Document:

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                                                                  EXECUTION COPY

            EMPLOYMENT AGREEMENT dated as of October 4, 1999 (the "Agreement"),
between FIBERNET TELECOM GROUP, INC., a Nevada corporation (the "Company"), and
LES HANKINSON (the "Executive").

            The parties hereto deem it to be in their best interests to enter
into an employment agreement whereby the Company will employ the Executive
pursuant to the terms set forth herein.

            NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:

            1. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts such employment by the Company, on the terms and
subject to the conditions hereinafter set forth. The parties hereto agree that
the Executive shall commence his duties and responsibilities hereunder on or
about November 8, 1999.

            2. Term. Subject to earlier termination pursuant to the terms of
Section 6 below, the employment of the Executive hereunder shall be for a fixed
term (the "Employment Period") commencing as provided in Section 1 hereof and
terminating on the second anniversary of the execution of this Agreement (the
"Scheduled Termination Date"). At the option of the Company, on or before April
4, 2001, the Company shall notify the Executive if its intention to renew this
Agreement or continue the employment of the Executive after the Scheduled
Termination Date pursuant to other terms and conditions as may be mutually
agreed upon by the Company and the Executive.

            3. Position.

                  (a) The Executive will be the Senior Vice President - Sales
and Marketing.

                  (b) The Company understands that the Executive will conduct
substantially all of his duties and responsibilities on behalf of the Company
from the executive offices of the Company, which shall be located in the New
York metropolitan area, or from any of the regional sales offices of the Company
to be opened after the date hereof. The Company shall reimburse the Executive
for all reasonable and necessary expenses during the time the Executive may be
temporarily located in New York ("Temporary Period"). During the Temporary
Period and at any other times during the Employment Period when the Executive
shall be located outside ("Outside Location") the Atlanta metropolitan area as
part of his employment hereunder, the Company shall reimburse the Executive for
round-trip air fare to Atlanta from New York or such other Outside Location one
time per week, and the Executive shall use his reasonable best efforts to
minimize the costs of such air fare.

                  (c) The Company agrees that during the Employment Period the
Company shall not require the Executive to re-locate his principal personal
residence outside the Atlanta metropolitan area to fulfill his duties and
responsibilities hereunder.

            4. Time to be Devoted to Employment. The Executive shall devote all
of his business time, attention and energies to the performance of his duties
and responsibilities under
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      this Agreement. During the Employment Period, the Executive shall not be
      engaged in any other business activity without the prior written consent
      of the President and the Executive Vice President except for (a) time
      spent in managing his personal, financial and legal affairs and serving on
      corporate, civic or charitable boards or committees, in each case only if,
      and to the extent that, such activities do not interfere with the
      performance of the Executive's duties and responsibilities hereunder and
      (b) periods of vacation to which the Executive is entitled, illness and
      periods of leave of absence as approved by the President and Executive
      Vice President of the Company.

            5. Compensation; Etc.

                  (a) Base Salary. The Company shall pay to the Executive an
annual base salary (the "Base Salary") of a minimum of $225,000, subject to
increase, but not decrease, at least annually at the discretion of the
Compensation Committee of the Board of Directors of the Company (the "Board").
The Base Salary shall be payable in such installments as is the policy of the
Company with respect to its executive officers generally, but no less frequently
than monthly.

                  (b) Signing Bonus. The Executive shall receive $30,000 as a
bonus ("Signing Bonus") for executing this Agreement payable in three equal
consecutive monthly installments beginning on December 1, 1999.

                  (c) Bonus.

                        (i) The Executive shall receive a bonus ("2000
      Performance Bonus") of $80,000 for performance of his duties and
      responsibilities hereunder for the year ended December 31, 2000.

                        (ii) In the event that the Executive substantially
      exceeds the sales and marketing targets and goals of the Company as set
      forth in the business plan for the year ended December 31, 2000 of the
      Company ("Business Plan") and Revenue (as defined herein) of the Company
      for the year ended December 31, 2000 exceed $20 million ("Revenue
      Target"), the Executive may receive a 2000 Performance Bonus up to
      $150,000, inclusive of the $80,000 the Executive may receive pursuant to
      clause (i) above. Such Revenue Target may be adjusted from time to time
      based on adjustments to the Business Plan, as mutually agreed upon by the
      Company and the Executive.

                        (iii) After a formal review by the President and
      Executive Vice President of the Company during the month of December, 2000
      of the Executive's performance and operations during the year 2000, the
      Executive may receive an additional bonus.

                        (iv) The Executive shall receive a bonus ("2001
      Performance Bonus") of $80,000 for performance of his duties and
      responsibilities hereunder during the Executive's employment in the year
      2001, and may receive an additional 2001 Performance Bonus based on the
      Revenue of the Company on or about the Scheduled Termination Date;
      provided, that if the Executive continues his employment with the

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      Company after the Scheduled Termination Date to December 31, 2001 pursuant
      to Section 2, any additional 2001 Performance Bonus shall be based on the
      Revenue of the Company for the year ended December 31, 2001.

                        (v) For purposes of this Agreement: (A) "Revenue" shall
      mean the revenues of the Company calculated based on the Company's
      Business Plan, future business plan, as such Business Plan or future
      business plan may be modified from time to time, and in accordance with
      the Company's accounting practices and generally accepted accounting
      principles; (B) any 2000 Performance Bonus paid hereunder shall be paid by
      the Company to the Executive in a manner consistent with the Company's
      compensation and payroll practices, but in no event later than February 1,
      2001; (C) any 2001 Performance Bonus to be paid hereunder shall be paid by
      the Company to the Executive on a date to be determined by the Company,
      but in no event later than February 1, 2002; and (D) the amount of any
      2000 Performance Bonus and/or 2001 Performance Bonus to be paid to the
      Executive pursuant to clauses (ii), (iii) and (iv) above shall be
      determined solely at the discretion of the President and Executive Vice
      President of the Company, subject to approval by the Board of Directors
      (or any committee thereof) of the Company.

                  (d) Benefits. During the Employment Period, the Company shall
provide the Executive with such employee benefits as are provided by the Company
from time to time to its senior executive officers generally.

                  (e) Qualified Options. The Executive shall be entitled to
receive Incentive Stock Options ("ISOs") (as that term is defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code")) for 37,208 shares
(or such greater or lesser amount then allowed under the Code) (the "1999
Options") of the Company's common stock, $.001 par value per share ("Common
Stock") with an exercise price equal to the Fair Market Value (as defined in the
Option Plan (as defined below)) of the Common Stock as of the date hereof
pursuant to the Company's 1999 Stock Option Plan (the "Option Plan") and the
execution of an Incentive Stock Option Agreement dated the date hereof between
the Company and the Executive (as provided to the Executive). Any ISOs issued
under this Section 5(e) shall vest equally over two years from the date hereof,
with 50% of the ISOs vesting one year from the date hereof and the remaining 50%
vesting two years from the date hereof.

                  (f) Non-Qualified Options. The Executive shall be entitled to
receive non-qualified options for (i)162,792 shares ("Non-Qualified A") of the
Common Stock of the Company with an exercise price of $4.50 per share and (ii)
100,000 shares ("Non-Qualified B" and together with the Non-Qualified A, the
"Non-Qualified Options") of the Common Stock of the Company with an exercise
price equal to the Fair Market Value (as defined in the Option Plan) of the
Common Stock on October 4, 1999. The Non-Qualified A shall vest equally over two
years from the date hereof, with 50% of the Non-Qualified A vesting one year
from the date hereof and the remaining 50% vesting two years from the date
hereof. The Non-Qualified B shall vest as of the date hereof, subject to Section
6(e)(iv). The Non-Qualified Options shall be exercisable for up to ten (10)
years, and shall provide for "cashless exercise" and in the event of the
Executive's termination of employment for any reason, exercisable for up to one
year from the date of such termination. The Non-Qualified A shall be subject to
accelerated vesting as

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provided for in this Agreement. If the Executive's employment is terminated
pursuant to a Termination for Cause or a Voluntary Termination, all the then
unvested Non-Qualified A shall immediately terminate and no longer be
outstanding. Unless otherwise provided herein, any Non-Qualified Options granted
hereunder are subject to the terms and provisions of the Option Plan.

            6. Termination of Employment.

                  (a) Involuntary Termination.

                        (i) Disability. If the Executive is incapacitated or
      disabled by accident or sickness or otherwise so as to render him mentally
      or physically incapable of performing the services required to be
      performed by him or her under this Agreement for a period of 120
      consecutive days or longer, or for an aggregate of 120 days during any
      twelve-month period (such condition being hereinafter referred to as a
      "Disability"), the Company may, at that time or any time thereafter, at
      its option, to the extent not in violation of applicable state and federal
      law, terminate the employment of the Executive under this Agreement
      immediately upon giving him notice to that effect (such termination, as
      well as a termination under Section 6(a)(ii) below, being hereinafter
      called an "Involuntary Termination"). In the event of an Involuntary
      Termination, all options granted hereunder shall vest on a pro rata basis
      for time served to the date of such Involuntary Termination (including the
      120 day disability qualifying period).

                        (ii) Death. If the Executive dies during the Employment
      Period, his employment hereunder shall be deemed to cease as of the date
      of his death, and all options granted hereunder shall vest as of the date
      of his death, and shall be exercisable by his estate for a period of one
      (1) year from the date of death.

                  (b) Termination for Cause. The Company may terminate the
employment of the Executive and all the Company's obligations under this
Agreement at any time during the Employment Period for "cause" (such termination
being hereinafter called a "Termination for Cause") after the Board has given
the Executive written notice of its intent to terminate the employment of the
Executive for cause, with reasonable specificity of the details thereof and
Executive shall have been provided a reasonable opportunity to cure any such
alleged occurrence constituting "cause" (not in excess of 30 days, provided that
in the event such occurrence cannot reasonably be expected to be cured in such
period then for such period as is reasonable and the Executive shall be using
his diligent best efforts to cure). For the purposes of this Agreement, "cause"
shall mean (i) the Executive's material breach of his material duties hereunder
or habitual neglect of his duties hereunder, (ii) the commission by the
Executive of an act constituting common law fraud, or a felony or criminal act
against the Company subsidiary or affiliate thereof or any of the assets of any
of them or (iii) the Executive's conviction of a crime involving moral
turpitude.

                  (c) Termination Without Cause. The Company may, with 30 days
written notice, terminate the employment of the Executive hereunder at any time
during the Employment Period without "cause" (such termination being hereinafter
called a "Termination Without

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Cause") by giving the Executive notice of such termination, upon the giving of
which notice such termination shall take effect 30 days from the date such
notice was given.

                  (d) Voluntary Termination. Any termination of the employment
of the Executive hereunder other than as a result of an Involuntary Termination,
a Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination." A Voluntary Termination shall be deemed to be effective
immediately upon such termination.

                  (e) Termination for Good Reason. Each of the events in clauses
(i) - (vi) below shall be a "Termination for Good Reason":

                        (i) the Executive's title, position, authority or
      responsibilities (including reporting responsibilities (including
      reporting responsibilities and authority) are changed in a materially
      adverse manner;

                        (ii) the Executive's Base Salary is reduced for any
      reason other than in connection with the termination of his employment;

                        (iii) other than in connection with the termination of
      the Executive's employment hereunder, the Company materially reduces any
      welfare or insurance benefits generally provided to other executive
      officers of the Company;

                        (iv) the Company otherwise materially breaches or is
      unable to perform its obligations hereunder;

                        (v) the sale of all or substantially all of the assets
      of the Company or the merger, consolidation or combination of the Company
      with another entity in which this Agreement is not assumed by any such
      purchaser or surviving entity; and

                        (vi) the Company requires the Executive to re-locate his
      principal residence outside the Atlanta metropolitan area during the
      Employment Period.

                        (vii) In the event of a Termination for Good Reason, the
      Executive may voluntarily terminate his employment under this Agreement
      with the Company, which voluntary termination shall be treated as a
      Termination Without Cause.

                  (f) Effect of Termination of Employment.

                        (i) Except as otherwise provided in Section 6(f)(ii)
      below, upon the termination of the Executive's employment hereunder for
      any reason whatsoever prior to the expiration of the Employment Period,
      neither the Executive nor his beneficiaries or estate shall have any
      further rights or claims against the Company or any of its subsidiaries or
      affiliates under this Agreement except to receive any earned and unpaid
      portion of the Base Salary, the Signing Bonus and any earned and unpaid
      portion of a declared bonus provided for in Section 5(c), plus a cash
      payment for all accrued and unused vacation time through the effective
      date of such termination, and shall be entitled to exercise all options
      vested as provided for in this Agreement. The Executive's family and, in
      the case of the Executive's Disability, the Executive, shall also be
      entitled to the

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      same employee benefits, at the Company's expense, provided to the
      Executive and his family by the Company prior to the termination of the
      Executive's employment hereunder for Disability or death for six months
      after such termination of employment for Disability or death. The
      Executive shall be indemnified after the Scheduled Termination Date (or
      any later date the Executive's employment with the Company is terminated)
      for any actions in his capacity as a Senior Vice President-Sales and
      Marketing of the Company. For purposes of this Agreement, the 2000
      Performance Bonus and the 2001 Performance Bonus shall be considered
      declared and earned on January 1, 2000 and January 1, 2001, respectively.

                        (ii) Upon the termination of the Executive's employment
      hereunder prior to the Scheduled Termination Date pursuant to a
      Termination Without Cause or Termination for Good Reason, the Executive
      shall have the right, in addition to the rights provided for in Section
      6(f)(i) above, to receive (A) severance (payable in such installments as
      the Base Salary was being paid immediately prior to such termination
      pursuant to Section 5(a)) equal to the then current Base Salary for a term
      equal to the lesser of (1) six months from the date of termination of the
      Executive's employment pursuant to a Termination Without Cause or prior to
      the Scheduled Termination Date and (2) the date the Executive executes an
      employment agreement or similar contract with a third party employer (or
      commences employment with a third party employer, whichever occurs
      earlier) after the termination of the Executive's employment pursuant to a
      Termination Without Cause or prior to the Scheduled Termination Date, (B)
      all options granted hereunder (including the 1999 Options and the
      Non-Qualified Option B, subject to Section 6(e)(iv)) shall vest and
      Executive shall have 12 months (unless with respect to the 1999 Options,
      the Option Plan shall require a shorter period) thereafter to exercise
      such options, and (C) at the Company's expense, any employee benefits
      provided to the Executive and his family by the Company prior to the
      Termination Without Cause or Termination for Good Reason for a period of
      six months after such Termination Without Cause or Termination for Good
      Reason.

                        (iii) Upon the termination of the Executive's employment
      hereunder prior to the Scheduled Termination Date pursuant to a
      Termination for Cause, the Executive shall be entitled to receive his Base
      Salary pro rata to the date of his Termination for Cause and the Signing
      Bonus plus any declared but unpaid bonus pursuant to Section 5(c) and
      shall be entitled to exercise all options vested as of the time of
      termination for 30 days, subject to Section 6(e)(iv).

                        (iv) Upon the termination of the Executive's employment
      hereunder on or prior to February 4, 2000 pursuant to a Termination for
      Cause or Voluntary Termination, the Executive shall return to the Company
      and disclaim ownership of 50% of the Non-Qualified B and execute any
      amendment or agreement necessary to reflect such adjustment.

            7. Restrictive Covenants.

                  (a) The Executive acknowledges and recognizes that during the
Employment Period he will be privy to trade secrets and confidential proprietary
information critical to the

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Company and the Company's business and further acknowledges and recognizes that
the Company would find it extremely difficult to replace the Executive. So long
as the Company is paying (or willing to pay in the event the Executive shall
refuse such payment) all amounts due hereunder, the Executive shall not, during
the Employment Period and for 12 months thereafter (i) directly induce employees
of the Company or its affiliates or subsidiaries to terminate their employment
with the Company or such affiliate or subsidiary for the purposes of engaging in
any Competitive Business or (ii) directly induce any entity or person with which
the Company or any of its subsidiaries or affiliates has a business relationship
to terminate or alter such business relationship.

            "Competitive Business" means and includes any business that builds
or operates an in-building fiber or copper network.

                  (b) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business similar that of the
Company, but he nevertheless believes that he has received and will receive
sufficient consideration and other benefits as an employee of the Company to
justify clearly such restrictions which, in any event (given his education,
skills and ability), the Executive does not believe would prevent him from
earning a livelihood.

            8. Non-Disclosure, Assignment of Intellectual Property Rights and
Documentation.

                  (a) At all times, both during the Executive's employment by
the Company and after its termination, the Executive will keep in strict
confidence and will not disclose any confidential or proprietary information
relating to the business of the Company, or any client, customer, or business
partner of the Company, to any person or entity, or make use of any such
confidential or proprietary information for the Executive's own purposes or for
the benefit of any person or entity, except as may be necessary in the ordinary
course of performing his duties and responsibilities as an employee of the
Company.

                  (b) If at any time or times during his employment the
Executive shall conceive or discover any Intellectual Property (as defined
herein) whatsoever (herein called "Developments") or any interest therein
("Intellectual Property Rights") that in each case relates to the business of
the Company, such Developments and the benefits thereof shall immediately become
the sole and absolute property of the Company and its assigns, and the Executive
shall promptly disclose to the Company (or any persons designated by it) each
such Development and hereby assign any rights the Executive may have or acquire
in the Developments and benefits and/or rights resulting therefrom to the
Company and its assigns.

                  (c) As used herein, the term "Intellectual Property" shall
mean all industrial and intellectual property, including, without limitation,
computer programs and other software, and all documentation and media
constituting, describing or relating to the above.

            9. Taxes. The Company shall pay any income taxes due and payable by
the Executive to taxing authorities to the City of New York and/or the State of
New York related to his employment hereunder. This payment shall be made on a
"grossed-up" basis, so that the

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Company will pay any federal, state or local income taxes payable (after taking
into account deductions allowed for state and local taxes) as a result of the
benefit provided to the Executive in the preceding sentence of this Section 9.

            10. Disability Insurance. As soon as reasonably practicable, the
Company shall obtain long-term disability insurance covering the Executive at
the Company's expense which provides for an "own occupation" definition of
disability, no less than 60% income replacement and an elimination period no
longer than the period after which the Company can terminate the Executive's
services for disability or such substantially similar provisions.

            11. Other Agreements. The Executive represents and warrants that the
execution and delivery of this Agreement and the performance of all the terms of
this Agreement do not and will not breach any agreement to keep in confidence
proprietary information acquired by the Executive in confidence or trust. The
Executive has not entered into and shall not enter into any agreement, either
written or oral, in conflict with this Agreement. The Executive represents that
he has not brought and will not bring with him to the Company or use at the
Company any materials or documents of an employer or a former employer that are
not generally available to the public, unless express written authorization from
such employer for their possession and use has been obtained. The Executive
further understands that he is not to breach any obligation of confidentiality
that he has to any employer or former employer and agrees to fulfill all such
obligations during the period of his affiliation with the Company.

            12. Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if (a) delivered
personally or sent by telecopier, (b) sent by nationally-recognized overnight
courier or (c) sent by certified mail, postage prepaid, return receipt
requested, addressed as follows:

            if to the Company, to:

            FiberNet Telecom Group, Inc.
            570 Lexington Avenue, Third Floor
            New York, NY  10022
            Telephone: 212 405-6200
            Facsimile: 212 421-4920
            Attention: President

            if to the Executive, to the Executive's address on the books or
            records of the Company;

or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered if
personally delivered or sent by telecopier, (ii) on the Business Day (as
hereinafter defined) after dispatch if sent by nationally-recognized, overnight
courier and (iii) on the fifth Business Day after dispatch if sent by mail. As
used herein, "Business Day" means a day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York are not required to be open.

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<PAGE>

            13. Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous negotiations, correspondence,
understandings and agreements between the parties with respect thereto. This
Agreement may be amended only by an agreement in writing signed by both parties
hereto.

            14. Assignment; Successors; Benefits of Agreement. This Agreement is
personal in its nature and neither party hereto shall, without the consent of
the other, assign or transfer this Agreement or any rights or obligations
hereunder. The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective heirs, executors, administrators and successors
and permitted assigns of the parties hereto. All amounts payable hereunder, and
all option grants provided hereunder, shall be payable to, and exercisable by,
the Executive's estate.

            15. Waiver of Breach. A waiver of any breach of any provision of
this Agreement shall not constitute or operate as a waiver of any other breach
of such provision or of any other provision, and any failure to enforce any
provision hereof shall not operate as a waiver of such provision or of any other
provision.

            16. Counterparts; Headings. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument. Headings said herein are for
convenience of reference only and are not to affect the interpretation of this
Agreement.

            17. Legal Fees. The Company will pay the reasonable attorney's fees
incurred by Executive in connection with the negotiation and execution hereof.

            18. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO PRINCIPLES GOVERNING CONFLICTS OF LAWS.

            19. Severability. In the event that any provision of this Agreement
would be held in any jurisdiction to be invalid, prohibited or unenforceable for
any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

            20. Indemnification. The Executive shall be indemnified to the full
extent provided for by applicable law and the charter and by-laws of the
Company, which indemnification provisions may not be altered in any material
manner to the detriment of the Executive from those provisions in effect as of
the date hereof. The Company shall maintain

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D&O coverage during the Employment Term (and for the applicable statute of
limitations period thereafter), with terms and conditions as in effect as of the
date hereof; provided that such D&O coverage may not be altered in any material
manner to the detriment of the Executive from those provisions in effect as of
the date hereof.

            21. Due Authorization. This Agreement has been duly authorized,
executed and delivered on behalf of the Company and represents the binding and
enforceable obligation of the Company, in accordance with its term.

            22. Remedies. The Executive acknowledges and understands that the
provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
that the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. In the event of a breach or threatened
breach by the Executive of the provisions contained in Section 7 of this
Agreement, the Company shall be entitled to seek an injunction restraining him
from such breach with a court of law.

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            IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.

                                    FIBERNET TELECOM GROUP, INC.

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

                                        /s/ Les Hankinson
                                    --------------------------------------------
                                         Les Hankinson<PAGE>

                                           OPTION AGREEMENT dated as of
                                           October 1, 1999 ("Agreement") between
                                           FIBERNET TELECOM GROUP,
                                           INC., a Delaware corporation (the
                                           "Company"), and PACER
                                           INTERNATIONAL, INC., a Florida
                                           corporation ("Pacer").

      The Company wishes to sell and issue to Pacer 600,000 shares of Common
Stock, $.001 par value (the "Common Stock") of the Company at $3.00 per share
pursuant to the terms and conditions contained herein. In consideration of the
premises and other good and valuable consideration, the receipt and adequacy of
which are acknowledged by the parties hereto agree as follows.

      Section 1. Option to Purchase. For a period (the "Option Period") from the
date hereof to February 29, 2000 (the "Option Expiration Date"), Pacer shall
have the option (the "Pacer Option") to purchase from the Company 600,000 shares
of Common Stock (the "Pacer Securities") at $3.00 per share for an aggregate
price of $1,800,000 (the "Pacer Purchase Price"). The parties agree that the
number of shares of Common Stock to be issued to Pacer or a Pacer Affiliate (as
defined herein) hereunder shall be adjusted to reflect any stock splits or
combinations or other similar transactions by the Company which may occur prior
to the exercise of the Pacer Option.

      Section 2. Notice of Exercise of Option. Pacer shall notify the Company in
writing ("Option Notice") at any time during the Option Period, but no later
than 2 days prior to the Option Expiration Date, of its intention to exercise
the Pacer Option.

      Section 3. Agreement to Purchase; Delivery of Pacer Securities. Promptly
after an Option Notice has been delivered to the Company by Pacer, at a closing
(the "Closing") to be held at the offices of the Company or counsel to the
Company within 2 days following receipt of the Option Notice, Pacer shall pay
the Company the Pacer Purchase Price by wire transfer to a bank account
designated by the Company of immediately available funds, and immediately upon
receipt of the Pacer Purchase Price, the Company shall (i) issue and deliver a
stock certificate representing the Pacer Securities in the name of Pacer or a
party which is controlled by or under common control with Pacer ("Pacer
Affiliate") as designated by Pacer not less than 5 days before the date of the
Closing ("Closing Date"), and (ii) deliver a counterpart to a cross-receipt
providing for the delivery of the Pacer Securities and receipt of the Pacer
Purchase Price by the Company and receipt of the Pacer Securities and payment of
the Pacer Purchase Price by Pacer ("Cross-Receipt"). Pacer agrees that as part
of the Closing, it shall deliver a counterpart to the Cross-Receipt.

      Section 4. Officer's Certificate The Company agrees to provide a
certificate of the President of the Company, dated as of the Closing Date
substantially in the form attached hereto as Exhibit A, certifying that the
representations and warranties made by the Company in Section 6 are true and
correct as of the Closing Date.
<PAGE>

      Section 5. Representations and Warranties by Pacer. Pacer represents and
warrants to the Company as follows:

            (a) Pacer is acquiring the Pacer Securities to be purchased by Pacer
for its own account, for investment and not with a view to the distribution
thereof.

            (b) Pacer understands that the Pacer Securities have not been
registered under the Securities Act of 1933, as amended (the "Act"), by reason
of their issuance in a transaction exempt from the registration requirements of
the Act, and that they may not be sold unless a subsequent sale thereof is
registered under the Act or is exempt from registration.

            (c) Pacer is an "accredited investor" as defined in Rule 501 (the
provisions of which are known to Pacer) promulgated under the Act and has been
advised by individuals with such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment for an indefinite period of time, and has been furnished with and has
had access to such information as reasonable requested and has had the
opportunity to ask, and has received answers for, questions of the Company.

      Section 6. Representations and Warranties by the Company. The Company
represents and warrants to Pacer as follows:

            (a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Company has
all requisite power and authority and has all governmental licenses, approvals,
consents and authorizations necessary to own or lease its property and assets
and to carry on its business as currently conducted and has filed applications
for qualification to do business in each jurisdiction in which the nature of the
business conducted or the property owned or leased by it requires such
qualification.

            (b) The Company has the power to execute, deliver and perform its
obligations under this Agreement, and has obtained all necessary consents and
approvals to execute, deliver and perform its obligations hereunder and to issue
and sell the Pacer Securities and deliver the Pacer Securities to Pacer or a
Pacer Affiliate as provided herein.

            (c) Upon their issuance, the Pacer Securities shall be duly
authorized, validly issued, fully-paid and non-assessable shares of Common Stock
free and clear of any liens or encumbrances and shall not be subject to
preemptive rights, rights of first refusal, redemption rights or, except as set
forth in this Agreement, any other restriction.

            (d) Based in part upon the accuracy of the representations of Pacer
in Section 5 hereof, the offering, sale, issuance and delivery of the Pacer
Securities are or, as of the date of the issuance, will be, exempt from
registration under the Act, and, subject to the timely filing by the Company of
any requisite notice, such offering, sale and issuance and delivery is or, as of
the date of issuance, will be, also exempt from registration under applicable
state securities and "blue sky" laws. The Company has made or shall make all
requisite findings and has taken or

                                       2
<PAGE>

shall take all action necessary to be taken to comply with such state securities
or "blue sky" laws.

            (e) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof, including the issuance, sale and delivery
of the Pacer Securities, have not and shall not (i) violate any law to which the
Company is subject, (ii) violate any provision of the Amended Articles of
Incorporation of the Company or By-laws of the Company or (iii) conflict with,
result in a material breach of or constitute a material default under any
material contract to which the Company is a party or by which it is bound.

      Section 7. Restricted Securities. The Pacer Securities shall be restricted
securities and the certificate representing the Pacer Securities shall be
stamped or otherwise imprinted with a legend in substantially the following
form:

            "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
            OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
            TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
            REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, THE
            SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE
            COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
            SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
            SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
            REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT OR ANY
            STATE SECURITIES LAWS."

      Section 8. Piggyback Registration Rights. In the event that the Company
proposes to register any of its securities pursuant to Section 2.2 of the
Registration Rights Agreement dated as of May 7, 1999, as amended (the
"Registration Rights Agreement"), among the Company and certain of its
stockholders listed therein, a copy of which has been delivered to the
Purchaser, it shall promptly give written notice thereof to the Purchaser. At
such time, (i) Pacer shall be deemed to be joined as a party to the Registration
Rights Agreement for the limited purpose of Section 2.2 thereof and (ii) the
Pacer Securities shall be deemed to be "Other Shares" (as defined in the
Registration Rights Agreement") for purposes of said Section 2.2 of the
Registration Rights Agreement.

      Section 9. Confidentiality. Pacer and the Company agree that (i) the
Company shall have the right to disclose to any potential investors or to any
potential financing sources the existence of any definitive agreements entered
into with Pacer or a Pacer Affiliate and (ii) that use of the Pacer name in any
published materials, other than public filings required by law, shall be subject
to the prior consent of Pacer, such consent not to be unreasonably withheld or
delayed.

                                       3
<PAGE>

      Section 10. Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.

      Section 11. Waivers and Consents. The terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

      Section 12. No Waiver of Rights, Powers and Remedies. No failure or delay
by a party hereto in exercising any right, power or remedy under this Agreement,
and no course of dealing between the parties hereto, shall operate as a waiver
of any such right, power or remedy of the party. No single or partial exercise
of any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.

      Section 13. Survival of Representations and Warranties. All
representations and warranties hereunder shall survive the Closing for a period
of one year from the date thereof.

      Section 14. Governing Law. This Agreement shall be governed by the laws of
the State of New York without giving effect to any choice of law or conflict of
law provisions.

      Section 15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed and delivered shall be deemed to be an
original, but all of which when taken together shall constitute but one and the
same instrument; either party may execute this Agreement by signing any
counterpart of it.

                                       4
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

                                    FIBERNET TELECOM GROUP, INC.

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

                                    Address:
                                    570 Lexington Avenue, Third Floor
                                    New York, New York  10022
                                    Attn: President

                                    PACER INTERNATIONAL, INC.

                                    By: /s/ Ben T. Austin III
                                       -----------------------------------------
                                      Name: Ben T. Austin III
                                     Title: Vice Chairman

                                    Address:
                                    551 SE 8th Street, Suite 600
                                    Delray Beach, Florida  33483
                                    Attn:
<PAGE>

                                                                       Exhibit A

                              OFFICER'S CERTIFICATE

                                       of

                          FIBERNET TELECOM GROUP, INC.

      The undersigned, being the duly elected, qualified and acting President of
FiberNet Telecom Group, Inc., a Delaware corporation (the "Company"), DOES
HEREBY certify as follows on behalf of the Company:

            The representations and warranties of the Company contained in
            Section 6 of the Option Agreement, dated as of October 1, 1999
            between the Company and Pacer International, Inc., are true and
            correct as of the date hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

                                                                  EXECUTION COPY

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

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

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