trademarks, trade names, corporate names, company names,
             business names, fictitious business names, trade styles, trade
             secrets, service marks, logos, other source and business
             identifiers, trademark registrations and applications for
             registration used exclusively at or relating exclusively to any
             part of the Grantor's business; all renewals, extensions and
             continuations-in-part of the items referred to above; any written
             agreements granting to the Grantor any right to use any trademark
             or trademark registration at or in connection with the Grantor's
             business; and the right of the Grantor to sue for past, present and
             future infringements of the foregoing; and the right in the name
             and on behalf of the Grantor to appear in and defend any action or
             proceeding brought with respect to any part of the Grantor's real
             or personal property and to commence any action or proceeding to
             protect the interest of the Grantor in such Collateral;

                    (c)  all books, records, writings, design documents,
             computer programs, printouts and other computer materials and
             records, data bases, software, information and other property
             relating to, used or useful in connection with, the Grantor's
             business;

                    (d)  to the extent not otherwise included in any of the
             classes or categories enumerated above, all equipment, inventory,
             documents, instruments, securities and chattel paper (as each of
             such terms is defined in the UCC) relating to the Collateral;

                    (e)  all personal property of whatever kind or nature
             whatsoever, including personal property used in the operation of
             the Grantor's business, or in any way related to the land on which
             the System is located, the System or any other improvements on such
             land, whether located on or in, affixed to, or attached to such
             land or improvements or otherwise related thereto or arising
             therefrom, and whether tangible or intangible, direct or indirect,
             fully matured or contingent, and all extensions, additions,
             improvements, betterments, renewals, substitutions, and
             replacements to or of any of the foregoing;

                                       4
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                    (f)  to the extent not otherwise included in any of the
             foregoing classes or categories of personal property, all proceeds
             (including all proceeds as defined in the UCC and all cash and non-
             cash proceeds as referred to in Section 552 of the United States
             Bankruptcy Code), products, offspring and profits of or from any of
             the foregoing;

                    (g)  all motor vehicles and all rights under equipment
             leases and all bills of lading and warehouse receipts relating to
             the Collateral; and

                    (h)  any and all additions and accessions to the Collateral,
             and all proceeds thereof, including proceeds of the conversion,
             voluntary or involuntary, of any of the foregoing into cash or
             liquidated claims, including all awards, all insurance proceeds,
             including any unearned premiums or refunds of premiums on any
             insurance policies covering all or any part of the Collateral and
             the right to receive and apply the proceeds of any insurance, or of
             any judgments or settlements made in lieu thereof for damage to or
             diminution of the Collateral;

     provided, however, that with respect to the Contracts, any such Contract
shall only be deemed to be and treated as Collateral if (i) such Contract or
Related Contract (other than Receivables) may lawfully be assigned (whether as
an outright assignment or as collateral security) to the Administrative Agent,
for the benefit of the Secured Parties, and (ii) the granting of a security
interest in and lien on, all of the Grantor's right, title and interest in such
Contract or Related Contract (other than Receivables) will not conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under such Contract or Related Contract (other than Receivables); and
provided, further, that with respect to the Permits, any such Permit shall only
be deemed to be and treated as Collateral if such Permit may lawfully be
assigned (whether as an outright assignment or as collateral security) to the
Administrative Agent, for the benefit of the Secured Parties.

     Section 2.2    Financing Statements.
                    --------------------

     The Grantor shall execute all financing statements, continuation
statements, assignments, certificates, and other documents and instruments with
respect to the Collateral pursuant to the UCC and otherwise as may be necessary
or reasonably requested by the Administrative Agent to perfect or from time to
time to publish notice of, or continue or renew the security interests granted
hereby (including, such financing statements, continuation statements,
certificates, and other documents as may be necessary or reasonably requested to
perfect a security interest in any additional property or rights hereafter
acquired by the Grantor or in any replacements, products or proceeds thereof),
in each case in form and substance satisfactory to the Administrative Agent. The
Grantor will pay the cost of filing the same in all public offices where filing
is necessary or reasonably requested by the Administrative Agent and will pay
any and all recording, transfer or filing taxes that may be due in connection
with any such filing. The Grantor grants the Administrative Agent the right, at
any time and at the Administrative Agent's option, and at the Grantor's expense,
to file any or all such financing statements, continuation statements, and other

                                       5
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documents pursuant to the UCC and otherwise as the Administrative Agent
reasonably may deem necessary or desirable.

     Section 2.3    Injury to Collateral.
                    --------------------

     No injury to, or loss or destruction of, the Collateral or any part thereof
shall relieve the Grantor of any of the Obligations.

     Section 2.4    Continuing Security Interest; Transfer of Notes.
                    ------------------------------------------------

     This Security Agreement shall create a continuing security interest in the
Collateral and shall

                    (a)  remain in full force and effect until payment in full
             in cash of all Obligations, the termination of all Interest Rate
             Agreements to which any Secured Party is a party and the
             termination of all Commitments,

                    (b)  be binding upon the Grantor, its successors,
             transferees and assigns, and

                    (c)  inure, together with the rights and remedies of the
             Administrative Agent Hereunder, to the benefit of the
             Administrative Agent and each other Secured Party.

Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Note, Loan or Commitment
held by it as well as any interest in any other Obligations to any other Person
or entity as permitted by, and in accordance with the terms of the Credit
Agreement, and such other Person or entity shall thereupon become vested with
all the rights and benefits in respect thereof granted to such Lender under any
Loan Document (including this Security Agreement) or otherwise, subject,
however, to any contrary provisions in such assignment or transfer, and to the
provisions of Sections 9.1 and 9.16 of the Credit Agreement.
              ------------     ----

     Section 2.5    Grantor Remains Liable.
                    ----------------------

     Anything herein to the contrary notwithstanding:

                    (a)  the Grantor shall remain liable under the contracts and
             agreements included in the Collateral to the extent set forth
             therein, and shall perform all of its duties and obligations under
             such contracts and agreements to the same extent as if this
             Security Agreement had not been executed,

                    (b)  the exercise by the Administrative Agent of any of its
             rights hereunder shall not release the Grantor from any of its
             duties or obligations under any such contracts or agreements
             included in the Collateral, and

                                       6
<PAGE>

                    (c)  neither the Administrative Agent nor any other Secured
             Party shall have any obligation or liability under any such
             contracts or agreements included in the Collateral by reason of
             this Security Agreement, nor shall the Administrative Agent or any
             other Secured Party be obligated to perform any of the obligations
             or duties of the Grantor thereunder or to take any action to
             collect or enforce any claim for payment assigned hereunder.

     Section 2.6    Security Interest Absolute.
                    --------------------------

     All rights of the Administrative Agent and the security interests granted
to the Administrative Agent hereunder, and all obligations of the Grantor
hereunder, shall be absolute and unconditional irrespective of:

             (a)    any lack of validity, legality or enforceability of the
     Credit Agreement, any Note, or any other Loan Document or any Interest Rate
     Agreement;

             (b)    the failure of any Secured Party or any holder of any Note

                         (i)  to assert any claim or demand or to enforce any
                    right or remedy against any Borrower, any other member of
                    the Borrower Group or any other Person (including any other
                    grantor) under the provisions of the Credit Agreement, any
                    Note, any other Loan Document, any Interest Rate Agreement
                    or otherwise, or

                         (ii) to exercise any right or remedy against any other
                    grantor of, or collateral securing, any of the Obligations;

             (c)    any change in the time, manner or place of payment of, or in
     any other term of, all or any of the Obligations, or any other extension or
     renewal of any Obligation of any Borrower or any other member of the
     Borrower Group;

             (d)    any reduction, limitation, impairment or termination of any
     of the Obligations for any reason other than the written agreement of the
     Secured Parties to terminate the Obligations in full, including any claim
     of waiver, release, surrender, alteration or compromise, and shall not be
     subject to, and the Grantor hereby waives any right to or claim of, any
     defense or setoff, counterclaim, recoupment or termination whatsoever by
     reason of the invalidity, illegality, nongenuineness, irregularity,
     compromise, unenforceability of, or any other event or occurrence
     affecting, any Obligations of any Borrower, any other member of the
     Borrower Group or otherwise;

             (e)    any amendment to, rescission, waiver, or other modification
     of, or any consent to departure from, any of the terms of the Credit
     Agreement, any Note, any other Loan Document or any Interest Rate
     Agreement;

             (f)    any addition, exchange, release, surrender or non-perfection
     of any collateral, or any amendment to or waiver or release or addition of,
     or consent to

                                       7
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     departure from, any other security interest held by any Secured Party or
     any holder of any Note securing any of the Obligations; or

             (g)    any other circumstance which might otherwise constitute a
     defense available to, or a legal or equitable discharge of, any Borrower,
     any other member of the Borrower Group, any surety or any grantor.

     Section 2.7    Postponement of Subrogation.
                    ---------------------------

     The Grantor agrees that it will not exercise any rights which it may
acquire by way of rights of subrogation under this Security Agreement, by any
payment made hereunder or otherwise, until the prior payment in full in cash of
all of the Obligations, the termination of all Interest Rate Agreements to which
any Secured Party is a party and the termination of all Commitments.  Any amount
paid to the Grantor on account of any such subrogation rights prior to the
payment in full in cash of all of the Obligations shall be held in trust for the
benefit of the Secured Parties and each holder of a Note and shall immediately
be paid to the Administrative Agent for the benefit of the Secured Parties and
each holder of a Note and credited and applied against the Obligations of the
Borrowers and each other member of the Borrower Group, whether matured or
unmatured, such order as the Administrative Agent shall elect; provided,
                                                               --------
however, that if
-------

             (a)    the Grantor has made payment to the Secured Parties and each
     holder of a Note of all or any part of the Obligations, and

             (b)    all Obligations have been paid in full in cash, all Interest
     Rate Agreements to which any Secured Party is a party have been terminated,
     all Letters of Credit have expired or been terminated and all Commitments
     have been permanently terminated,

then, at the Grantor's request, the Administrative Agent, on behalf of the
Secured Parties and the holders of the Notes, will execute and deliver to the
Grantor appropriate documents (without recourse and without representation or
warranty) necessary to evidence the transfer by subrogation to the Grantor of an
interest in the Obligations resulting from such payment by the Grantor. In
furtherance of the foregoing, for so long as any Obligations or Commitments
remain outstanding, the Grantor shall refrain from taking any action or
commencing any proceeding against any Borrower or any other member of the
Borrower Group (or any of its or their successors or assigns, whether in
connection with a bankruptcy proceeding or otherwise) to recover any amounts in
respect of payments made under this Security Agreement to any Secured Party or
any holder of a Note, except that the Grantor may file a proof of claim in a
bankruptcy proceeding with respect to any Borrower or any other member of the
Borrower Group in connection with any obligations owed by such member to the
Grantor in the event that the Administrative Agent has failed to file a proof of
claim on the Grantor's behalf by the second business day before the due date for
such filing.

                                       8
<PAGE>

                                 ARTICLE III.
                   REPRESENTATIONS AND WARRANTIES OF GRANTOR

     The Grantor hereby represents and warrants to the Administrative Agent and
the other Secured Parties that:

     Section 3.1    Title to Collateral.
                    -------------------

     The Grantor is the sole owner of, and has good, valid, and marketable title
to, the Collateral, free from all Liens other than Permitted Liens, and the
Grantor has full right and power to grant the Administrative Agent for the
benefit of the Secured Parties a lien thereon and a security interest therein.

     Section 3.2    Security Interest.
                    -----------------

     The execution and delivery of this Security Agreement creates a good and
valid lien on and security interest in the Collateral.

     Section 3.3    Negotiable Documents, Instruments and Chattel Paper.
                    ---------------------------------------------------

     The Grantor has, contemporaneously with the execution and delivery of this
Security Agreement, delivered to the Administrative Agent possession of all
originals of all negotiable documents, instruments and chattel paper, including
all negotiable documents, instruments and chattel paper evidencing Receivables,
currently owned or held by the Grantor (duly endorsed in blank, if requested by
the Administrative Agent).

     Section 3.4    Authorization, Approval, Etc.
                    ----------------------------

     Except as have been obtained or made and are in full force and effect, no
authorization, approval or other action by, and no notice to or filing with, any
Governmental Instrumentality, regulatory body or any other Person is required
for the grant by the Grantor of the security interest granted hereby or for the
execution, delivery and performance of this Security Agreement by the Grantor or
for the exercise by the Administrative Agent of the rights provided for in this
Security Agreement, other than those authorizations, approvals, actions, notices
or filings set forth in Schedule 3.4 hereto.
                        ------------

     Section 3.5    Bankruptcy Matters.
                    ------------------

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

     Section 3.6    Representations and Warranties under the Credit Agreement.
                    ---------------------------------------------------------

                                       9
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     The representations and warranties of or pertaining to the Grantor
contained in the Credit Agreement and each of the other Loan Documents are true
and correct as of the date hereof to the same extent as if set forth in full
herein.

     Section 3.7    Location of Collateral.
                    ----------------------

     The Grantor's principal place of business and chief executive office is
located at 570 Lexington Avenue, New York, New York 10022.

                                  ARTICLE IV.
                             COVENANTS OF GRANTOR

     Section 4.1    General Covenants Relating to Collateral.
                    ----------------------------------------

     Until all Obligations have been paid and performed in full, all Commitments
have been terminated, all Letters of Credit have been terminated or expired and
all Interest Rate Agreements to which any Secured Party is a party have been
terminated, the Grantor hereby covenants that, unless the Administrative Agent,
acting pursuant to the Credit Agreement, otherwise consents in advance in
writing:

     Section 4.1.1  Collateral.
                    ----------

     The Grantor shall (a) execute and deliver any and all documents, or cause
the execution and delivery of any and all documents, necessary to create,
perfect, preserve, validate or otherwise protect the Administrative Agent's lien
on and security interest in the Collateral and the priority thereof, (b)
maintain, or cause to be maintained, at all times the Administrative Agent's
lien on and security interest in the Collateral and the priority thereof, (c)
promptly upon learning thereof, report to the Administrative Agent any matters
that could reasonably be expected to materially and adversely affect the value
or enforceability or collectibility of any of the Collateral, (d) defend the
Collateral and the Administrative Agent's interests therein against all claims
and demands of all persons at any time claiming the same or any interest therein
adverse to the Administrative Agent and pay all costs and expenses (including,
reasonable attorneys' fees and charges) incurred in connection with such
defense, and (e) at the Grantor's sole cost and expense, settle any and all such
claims and disputes and indemnify and protect the Administrative Agent against
any liability, loss, cost or expense (including, reasonable attorneys' fees and
charges), arising therefrom or out of any matter affecting any of the Collateral
(provided, however, that if the Administrative Agent shall so elect after the
 --------  -------
occurrence and during the continuation of an Event of Default hereunder, the
Administrative Agent shall have the right at all times to settle, compromise,
adjust or liquidate all claims or disputes directly with the Grantor or any
obligor of the Grantor upon such terms and conditions as the Administrative
Agent reasonably deems advisable, and to charge all costs and expenses thereof
(including, reasonable attorneys' fees and charges) to the Grantor's account and
to add them to the Obligations, whereupon such costs and expenses shall be and
become part of the Obligations).

     Section 4.1.2  No Change in Places of Business or Collateral.
                    ---------------------------------------------

                                       10
<PAGE>

     The Grantor shall (a) maintain its places of business and its chief
executive office only in the locations set forth in Section 3.7, and in such
                                                    -----------
other places as the Grantor may select, provided that the Grantor shall provide
to the Administrative Agent at least twenty (20) days' prior written notice of
any changes in or additions to the locations of the Grantor's places of business
or of the Grantor's principal office and shall make all filings in the
applicable jurisdictions necessary to maintain the Administrative Agent's lien
on and security interest in the Collateral and the priority thereof in
connection with any such changes or additions, (b) keep, store and maintain the
Collateral only at the foregoing locations, and (c) keep and maintain the
records and books of account relating to the Collateral only at the Grantor's
chief executive office.

     Section 4.1.3  No Impairment.
                    -------------

     The Grantor shall not take or permit to be taken any action in connection
with the Collateral which would impair in any material respect the value of the
interests or rights of the Grantor therein or which would impair the interests
or rights of the Administrative Agent therein or with respect thereto.

     Section 4.2    Sale of Assets.
                    --------------

     Sell, lease, assign, pledge, transfer or otherwise dispose of any of the
Collateral, whether now owned or hereafter acquired, except as expressly
permitted by the Credit Agreement.

                                  ARTICLE V.
                RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT

     Section 5.1    Miscellaneous Rights of the Administrative Agent.
                    ------------------------------------------------

     Upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent shall have the right: (i) to declare all of the monetary
Obligations to be immediately due and payable, whereupon all such Obligations
shall become immediately due and payable without presentment, demand, notice of
dishonor, protest or further notice of any kind, all of which are hereby
expressly waived by the Grantor, anything contained herein to the contrary
notwithstanding; (ii) to exercise any one or more of the rights and remedies
exercisable by the Administrative Agent under any other provisions of this
Security Agreement, or any other related agreement, or exercisable by a secured
party under the UCC or under any other applicable law; and (iii) to exercise, in
the name of the Grantor or in the name of the Administrative Agent, such rights
and powers with respect to the Collateral as the Grantor might exercise,
including, the right to:

                    (a)  enter into any extension, reorganization, deposit,
             merger, consolidation or other agreement pertaining to, or deposit,
             surrender, accept, hold or apply other property in exchange for,
             the Collateral or any part thereof;

                    (b)  insure, process, and preserve the Collateral;

                                       11
<PAGE>

                    (c)  transfer the Collateral or any part thereof to the name
             of the Administrative Agent or to the name of the Administrative
             Agent's nominee;

                    (d)  receive, open, and dispose of mail addressed to the
             Grantor relating to the Collateral or any part thereof;

                    (e)  collect and endorse, receive, and give receipts for all
             dividends, interest, rent, payments, proceeds, and other sums and
             property now or hereafter payable on or on account of the
             Collateral or any part thereof or on account of its sale or lease;

                    (f)  initiate, pursue, compromise, settle or withdraw any
             claims, suits or proceedings pertaining to the Collateral or any
             part thereof or to any interest, rent or other payment on or on
             account of the Collateral or any part thereof or on account of its
             sale or lease;

                    (g)  take possession of and endorse in the name of the
             Grantor or in the name of the Administrative Agent, for the account
             of the Grantor, any bills of exchange, checks, drafts, money
             orders, notes or any other chattel paper, documents or instruments
             constituting all or any part of the Collateral or received as
             interest, rent or other payment on or on account of the Collateral
             or any part thereof or on account of its sale or lease;

                    (h)  appoint another (who may be an employee, officer or
             other representative of the Administrative Agent) to do any of the
             foregoing on behalf of the Administrative Agent;

                    (i)  execute (in the name, place and stead of the Grantor)
             endorsements, assignments and other instruments of conveyance or
             transfer with respect to all or any of the Collateral; and

                    (j)  take any other action which the Administrative Agent
             deems necessary or desirable to protect or realize upon its
             security interest in the Collateral or any part thereof, and the
             Grantor hereby irrevocably appoints the Administrative Agent as the
             Grantor's attorney-in-fact to take any such action, including the
             execution and delivery of any and all documents or instruments
             related to the Collateral or any part thereof in the Grantor's
             name, and said appointment shall create in the Administrative Agent
             a power coupled with an interest which shall be irrevocable.

     Section 5.2    Right of the Administrative Agent to Take Possession and
                    --------------------------------------------------------
Foreclose.
---------

     Upon the occurrence and during the continuation of any Event of Default,
the Administrative Agent shall have the right and power to take possession of
the Collateral and of any and all books of account and records of the Grantor
relating to any of the Collateral, the right to place the Administrative Agent's
representatives upon any premises on which the Collateral or

                                       12
<PAGE>

any part thereof or any such books of account or records may be situated with
full power to remove the same therefrom, and the right to exclude the Grantor
and all persons claiming under the Grantor from any access to the Collateral or
to any part thereof, and the Administrative Agent and such representatives are
hereby granted the irrevocable license to enter upon such premises for such
purpose. The Administrative Agent may require the Grantor to assemble the
Collateral or any part thereof and to make the same (to the extent the same is
moveable) available to the Administrative Agent at a place to be designated by
the Administrative Agent which is reasonably convenient to the Grantor and the
Administrative Agent. The Administrative Agent may render the Collateral or any
part thereof unusable without removing the same from the premises on which it
may be situated, and may sell the same on the premises of the Grantor if such
Collateral or part thereof is situated thereon. The Administrative Agent may
make formal application for the transfer of all of the Grantor's permits,
licenses, approvals, and the like relating to the Collateral or to the Grantor's
business to the Administrative Agent or to any assignee of the Administrative
Agent or to any purchaser of any of the Collateral to the extent the same are
assignable in accordance with their terms and applicable law. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Administrative Agent will give
the Grantor at least ten (10) days' prior written notice of the time and place
of any public sale thereof or of the time after which any private sale or any
other intended disposition thereof is to be made, which notice shall constitute
reasonable notice. In addition to exercising the foregoing rights, the
Administrative Agent may, to the extent permitted by law, arrange for and
conduct the sale of the Collateral at a public or private sale, as the
Administrative Agent may elect, which sale may be conducted by an employee or
representative of the Administrative Agent, and any such sale shall be
considered or deemed to be a sale made in a commercially reasonable manner. The
Administrative Agent may release, temporarily or otherwise, to the Grantor any
item of Collateral of which the Administrative Agent has taken possession
pursuant to any right granted to the Administrative Agent by this Security
Agreement without waiving any rights granted to the Administrative Agent under
this Security Agreement, the Credit Agreement, or the other Loan Documents or
any other agreement related hereto or thereto. The Grantor, in dealing with or
disposing of the Collateral or any part thereof, hereby waives all rights, legal
and equitable, it may now or hereafter have to require marshaling of assets or
to require, upon foreclosure, sales of assets in a particular order. Each
successor and assign of the Grantor, including a holder of a lien subordinate to
the lien created hereby (without implying that the Grantor has, except as
expressly provided herein, a right to grant an interest in, or a subordinate
lien on, any of the Collateral), by acceptance of its interest or lien agrees
that it shall be bound by the above waiver, to the same extent as if such holder
gave the waiver itself. The Grantor also hereby waives, to the full extent it
may lawfully do so, the benefit of all laws providing for rights of appraisal,
valuation, stay or extension or of redemption after foreclosure now or hereafter
in force.

     Section 5.3    Right of the Administrative Agent to Collect and Service
                    --------------------------------------------------------
Accounts.
--------

     Upon the occurrence and during the continuation of any Event of Default,
and the acceleration of any Loan in accordance with Article VII of the Credit
                                                    -----------
Agreement, the Administrative Agent may notify or may require the Grantor to
notify any person or entity obligated to the Grantor under any account for
monies due or to become due forming all or any

                                       13
<PAGE>

part of the Collateral, whether now existing or hereafter acquired, that the
same has been assigned to the Administrative Agent and that such obligor should
make payment or performance of its obligations under such account directly to
the Administrative Agent, and the Administrative Agent may take possession of
and exercise control over all proceeds of any such account in the Grantor's
possession or otherwise, and may take any other action which the Administrative
Agent deems necessary or desirable to collect any such account or the proceeds
thereof. To evidence the Administrative Agent's rights hereunder, the Grantor
shall, at the Grantor's expense, execute such assignments or endorsements of any
such account, or of the proceeds thereof, as the Administrative Agent may
request.

     Section 5.4    Right of the Administrative Agent to Use, Operate and
                    -----------------------------------------------------
Maintain Collateral.
-------------------

     Section 5.4.1  Rights of the Administrative Agent.
                    ----------------------------------

     Upon the Administrative Agent's taking possession of all or any part of the
Collateral in accordance with the terms of this Security Agreement or otherwise,
the Administrative Agent shall have the right to hold, store, and/or use,
operate, manage, and control the same.  Upon any such taking of possession, the
Administrative Agent may (but shall not be obligated to), from time to time, at
the expense of the Grantor, make all such repairs, replacements, alterations,
additions, and improvements to and of all or any of the Collateral as the
Administrative Agent may deem proper.  In any such case the Administrative Agent
shall have the right to exercise all rights and powers of the Grantor in respect
of the Collateral or any part thereof as the Administrative Agent shall deem
proper, including the right to enter into any and all such agreements with
respect to the leasing and/or operation of the Collateral or any part thereof as
the Administrative Agent may see fit; and the Administrative Agent shall be
entitled to collect and receive all rents, issues, profits, fees, revenues, and
other income of the same and every part thereof.

     Section 5.4.2  The Administrative Agent Has No Duty.
                    ------------------------------------

     The powers conferred on the Administrative Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty on it to
exercise any such powers.  Except for the reasonable care and preservation of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Administrative Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.

     Section 5.5    Right of the Administrative Agent to Appoint Receiver.
                    -----------------------------------------------------

     Upon the occurrence and during the continuation of any Event of Default,
the Administrative Agent shall, as a matter of right and without any requirement
of notice, to the extent permitted under applicable law, be entitled to appoint
a receiver for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or otherwise.  All disbursements
made by the receiver under this Section 5.5 and the expenses of
                                -----------

                                       14
<PAGE>

receivership shall be added to and be a part of the Obligations, and, whether or
not said principal sum, including such disbursements and expenses, exceeds the
indebtedness originally intended to be secured hereby, the entire amount of said
sum, including such disbursements and expenses, shall be secured by this
Security Agreement and shall be due and payable upon demand therefor and
thereafter shall bear interest at the rate set forth in Section 2.3.E of the
                                                        -------------
Credit Agreement.

     Section 5.6    Remedies Cumulative; Delay Not Waiver.
                    -------------------------------------

     The rights and remedies of the Administrative Agent under the Credit
Agreement, this Security Agreement, the other Loan Documents, or any other
related agreement are cumulative and shall in no way affect, or deprive the
Administrative Agent of, or be deemed to constitute a waiver by the
Administrative Agent of any other rights or remedies allowed to the
Administrative Agent at law or in equity.  No notice to or demand on the Grantor
in any case shall entitle the Grantor to any other notice or demand in similar
or other circumstances and the exercise of any one remedy shall not impair the
Administrative Agent's right simultaneously or at any time or in any order to
exercise any other remedy nor shall the exercise of any remedy in one case
impair or otherwise affect the Administrative Agent's right or ability to
exercise such remedy contemporaneously or again in the same case or in any other
case.  No failure or delay by the Administrative Agent in exercising any right
or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.

     Section 5.7    Waiver of Rights.
                    ----------------

     To the extent permitted under applicable law, the Grantor waives all rights
and remedies of a debtor or grantor under the UCC or other applicable law, and
all formalities prescribed by law relative to the sale or disposition of the
Collateral (other than notice of sale) after the occurrence and during the
continuation of an Event of Default and all other rights and remedies of the
Grantor with respect thereto.  In exercising its right to take possession of the
Collateral upon the occurrence and during the continuation of an Event of
Default hereunder, the Administrative Agent, personally or by its agents or
attorneys, and subject to the rights of any tenant under any lease or sublease
of the Collateral, to the fullest extent permitted by law, may enter upon any
land owned or leased by the Grantor without being guilty of trespass or any
wrongdoing, and without liability for damages thereby occasioned.  In the event
the Administrative Agent elects to proceed with respect to the Collateral,
separately from any real property, the Administrative Agent shall give the
Grantor at least ten (10) days' notice of the sale of the Collateral, which
shall for all purposes be deemed to be commercially reasonable.

     Section 5.8    Compliance with Restrictions.
                    ----------------------------

     The Grantor agrees that in any sale of any of the Collateral whenever an
Event of Default shall have occurred and be continuing, the Administrative Agent
is hereby authorized to comply with any limitation or restriction in connection
with such sale as it may be advised by counsel is necessary in order to avoid
any violation of applicable law, or in order to obtain any required

                                       15
<PAGE>

approval of the sale or of the purchaser by any governmental regulatory
authority or official, and the Grantor further agrees that such compliance shall
not result in such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall the Administrative Agent be liable or
accountable to the Grantor for any discount allowed by reason of the fact that
such Collateral is sold in compliance with any such limitation or restriction.

     Section 5.9    Distribution of Proceeds.
                    ------------------------

     All cash proceeds received by the Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Administrative Agent, be held by the
Administrative Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Administrative Agent
pursuant to Section 6.2) in whole or in part by the Administrative Agent for the
            -----------
ratable benefit of the Secured Parties against, all or any part of the
Obligations in such order as the Administrative Agent shall elect.  The Grantor
shall remain liable for any deficiency.  Any surplus of such cash or cash
proceeds held by the Administrative Agent and remaining after payment in full in
cash of all the Obligations, the termination of all Interest Rate Agreements to
which a Secured Party is a party, the termination or expiration of all Letters
of Credit and the termination of all Commitments shall be paid over to the
Grantor or to whomsoever may be lawfully entitled to receive such surplus.

                                  ARTICLE VI.
                           MISCELLANEOUS PROVISIONS

     Section 6.1    Additional Actions and Documents.
                    --------------------------------

     The Grantor agrees that at any time, and from time to time, at the expense
of the Grantor, the Grantor will promptly execute and deliver all further
instruments, and take all further action that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral.  Nothing in this Section 6.1 shall be construed as limiting the
                             -----------
Obligations of each Borrower under Section 5.11 of the Credit Agreement.
                                   ------------

     Section 6.2    Expenses.
                    --------

     The Grantor agrees to reimburse and save the Administrative Agent harmless
against liability for the payment of all out-of-pocket expenses arising in
connection with the administration or enforcement of, or the preservation or
exercise of, any rights (including the right to collect and dispose of the
Collateral) under, this Security Agreement, including the reasonable fees and
other charges of outside counsel to the Administrative Agent arising in such
connection, and all such fees and other charges shall be added to the Grantor's
obligations secured hereby.

     Section 6.3    Notices.
                    -------

                                       16
<PAGE>

     Any communications between the parties hereto or notices provided herein to
be given shall be sent in accordance with the provisions of, and to the
addresses set forth in, Section 9.8 of the Credit Agreement, and if to the
                        -----------
Grantor, to the following address:

                          Local Fiber, L.L.C.
                          570 Lexington Avenue
                          3/rd/ Floor
                          New York, New York 10022
                          Attn.: President
                          Telecopy: (212) 421-8920

     Section 6.4    Release and Satisfaction.
                    ------------------------

     Upon the indefeasible payment (whether in cash and/or other consideration
which is satisfactory to the Lenders in their sole discretion) and performance
in full of the Obligations, the termination of all Commitments, the termination
or expiration of all Letters of Credit and the termination of all Interest Rate
Agreements to which any Secured Party is a party, (i) this Security Agreement
and the security interest created hereby shall terminate, and (ii) upon written
request of the Grantor, the Administrative Agent shall execute and deliver to
the Grantor, at the Grantor's expense and without representation or warranty by
or recourse to the Administrative Agent or the Secured Parties, releases and
satisfactions of all financing statements, mortgages, notices of assignment and
other registrations of security, and the Grantor shall deliver to the
Administrative Agent a general release of all of the Administrative Agent's
liabilities and obligations under all Loan Documents and an acknowledgment that
the same have been terminated.

     Section 6.5    Benefit.
                    -------

     This Security Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and the Secured Parties and their respective
successors, legal representatives and permitted assigns. The Grantor shall not
assign any of its rights or obligations hereunder without the prior written
consent of the Required Lenders.

     Section 6.6    Amendments and Waivers.
                    ----------------------

     No amendment, modification, termination or waiver of any provision of this
Security Agreement, or consent to any departure by the Administrative Agent
therefrom, shall be effective unless the same shall be in writing and signed by
the Administrative Agent and the Grantor and shall comply with the provisions
set forth in Section 9.6 of the Credit Agreement.  Each amendment, modification,
             -----------
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given.

     Section 6.7    Headings.
                    --------

                                       17
<PAGE>

     Section and subsection headings contained in this Security Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Security Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

     Section 6.8    Applicable Law; Entire Agreement.
                    --------------------------------

     This Security Agreement shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of New York, without
regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of
the General Obligations Law of the State of New York), except to the extent that
the validity or perfection of the security interest hereunder, or exercise of
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York.  This Security
Agreement and the other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and supersede any
prior agreements, written or oral, with respect thereto (including, subject to
the following sentence, the Original Subsidiary Security Agreement).  On and
after the date hereof, each reference in any document, instrument, record or
account (other than the Original Subsidiary Security Agreement) entered into in
connection with the Original Subsidiary Security Agreement to the "Subsidiary
Security Agreement" of the Grantor shall be a reference to and mean this Amended
and Restated Subsidiary Security Agreement.

     Section 6.9    Severability.
                    ------------

     The invalidity, illegality or unenforceability in any jurisdiction of any
provision in or obligation under this Security Agreement shall not affect or
impair the validity, legality or enforceability of the remaining provisions or
obligations under this Security Agreement or of such provision or obligation in
any other jurisdiction.

     Section 6.10   Consent to Jurisdiction.
                    -----------------------

     The Grantor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court in respect
thereof, in any action or proceeding arising out of or relating to this Security
Agreement, or for recognition or enforcement of any judgment, and hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State court
or, to the extent permitted by law, in such federal court.  The Grantor agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Section 6.10 shall affect any right that
                                        ------------
the Administrative Agent or any Secured Party may otherwise have to bring any
action or proceeding relating to this Security Agreement against the Grantor or
any of its properties in the courts of any jurisdiction.  The Grantor hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this

                                       18
<PAGE>

Security Agreement in any court referred to in this Section 6.10. The Grantor
                                                    ------------
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court. The Grantor irrevocably consents to service of process in the manner
provided for notices in Section 6.3. Nothing in this Security Agreement will
                        -----------
affect the right of any party hereto to serve process in any other manner
permitted by law.

     Section 6.11   Construction.
                    ------------

     The Grantor and the Administrative Agent each acknowledges that it has had
the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Security Agreement with its legal counsel and that
this Security Agreement shall be construed as if jointly drafted by the Grantor
and the Administrative Agent.

     Section 6.12   Counterparts; Effectiveness.
                    ---------------------------

     This Security Agreement and any amendments, waivers, consents, or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts together
shall constitute but one and the same instrument.  This Security Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto.  Delivery of an executed counterpart of a signature page to this
Security Agreement or to any amendments, waivers, consents or supplements hereof
by telecopier shall be as effective as delivery of a manually executed
counterpart thereof.

     Section 6.13   Waiver of Jury Trial.
                    --------------------

     THE GRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused this Subsidiary
Security Agreement to be duly executed and delivered in its name and on its
behalf, all as of the day and year first above written.

                              LOCAL FIBER, L.L.C., as the Grantor

                              By: /s/ Michael S. Liss
                                  -------------------------------------
                                  Name:  Michael S. Liss
                                  Title: President and Chief Executive

                              DEUTSCHE BANK AG NEW YORK
                              BRANCH, as the Administrative Agent

                              By: /s/ Colleen Roux
                                  -------------------------------------
                                  Name:  Colleen Roux
                                  Title: Director

                              By: /s/ Colleen Roux
                                  -------------------------------------
                                  Name:  Alexander Richarz
                                  Title: Assistant Vice President

Local Fiber Security Agreement

<PAGE>

                                 SCHEDULE 3.4

                             GOVERNMENTAL CONSENTS
                             ---------------------

None.

                                      S-1<PAGE>

                                                                 Exhibit 10.8

                 AMENDED AND RESTATED PARENT PLEDGE AGREEMENT
                 --------------------------------------------
                                   (DEVNET)

     This AMENDED AND RESTATED PARENT PLEDGE AGREEMENT (as amended,
supplemented, amended and restated or otherwise modified from time to time, this
"Pledge Agreement"), is entered into as of February 9, 2001, by FIBERNET TELECOM
GROUP, INC., a Delaware corporation formerly known as FiberNet Holdco, Inc. (the
"Pledgor"), in favor of DEUTSCHE BANK AG NEW YORK BRANCH, as administrative
agent (together with any successor(s) thereto in such capacity, the
"Administrative Agent") for each of the Secured Parties, and amends and restates
in its entirety that certain Pledge Agreement (as amended prior to the date
hereof, the "Original Parent Pledge Agreement"), dated as of August 7, 2000
between the Pledgor and the Administrative Agent.

                                   RECITALS
                                   --------

     A.   Pursuant to the Amended and Restated Credit Agreement, dated as of
February 9, 2001 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Credit Agreement"), among Devnet L.L.C., a
Delaware limited liability company (the "Pledged Subsidiary"), FiberNet
Operations, Inc., a Delaware corporation ("FiberNet" and, together with the
Pledged Subsidiary, the "Borrowers"), the financial institutions from time to
time parties thereto as lenders (each individually referred to herein as a
"Lender" and, collectively, as the "Lenders"), the Administrative Agent, Toronto
Dominion (USA) Securities Inc., as syndication agent for the Lenders, and First
Union Investors, Inc., as documentation agent for the Lenders, the Lenders have
extended commitments to make Loans and to issue Letters of Credit (each as
defined in the Credit Agreement) to, and for the benefit of, the Borrowers;

     B.   The Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and

     C.   It is in the best interest of the Pledgor to execute this Pledge
Agreement as the Pledgor will derive substantial direct and indirect benefits
from the Loans made to the Borrowers, and the Letters of Credit issued for the
benefit of the Borrowers, from time to time pursuant to the Credit Agreement.

                                   AGREEMENT
                                   ---------

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
to make the Loans and issue the Letters of Credit to or for the benefit of the
Borrowers pursuant to the Credit Agreement and to induce the Secured Parties to
enter into any Interest Rate Agreements, the Pledgor agrees, for the benefit of
each Secured Party, as follows:
<PAGE>

                                  ARTICLE I.
                                  DEFINITIONS

     Section 1.1    Defined Terms.
                    -------------

     The following terms when used in this Pledge Agreement shall have the
following meanings:

     "Administrative Agent" shall have the meaning assigned to such term in the
Preamble.
--------

     "Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person other than a corporation
(including partnership interests in a partnership, member interests in a limited
liability company and beneficial interests in a trust), and any and all
warrants, options and other rights to purchase any of the foregoing.

     "Credit Agreement" shall have the meaning assigned to such term in the
Recitals.
--------

     "Distributions" means all stock dividends, liquidating dividends, shares of
stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
Capital Stock constituting Pledged Collateral, but shall not include Dividends
or repurchases of redeemable shares.

     "Dividends" means cash dividends and cash distributions with respect to any
Pledged Shares or other Pledged Property which is not a liquidating dividend.

     "FiberNet" shall have the meaning assigned to such term in the Recitals.
                                                                    --------

     "Lender" shall have the meaning assigned to such term in the Recitals.
                                                                  --------

     "Pledge Agreement" shall have the meaning assigned to such term in the
Preamble.
--------

     "Pledged Collateral" shall have the meaning assigned to such term in
Section 2.1.
-----------

     "Pledged Note Issuer" means each Person identified in Item A of Attachment
                                                           ------    ----------
1 hereto as the issuer of the Pledged Note identified opposite the name of such
-
Person.

     "Pledged Notes" means all notes (including, without limitation, promissory
notes and notes evidencing indebtedness of (i) a Subsidiary of the Pledgor to
the Pledgor or any other Subsidiary of the Pledgor, or (ii) the Pledgor to any
of its Subsidiaries) of any Pledged Note Issuer which are required to be
delivered by the Pledgor to the Administrative Agent as Pledged Property
hereunder.

                                       2
<PAGE>

     "Pledged Property" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of Capital Stock or promissory notes, all other securities,
all assignments of any amounts due or to become due, all other instruments which
are now being delivered by the Pledgor to the Administrative Agent or may from
time to time hereafter be delivered by the Pledgor to the Administrative Agent
for the purpose of pledge under this Pledge Agreement or any other Loan
Document, and all proceeds of any of the foregoing.

     "Pledged Share Issuer" means each Person identified in Item B of Attachment
                                                            ------    ----------
1 hereto as the issuer of the Pledged Shares identified opposite the name of
-
such Person.

     "Pledged Shares" means all shares or interest of Capital Stock of any
Pledged Share Issuer which are required to be delivered by the Pledgor to the
Administrative Agent as Pledged Property hereunder.

     "Pledged Subsidiary" shall have the meaning assigned to such term in the
Recitals.
--------

     "Pledgor" shall have the meaning assigned to such term in the Preamble.
                                                                   --------

     "Securities Act" shall have the meaning assigned to such term in Section
                                                                      -------
6.2.
---

     "UCC" shall have the meaning assigned to such term in Section 1.3.
                                                           -----------

     Section 1.2    Credit Agreement Definitions.
                    ----------------------------

     Unless otherwise defined herein or unless the context otherwise requires,
terms used in this Pledge Agreement, including, without limitation, its preamble
and recitals, have the meanings provided in the Credit Agreement.  Nothing in
this Pledge Agreement shall be construed as limiting any of the rights and
remedies under the Credit Agreement, unless expressly set forth herein.

     Section 1.3    UCC Definitions.
                    ---------------

     Unless otherwise defined herein or in the Credit Agreement or unless the
context otherwise requires, terms for which meanings are provided in the Uniform
Commercial Code of the applicable jurisdiction ("UCC") are used in this Pledge
Agreement, including, without limitation, its preamble and recitals, with such
meanings.

                                  ARTICLE II.
                                    PLEDGE

     Section 2.1    Grant of Security Interest.
                    --------------------------

     As security for the due and punctual payments in full in cash and
performance in full of all Obligations, the Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Administrative Agent for its benefit and the ratable benefit of each of the
Secured Parties, and hereby grants to the Administrative Agent for its benefit
and the ratable

                                       3
<PAGE>

benefit of each of the Secured Parties, a continuing security interest in all of
the following property (the "Pledged Collateral"):

               (a)  all promissory notes of each Pledged Note Issuer identified
          in Item A of Attachment I hereto;
             ------    ------------

               (b)  all issued and outstanding shares of Capital Stock of each
          Pledged Share Issuer identified in Item B of Attachment 1 hereto;
                                             ------    ------------

               (c)  all securities, notes, certificates and instruments
          representing or evidencing the Pledged Property or the ownership
          thereof and any interest of the Pledgor reflected in the books of any
          financial intermediary pertaining to the Pledged Property or of any
          Pledged Share Issuer thereof and all non-cash dividends, cash,
          options, warrants, stock splits, reclassifications, rights,
          instruments or other investment property and other property or
          proceeds from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of the Pledged
          Property;

               (d)  all additional Capital Stock of any Pledged Share Issuer
          from time to time held or acquired by the Pledgor in any manner (which
          shares shall be deemed to be part of the Pledged Property), and all
          securities, certificates and instruments representing or evidencing
          such additional Capital Stock or the ownership thereof and any
          interest of the Pledgor reflected in the books of any financial
          intermediary pertaining to such additional Capital Stock or of the
          Pledged Share Issuer thereof, and all non-cash dividends, cash,
          options, warrants, rights, instruments and other property or proceeds
          from time to time received, receivable or otherwise distributed in
          respect of or in exchange for any or all of such Capital Stock;

               (e)  all other Pledged Property, whether now or hereafter
          delivered to the Administrative Agent in connection with this Pledge
          Agreement;

               (f)  all Dividends, Distributions, interest and other payments;

               (g)  all other options, warrants and rights to subscribe for or
          purchase voting or nonvoting Capital Stock of any Pledged Share Issuer
          and any present or future notes, bonds, debentures or other evidences
          of indebtedness owned by the Pledgor that (i) are at any time
          convertible into Capital Stock of any Pledged Share Issuer, or (ii)
          have or at any time would have voting rights with respect to any
          Pledged Share Issuer;

               (h)  all voting rights in respect of the Pledged Property; and

               (i)  all proceeds of any of the foregoing.

     Section 2.2    Delivery of Pledged Property.
                    ----------------------------

                                       4
<PAGE>

     All certificates or instruments representing or evidencing any Pledged
Collateral, including, without limitation, all Pledged Shares and all Pledged
Notes, shall be delivered to and held by or on behalf of and, in the case of the
Pledged Notes, endorsed to the order of the Administrative Agent or its designee
pursuant hereto, shall be in suitable form for transfer by delivery, and shall
be accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.

     Section 2.3    Continuing Security Interest;  Transfer of Note.
                    -----------------------------------------------
     This Pledge Agreement shall create a continuing security interest in the
Pledged Collateral and shall

                    (a)  remain in full force and effect until payment in full
               in cash of all Obligations,

                    (b)  be binding upon the Pledgor and its successors,
               transferees and assigns, and

                    (c)  inure, together with the rights and remedies of the
               Administrative Agent hereunder, to the benefit of the
               Administrative Agent.

Without limiting the foregoing clause (c), any Lender may assign or otherwise
                               ----------
transfer (in whole or in part) any Note, Loan or Commitment held by it to any
other Person or entity as permitted by, and in accordance with the terms of, the
Credit Agreement, and such other Person or entity shall thereupon become vested
with all the rights and benefits in respect thereof granted to such Lender under
any Loan Document (including, without limitation, this Pledge Agreement) or
otherwise.

     Section 2.4    Security Interest Absolute.
                    --------------------------

     All rights of the Administrative Agent and the security interests granted
to the Administrative Agent hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:

                    (a)  any lack of validity, legality or enforceability of the
               Credit Agreement, any Note, or any other Loan Document or any
               Interest Rate Agreement;

                    (b)  the failure of any Secured Party or any holder of any
               Note

                         (i)  to assert any claim or demand or to enforce any
                    right or remedy against any Borrower, any other member of
                    the Borrower Group or any other Person (including any other
                    pledgor) under the provisions of the Credit Agreement, any
                    Note, any other Loan Document, any Interest Rate Agreement
                    or otherwise, or

                                       5
<PAGE>

                         (ii) to exercise any right or remedy against any other
                    pledgor of, or collateral securing, any of the Obligations;

                    (c)  any change in the time, manner or place of payment of,
               or in any other term of, all or any of the Obligations, or any
               other extension or renewal of any Obligation of any Borrower or
               any other member of the Borrower Group;

                    (d)  any reduction, limitation, impairment or termination of
               any of the Obligations for any reason other than the written
               agreement of the Secured Parties to terminate the Obligations in
               full, including any claim of waiver, release, surrender,
               alteration or compromise, and shall not be subject to, and the
               Pledgor hereby waives any right to or claim of, any defense or
               setoff, counterclaim, recoupment or termination whatsoever by
               reason of the invalidity, illegality, nongenuineness,
               irregularity, compromise, unenforceability of, or any other event
               or occurrence affecting, any Obligations of any Borrower, any
               other member of the Borrower Group or otherwise;

                    (e)  any amendment to, rescission, waiver, or other
               modification of, or any consent to departure from, any of the
               terms of the Credit Agreement, any Note, any other Loan Document
               or any Interest Rate Agreement;

                    (f)  any addition, exchange, release, surrender or non-
               perfection of any collateral, or any amendment to or waiver or
               release or addition of, or consent to departure from, any other
               pledgor held by any Secured Party or any holder of any Note
               securing any of the Obligations; or

                    (g)  any other circumstance which might otherwise constitute
               a defense available to, or a legal or equitable discharge of, any
               Borrower, any other member of the Borrower Group, any surety or
               any pledgor.

     Section 2.5    Postponement of Subrogation.
                    ---------------------------

     The Pledgor agrees that it will not exercise any rights which it may
acquire by way of rights of subrogation under this Pledge, by any payment made
hereunder or otherwise, until the prior payment in full in cash of all of the
Obligations, the termination of all Interest Rate Agreements to which any
Secured Party is a party, the termination or expiration of all Letters of Credit
and the termination of all Commitments.  Any amount paid to the Pledgor on
account of any such subrogation rights prior to the payment in full in cash of
all of the Obligations shall be held in trust for the benefit of the Secured
Parties and each holder of a Note and shall immediately be paid to the
Administrative Agent for the benefit of the Secured Parties and each holder of a
Note and credited and applied against the Obligations of the Borrowers and each
other member of the Borrower Group, whether matured or unmatured, such order as
the Administrative Agent shall elect; provided,  however, that if
                                      --------   -------

                    (a)  the Pledgor has made payment to the Secured Parties and
               each holder of a Note of all or any part of the Obligations, and

                                       6
<PAGE>

                    (b)  all Obligations have been paid in full in cash, all
               Interest Rate Agreements to which any Secured Party is a party
               have been terminated, all Letters of Credit have expired or
               terminated and all Commitments have been permanently terminated,

then, at the Pledgor's request, the Administrative Agent, on behalf of the
Secured Parties and the holders of the Notes, will execute and deliver to the
Pledgor appropriate documents (without recourse and without representation or
warranty) necessary to evidence the transfer by subrogation to the Pledgor of an
interest in the Obligations resulting from such payment by the Pledgor.  In
furtherance of the foregoing, for so long as any Obligations, Letters of Credit
or Commitments remain outstanding, the Pledgor shall refrain from taking any
action or commencing any proceeding against any Borrower or any other member of
the Borrower Group  (or any of its or their successors or assigns, whether in
connection with a bankruptcy proceeding or otherwise) to recover any amounts in
respect of payments made under this Pledge to any Secured Party or any holder of
a Note, except that the Pledgor may file a proof of claim in a bankruptcy
proceeding with respect to any Borrower or any other member of the Borrower
Group in connection with any obligations owed by such member to the Pledgor in
the event that the Administrative Agent has failed to file a proof of claim on
the Pledgor's behalf by the second business day before the due date for such
filing.

                                 ARTICLE III.
                        REPRESENTATIONS AND WARRANTIES

     The Pledgor represents and warrants to the Administrative Agent for the
benefit of the Administrative Agent as set forth in this Article.

     Section 3.1    Ownership,  No Liens, Etc.
                    -------------------------

     The Pledgor is the legal and beneficial owner of, and has good and
marketable title to (and has full right and authority to pledge and assign), the
Pledged Collateral, free and clear of all Liens except Permitted Liens.

     Section 3.2    Valid Security Interest.
                    -----------------------

     The execution and delivery of this Pledge Agreement, together with the
delivery of all Pledged Shares and all Pledged Notes to the Administrative
Agent, is effective to create a valid, perfected, first priority security
interest in such Pledged Collateral, securing payment of the Obligations.
Possession by the Administrative Agent of the Pledged Shares and the proceeds
thereof is the only action necessary to perfect or protect such security
interest in the Pledged Shares and the proceeds thereof under the UCC, subject
to Section 9-306 of the UCC.

     Section 3.3    As to Pledged Shares.
                    --------------------

     The Pledged Shares are duly authorized and validly issued, fully paid, and
non-assessable, and constitute all of the issued and outstanding shares of
Capital Stock of each Pledged Share Issuer, except as otherwise described on
Schedule 4.1.D to the Credit Agreement.
--------------

                                       7
<PAGE>

     Section 3.4    As to Pledged Notes.
                    -------------------

     Each Pledged Note has been duly authorized, executed, endorsed, issued and
delivered, and is the legal, valid and binding obligation of the issuer thereof,
and such issuer is not in default thereunder.

     Section 3.5    Authorization, Approval, etc.
                    ----------------------------
     No authorization, approval, or other action by, and no notice to or filing
with, any governmental authority, regulatory body or any other Person is
required either

                    (a)  for the pledge by the Pledgor of any Pledged Collateral
               pursuant to this Pledge Agreement or for the execution, delivery,
               and performance of this Pledge Agreement by the Pledgor, or

                    (b)  except as set forth in Schedule 3.5 hereto, for the
                                                ------------
               exercise by the Administrative Agent of the voting or other
               rights provided for in this Pledge Agreement.

     Section 3.6    Application of Representations and Warranties.
                    ---------------------------------------------

     It is understood and agreed that the foregoing representations and
warranties shall apply only to the Pledged Collateral delivered on the date
hereof and that, with respect to Pledged Collateral delivered thereafter, the
Pledgor shall be required to make representations and warranties in form and
substance substantially similar to the foregoing in supplements hereto and that
such representations and warranties contained in such supplements hereto shall
be applicable to such Pledged Collateral hereafter delivered.

                                  ARTICLE IV.
                                   COVENANTS

     Section 4.1    Protect Pledged Collateral.
                    --------------------------

     The Pledgor will not sell, assign, transfer, pledge, or encumber in any
other manner the Pledged Collateral except in accordance with the Credit
Agreement. The Pledgor will warrant and defend the right and title herein
granted unto the Administrative Agent in and to the Pledged Collateral (and all
right, title, and interest represented by the Pledged Collateral) against the
claims and demands of all Persons whomsoever.

     Section 4.2    Stock Powers, Etc.
                    -----------------

     The Pledgor agrees that all Pledged Shares (and all other shares of Capital
Stock constituting Pledged Collateral) delivered by the Pledgor pursuant to this
Pledge Agreement will be accompanied by duly executed undated blank stock
powers, or other equivalent instruments of transfer acceptable to the
Administrative Agent.  The Pledgor shall, from time to time upon the request of
the Administrative Agent, promptly deliver to the Administrative Agent such
stock powers, instruments, and similar documents, in form and substance
reasonably satisfactory to the

                                       8
<PAGE>

Administrative Agent, with respect to the Pledged Collateral as the
Administrative Agent may reasonably request and shall, from time to time upon
the request of the Administrative Agent after the occurrence, and during the
continuance, of any Event of Default, promptly transfer any Pledged Shares or
other shares of common stock constituting Pledged Collateral into the name of
any nominee designated by the Administrative Agent.

     Section 4.3    Continuous Pledge.
                    -----------------

     The Pledgor shall, at all times, keep pledged to the Administrative Agent
pursuant hereto all Pledged Shares and all other shares of Capital Stock
constituting Pledged Collateral, all Dividends and Distributions with respect
thereto, all Pledged Notes, all interest, principal and other proceeds received
by the Administrative Agent with respect to the Pledged Notes, and all other
Pledged Collateral and other securities, instruments, proceeds, and rights from
time to time received by or distributable to the Pledgor in respect of any
Pledged Collateral and will not permit any Pledged Share Issuer to issue any
Capital Stock which shall not have been immediately duly pledged hereunder on a
first priority perfected basis.

     Section 4.4    Voting Rights, Dividends, Etc.
                    -----------------------------

                    (a)  If any Event of Default shall have occurred and be
               continuing, promptly upon receipt of notice thereof by the
               Pledgor, the Pledgor shall deliver (properly endorsed where
               required hereby or requested by the Administrative Agent) to the
               Administrative Agent, without any request therefor by the
               Administrative Agent, all Dividends, all Distributions, all
               interest, all principal, all other cash payments, and all
               proceeds of the Pledged Collateral, all of which shall be held by
               the Administrative Agent as additional Pledged Collateral for use
               in accordance with Section 6.4.
                                  -----------

                    (b)  If any Event of Default shall have occurred and be
               continuing, and the Administrative Agent shall have notified the
               Pledgor of the Administrative Agent's intention to exercise its
               right under this Section 4.4(b) to exercise (to the exclusion of
                                --------------
               the Pledgor) the voting power and all other incidental rights of
               ownership with respect to any Pledged Shares or other shares of
               Capital Stock constituting Pledged Collateral, the Pledgor shall
               grant the Administrative Agent an irrevocable proxy, exercisable
               under such circumstances, to vote the Pledged Shares and such
               other Pledged Collateral and shall promptly deliver to the
               Administrative Agent such additional proxies and other documents
               as may be necessary to allow the Administrative Agent to
               effectively exercise such voting power.

                    (c)  All Dividends, Distributions, interest, principal, cash
               payments, and proceeds which may at any time and from time to
               time be held by the Pledgor but which the Pledgor is then
               obligated to deliver to the Administrative Agent, shall, until
               delivery to the Administrative Agent, be held by the Pledgor
               separate and apart from its other property in trust for the
               Administrative Agent. The Administrative Agent agrees that unless
               any Event of Default shall have occurred

                                       9
<PAGE>

               and be continuing and the Administrative Agent shall have given
               the notice referred to in Section 4.4(b), the Pledgor shall have
                                         --------------
               the exclusive voting power with respect to any shares of Capital
               Stock (including, without limitation, any of the Pledged Shares)
               constituting Pledged Collateral and the Administrative Agent
               shall, upon the written request of the Pledgor, promptly deliver
               such proxies and other documents, if any, as shall be reasonably
               requested by the Pledgor which are necessary to allow the Pledgor
               to exercise voting power with respect to any such share of
               Capital Stock (including, without limitation, any of the Pledged
               Shares) constituting Pledged Collateral; provided, however, that
                                                        --------  -------
               no vote shall be cast, or consent, waiver, or ratification given,
               or action taken by the Pledgor that would be inconsistent with or
               violate any provision of any Loan Document.

     Section 4.5    Additional Undertakings.
                    -----------------------
     The Pledgor shall not, without the prior written consent of the
Administrative Agent:

                    (a)  enter into any agreement amending, supplementing, or
               waiving any provision of any Pledged Note (including, without
               limitation, any underlying instrument pursuant to which such
               Pledged Note is issued) or compromising or releasing or extending
               the time for payment of any obligation of the maker thereof;

                    (b)  take or omit to take any action the taking or the
               omission of which would result in any impairment or alteration of
               any obligation of the maker of any Pledged Note or other
               instrument constituting Pledged Collateral (unless permitted by
               the Credit Agreement);

                    (c)  take or omit to take any action which would result in
               the Pledgor ceasing to own directly or indirectly all of the
               Capital Stock of the Pledged Subsidiary(ies); or

                    (d)  take or omit to take any action which would result in
               the creation, incorporation or formation of any direct or
               indirect Subsidiary of the Pledgor which is not validly existing
               as of the date hereof.

                                  ARTICLE V.
                           THE ADMINISTRATIVE AGENT

     Section 5.1    Administrative Agent Appointed Attorney-in-Fact.
                    -----------------------------------------------

     The Pledgor hereby irrevocably appoints the Administrative Agent the
Pledgor's attorney-in-fact, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Administrative Agent's discretion, following the occurrence and during the
continuation of any Event of Default, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without limitation:

                                       10
<PAGE>

                    (a)  to ask, demand, collect, sue for, recover, compromise,
               receive and give acquittance and receipts for moneys due and to
               become due under or in respect of any of the Pledged Collateral;

                    (b)  to receive, endorse, and collect any drafts or other
               instruments, documents and chattel paper, in connection with
               clause (a) above;
               ----------

                    (c)  to file any claims or take any action or institute any
               proceedings which the Administrative Agent may deem necessary or
               desirable for the collection of any of the Pledged Collateral or
               otherwise to enforce the rights of the Administrative Agent with
               respect to any of the Pledged Collateral; provided that, with
                                                         --------
               respect to this clause (c), such rights shall be exercised in
                               ----------
               accordance with Section 6.1; and
                               -----------

                    (d)  to perform the affirmative Obligations of the Pledgor
               hereunder or under any other Loan Document.

     The Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.

     Section 5.2    Administrative Agent May Perform.
                    --------------------------------

     The Administrative Agent may from time to time, at its option, perform or
cause to be performed any act which the Pledgor agrees hereunder to perform and
which the Pledgor fails to perform. In addition, the Administrative Agent may
from time to time take any other action which the Administrative Agent
reasonably deems necessary for the maintenance, preservation or protection of
any of the Pledged Collateral or of its security interest therein. Expenses
incurred by the Administrative Agent pursuant to this Section 5.2 shall be
                                                      -----------
payable by the Pledgor pursuant to Section 6.5.
                                   -----------

     Section 5.3    Administrative Agent Has No Duty.
                    --------------------------------

     The powers conferred on the Administrative Agent hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose any duty on
it to exercise any such powers. Except for the reasonable care of any Pledged
Collateral (subject to Section 5.4) in its possession and the accounting for
                       -----------
moneys actually received by it hereunder, the Administrative Agent shall have no
duty as to any Pledged Collateral or responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relative to any Pledged Property, whether or not the
Administrative Agent has or is deemed to have knowledge of such matters, or (b)
taking any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Pledged Collateral.

     Section 5.4    Reasonable Care.
                    ---------------

     The Administrative Agent is required to exercise reasonable care in the
custody and preservation of any of the Pledged Collateral in its possession;
provided, however, the
--------- -------

                                       11
<PAGE>

Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any of the Pledged Collateral if it takes such
action for that purpose as the Pledgor reasonably requests in writing at times
other than upon the occurrence and during the continuance of any Event of
Default, but failure of the Administrative Agent to comply with any such request
at any time shall not in itself be deemed a failure to exercise reasonable care.

                                  ARTICLE VI.
                                   REMEDIES

     Section 6.1    Certain Remedies.
                    ----------------

     If any Event of Default shall have occurred and be continuing:

                    (a)  The Administrative Agent may exercise in respect of the
               Pledged Collateral, in addition to other rights and remedies
               provided for herein or otherwise available to it, all the rights
               and remedies of a secured party on default under the UCC (whether
               or not the UCC applies to the affected Pledged Collateral) and
               also may, without notice except as specified below, sell the
               Pledged Collateral or any part thereof in one or more parcels at
               public or private sale, at any of the Administrative Agent's
               offices or elsewhere, for cash, on credit or for future delivery,
               and upon such other terms as the Administrative Agent may deem
               commercially reasonable. The Pledgor agrees that, to the extent
               notice of sale shall be required by law, at least ten days prior
               notice to the Pledgor of the time and place of any public sale or
               the time after which any private sale is to be made shall
               constitute reasonable notification. The Administrative Agent
               shall not be obligated to make any sale of Pledged Collateral
               regardless of notice of sale having been given. The
               Administrative Agent may adjourn any public or private sale from
               time to time by announcement at the time and place fixed
               therefor, and such sale may, without further notice, be made at
               the time and place to which it was so adjourned.

                    (b)  The Administrative Agent may:

                         (i)   transfer all or any part of the Pledged
                    Collateral into the name of the Administrative Agent or its
                    nominee for the benefit of the Secured Parties, with or
                    without disclosing that such Pledged Collateral is subject
                    to the lien and security interest granted hereunder,

                         (ii)  notify the parties obligated on any of the
                    Pledged Collateral to make payment to the Administrative
                    Agent of any amount due or to become due thereunder,

                         (iii) enforce collection of any of the Pledged
                    Collateral by suit or otherwise, and surrender, release or
                    exchange all or any part thereof, or compromise or extend or
                    renew for any period (whether or not longer than

                                       12
<PAGE>

                    the original period) any Obligations of any nature of any
                    party with respect thereto,

                         (iv)  endorse any checks, drafts, or other writings in
                    the Pledgor's name to allow collection of the Pledged
                    Collateral,

                         (v)   take control of any proceeds of the Pledged
                    Collateral, and

                         (vi)  execute (in the name, place and stead of the
                    Pledgor) endorsements, assignments, stock powers and other
                    instruments of conveyance or transfer with respect to all or
                    any of the Pledged Collateral.

All rights and remedies provided for in this Pledge Agreement are cumulative,
and not exclusive of any other rights or remedies.  No failure or delay by the
Administrative Agent in exercising any right or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power.

     Section 6.2    Securities Laws.
                    ---------------

     If the Administrative Agent shall determine to exercise its right to sell
all or any of the Pledged Collateral pursuant to Section 6.1, the Pledgor shall,
                                                 -----------
upon the request of the Administrative Agent, at the expense of the Pledgor:

                    (a)  execute and deliver, and cause each issuer of the
               Pledged Collateral contemplated to be sold and the directors and
               officers thereof to execute and deliver, all such instruments and
               documents, and do or cause to be done all such other acts and
               things, as may be necessary to register such Pledged Collateral
               under the provisions of the Securities Act of 1933, as from time
               to time amended (the "Securities Act"), and to cause the
               registration statement relating thereto to become effective and
               to remain effective for such period as prospectuses are required
               by law to be furnished, and to make all amendments and
               supplements thereto and to the related prospectus which, in the
               reasonable opinion of the Administrative Agent, are necessary or
               advisable, all in conformity with the requirements of the
               Securities Act and the rules and regulations of the Securities
               and Exchange Commission applicable thereto;

                    (b)  use its best efforts to qualify the Pledged Collateral
               under the state securities or "Blue Sky" laws, and to obtain all
               necessary governmental approvals for the sale of the Pledged
               Collateral, as reasonably requested by the Administrative Agent;

                    (c)  cause each such issuer to make available to its
               security holders, as soon as practicable, an earnings statement
               that will satisfy the provisions of Section 11(a) of the
               Securities Act; and

                                       13
<PAGE>

                    (d)  do or cause to be done all such other acts and things
               as may be necessary to make such sale of the Pledged Collateral
               or any part thereof valid and binding and in compliance with
               applicable law.

     Section 6.3    Compliance with Restrictions.
                    ----------------------------

     The Pledgor agrees that in any sale of any of the Pledged Collateral
whenever an Event of Default shall have occurred and be continuing, the
Administrative Agent is hereby authorized to comply with any limitation or
restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including, without
limitation, compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that prospective bidders and
purchasers have certain qualifications, and restrict prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Pledged Collateral), or in order to obtain any required approval
of the sale or of the purchaser by any governmental regulatory authority or
official, and the Pledgor further agrees that such compliance shall not result
in such sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Administrative Agent be liable or accountable
to the Pledgor for any discount allowed by reason of the fact that such Pledged
Collateral is sold in compliance with any such limitation or restriction.

     Section 6.4    Application of Proceeds.
                    -----------------------

     All cash proceeds received by the Administrative Agent in respect of any
sale of, collection from, or other realization upon, all or any part of the
Pledged Collateral in accordance with Section 6.1 hereof may, in the discretion
                                      -----------
of the Administrative Agent, be held by the Administrative Agent as additional
Pledged Collateral security for, or then or at any time thereafter be applied
(after payment of any amounts payable to the Secured Parties pursuant to the
Loan Documents) in whole or in part by the Administrative Agent against all or
any of the Obligations in such order as the Administrative Agent shall elect.
The Pledgor shall remain liable for any deficiency.  Any surplus of such cash or
cash proceeds held by the Administrative Agent and remaining after payment in
full in cash of all the Obligations, the termination of all Interest Rate
Agreements to which a Secured Party is a party, the termination or expiration of
all Letters of Credit and the termination of all Commitments shall be paid over
to the Pledgor or to whomsoever may be lawfully entitled to receive such
surplus.

     Section 6.5    Indemnity and Expenses.
                    ----------------------

     The Pledgor shall upon demand pay to the Administrative Agent the amount of
any and all reasonable expenses, including, without limitation, the reasonable
fees and disbursements of its outside counsel and of any experts and agents,
which the Administrative Agent may incur in connection with:

                    (a)  the consideration of legal matters relevant to this
               Pledge Agreement;

                                       14
<PAGE>

                    (b)  the custody, preservation, use, or operation of, or the
               sale of, collection from, or other realization upon, any of the
               Pledged Collateral;

                    (c)  the exercise or enforcement of any of the rights of the
               Administrative Agent hereunder; or

                    (d)  the failure by the Pledgor to perform or observe any of
               the provisions hereof.

The provisions of this Section 6.5 shall survive termination of this Pledge
                       -----------
Agreement.

                                 ARTICLE VII.
                           MISCELLANEOUS PROVISIONS

     Section 7.1    Additional Actions and Documents.
                    --------------------------------

     The Pledgor agrees that at any time, and from time to time, at the expense
of the Pledgor, the Pledgor will promptly execute and deliver all further
instruments, and take all further action that the Administrative Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.

     Section 7.2    Expenses.
                    --------

     The Pledgor agrees to reimburse and save the Administrative Agent harmless
against liability for the payment of all out-of-pocket expenses arising in
connection with the administration or enforcement of, or the preservation or
exercise of, any rights (including, without limitation, the right to collect and
dispose of the Pledged Collateral) under this Pledge Agreement, including,
without limitation, the reasonable fees and other charges of outside counsel to
the Administrative Agent arising in such connection, and all such fees and other
charges shall be deemed to be a part of the Obligations secured hereby.

     Section 7.3    Notices.
                    -------

     Any communications between the parties hereto or notices provided herein to
be given shall be sent in accordance with the provisions of, and to the
addresses set forth in, Section 9.8 of the Credit Agreement, and if to the
                        -----------
Pledgor, to the following address:

                                   FiberNet Telecom Group, Inc.
                                   570 Lexington Avenue
                                   3/rd/ Floor
                                   New York, New York 10022
                                   Attn.: President
                                   Telecopy: (212) 421-8920

     Section 7.4    Release and Satisfaction.
                    ------------------------

                                       15
<PAGE>

     Upon the indefeasible payment (whether in cash and/or other consideration
which is satisfactory to the Lenders in their sole discretion) and performance
in full of the Obligations, the termination of all Interest Rate Agreements to
which any Secured Party is a party, the termination or expiration of all Letters
of Credit and the termination of all Commitments (i) this Pledge Agreement and
the security interest created hereby shall terminate, and (ii) upon written
request of the Pledgor, the Administrative Agent shall execute and deliver to
the Pledgor, at the Pledgor's expense and without representation or warranty by
or recourse to the Administrative Agent or the Secured Parties, all
certificates, representations or evidences of the Pledged Shares and all Pledged
Notes, together with all other Pledged Collateral held by the Administrative
Agent hereunder and such documents as the Pledgor shall reasonably request to
evidence such termination, and the Pledgor shall deliver to the Administrative
Agent a general release of all of the Administrative Agent's liabilities and
Obligations under all Loan Documents and an acknowledgment that the same have
been terminated.

     Section 7.5    Benefit.
                    -------

     This Pledge Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto, the Secured Parties and their respective successors,
legal representatives and permitted assigns.  The Pledgor shall not assign any
of its rights or obligations hereunder without the prior written consent of the
Required Lenders.

     Section 7.6    Amendments and Waivers.
                    ----------------------

     No amendment, modification, termination or waiver of any provision of this
Pledge Agreement, or consent to any departure by the Administrative Agent
therefrom, shall be effective unless the same shall be in writing and signed by
the Administrative Agent and the Pledgor and shall comply with the provisions
set forth in Section 9.6 of the Credit Agreement.  Each amendment, modification,
             -----------
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given.

     Section 7.7    Headings.
                    --------

     Section and subsection headings contained in this Pledge Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Pledge Agreement for any purpose, and shall not in any way define or affect
the meaning, construction or scope of any of the provisions hereof.

     Section 7.8    Applicable Law; Entire Agreement.
                    --------------------------------

     This Pledge Agreement shall be governed by, and shall be construed and
enforced in accordance with, the internal laws of the State of New York, without
regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of
the General Obligations Law of the State of New York), except to the extent that
the validity or perfection of the security interest hereunder, or exercise of
remedies hereunder, in respect of any particular Pledged Collateral are governed
by the laws of a jurisdiction other than the State of New York.  This Pledge
Agreement and the other Loan Documents constitute the entire understanding among
the parties hereto with respect

                                       16
<PAGE>

to the subject matter hereof and supersede any prior agreements, written or
oral, with respect thereto (including, subject to the following sentence, the
Original Parent Pledge Agreement). On and after the date hereof, each reference
in any document, instrument, record or account (other than the Original Parent
Pledge Agreement) entered into in connection with the Original Parent Pledge
Agreement to the "Parent Pledge Agreement" with respect to Devnet shall be a
reference to and mean this Amended and Restated Parent Pledge Agreement.

     Section 7.9    Severability.
                    ------------

     The invalidity, illegality or unenforceability in any jurisdiction of any
provision in or obligation under this Pledge Agreement shall not affect or
impair the validity, legality or enforceability of the remaining provisions or
obligations under this Pledge Agreement or of such provision or obligation in
any other jurisdiction.

     Section 7.10   Consent to Jurisdiction.
                    -----------------------

     The Pledgor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court in respect
thereof, in any action or proceeding arising out of or relating to this Pledge
Agreement, or for recognition or enforcement of any judgment, and hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State court
or, to the extent permitted by law, in such federal court.  The Pledgor agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this Section 7.10 shall affect any right
                                         ------------
that the Administrative Agent or any Secured Party may otherwise have to bring
any action or proceeding relating to this Pledge Agreement against the Pledgor
or any of its properties in the courts of any jurisdiction. The Pledgor hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Pledge Agreement in any court referred to in this Section 7.10. The
                                                       ------------
Pledgor irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court. The Pledgor irrevocably consents to service of process in the manner
provided for notices in Section 7.3.  Nothing in this Pledge Agreement will
                        -----------
affect the right of any party hereto to serve process in any other manner
permitted by law.

     Section 7.11   Construction.
                    ------------

     The Pledgor and the Administrative Agent each acknowledges that it has had
the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Pledge Agreement with its legal counsel and that this
Pledge Agreement shall be construed as if jointly drafted by the Pledgor and the
Administrative Agent.

     Section 7.12   Waiver of Jury Trial.
                    --------------------

                                       17
<PAGE>

     THE PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).

     Section 7.13   Survival.
                    --------

     All agreements, covenants, representations and warranties made herein shall
survive the execution and delivery of this Pledge Agreement.  Notwithstanding
anything in this Pledge Agreement or implied by law to the contrary, the
agreements set forth in Sections 6.5 and 7.2 shall survive the payment of the
                        ------------     ---
Obligations and the termination of this Pledge Agreement.

     Section 7.14   Counterparts; Effectiveness.
                    ---------------------------

     This Pledge Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.  This Pledge Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.  Delivery
of an executed counterpart of a signature page to this Pledge Agreement or to
any amendments, waivers, consents or supplements hereof by telecopier shall be
as effective as delivery of a manually executed counterpart thereof.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       18
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.

                                        FIBERNET TELECOM GROUP, INC.,
                                        as the Pledgor

                                        By: /s/ Michael S. Liss
                                           -------------------------------
                                           Name:  Michael S. Liss
                                           Title: President and Chief Executive
                                                  Officer

                                        DEUTSCHE BANK AG NEW YORK
                                           BRANCH, as Administrative Agent

                                        By: /s/ Colleen Roux
                                           -------------------------------
                                           Name:  Colleen Roux
                                           Title: Director

                                        By: /s/ Alexander Richarz
                                           -------------------------------
                                           Name:  Alexander Richarz
                                           Title: Assistant Vice President

<PAGE>

                                                                    Attachment 1
                                              to the Sudsidiary Pledge Agreement

Item A.   Pledged Notes
          -------------

  Pledged Note Issuer                   Description of Pledged Notes
------------------------     ---------------------------------------------------

  None                             Not applicable

Item B.      Pledged Shares
             --------------

  Pledged Share Issuer                  Description of Pledged Shares
------------------------     ---------------------------------------------------

                                                                       % of
                                                                    Outstanding
                                                                       Shares
                                                                      Pledged

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

DEVNET L.L.C.                 Certificated Securities Representing     96.386%
                              96.386% of the membership interests of
                              Devnet L.L.C.

<PAGE>

                                 SCHEDULE 3.5

                             GOVERNMENTAL CONSENTS
                             ---------------------

None.

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