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                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

     AGREEMENT by and between FiberNet Telecom Group, Inc., a Delaware
corporation, formerly known as FiberNet Holdco, Inc. (the "Company"), and Philip
DiGennaro (the "Executive"), dated as of the 31st day of July, 2000.

     WHEREAS, the Company is acquiring Devnet, LLC ("Devnet"), and Executive is
currently COO of Devnet and a significant shareholder of Devnet, who will
receive consideration for his interests in Devnet in connection with the
acquisition;

     WHEREAS, the Company has determined to secure the services of the Executive
as President and CEO of Devnet following the acquisition, as provided for below,
and the Executive desires to serve in such capacity.

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

     1.  Employment Period.  Subject to consummation of the acquisition by the
         -----------------
Company of Devnet, the Company shall employ the Executive, and the Executive
shall serve the Company, on the terms and conditions set forth in this
Agreement, for the period commencing on the effective date of the acquisition by
the Company of Devnet, and ending on the first anniversary thereof (the
"Employment Period").

     2.  Position and Duties.  (a) Upon consummation of the acquisition, the
         -------------------
Executive shall serve as President and Chief Executive Officer of Devnet which
shall be a wholly owned subsidiary of the Company or such successor to the
business of Devnet as the Company shall determine, reporting to the Chief
Executive Officer of the Company, with such duties and responsibilities as are
customarily assigned to such position, and such other duties and
responsibilities not inconsistent therewith as may be assigned to the Executive
from time to time by the Company.  In addition, the Company shall recommend that
the Executive be nominated as a member of the Board of Directors of the Company
and shall use its best efforts for so long as the Executive remains employed
hereunder to have the Executive elected to the Board of Directors during the
Employment Period.

          (b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote his full business time and efforts to the business and affairs of Devnet
and use his best efforts to carry out such responsibilities faithfully and
efficiently. During the Employment Period, the Executive shall not be engaged in
any other business activity without the prior written consent of the Company
except for time spent in managing his personal, financial, legal affairs and the
real estate business activities in which the Executive is currently engaged and
such other activities with respect to properties currently owned as Executive
shall reasonably undertake, in each case

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only if, and to the extent that, such activities do not interfere with the
performance of the Executive's duties and responsibilities hereunder.

          (c) The Executive's services shall be performed at Devnet's Westport
Connecticut headquarters subject to such business travel as may be required from
time to time, or such other headquarters of Devnet in Connecticut as the
Executive may determine, subject to Company approval.

     3.  Compensation.  (a) Base Salary.  During the Employment Period, the
         ------------       -----------
Executive shall receive a base salary (the "Annual Base Salary") at the annual
rate of $200,000.  The Annual Base Salary shall be payable in accordance with
the Company's payroll practices as in effect from time to time (whether payable
by the Company, Devnet or such other entity as the Company shall designate),
subject to applicable taxes and withholding.  During the Employment Period, the
Annual Base Salary shall be reviewed for possible merit increases at least
annually.

          (b) Annual Bonus.  For each calendar year or portion of a calendar
              ------------
year during the Employment Period, the Executive shall be eligible to earn an
annual performance bonus (the "Annual Bonus") based on such performance goals
and targets and in such amounts as the Company may in its sole discretion
establish. Each Annual Bonus shall be paid in accordance with the terms of the
management incentive program then applicable to the Executive.

          (c) Benefits.  During the Employment Period, the Executive and/or the
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Executive's family, as the case may be, shall be provided with such employee
benefits as are provided by the Company from time to time to its senior
executives generally.

          (d) Expenses.  During the Employment Period, the Executive shall be
              --------
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in carrying out the Executive's duties under this Agreement,

provided that the Executive complies with the policies, practices and procedures
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of the Company for submission of expense reports, receipts, or similar
documentation of such expenses.

          (f) Options.  The Executive shall be entitled to receive options on
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300,000 shares (the "Options") of the Company's common stock, $.001 par value
per share ("Common Stock") with an exercise price equal to the Fair Market Value
            ------------
of the Common Stock, pursuant to the terms of the Company's 1999 Stock Option
Plan (the "Option Plan"), as of the date the  Executive actually commences
employment at the Company (the "Commencement Date") subject to the execution by
the Company and the Executive of a stock option agreement in form satisfactory
to the Company.  The Options issued under this Section 3(f) shall vest equally
over two years from the date hereof; with 50% of the Options vesting one year
from the Commencement Date (provided that the Executive remains employed as of
                            -------- ----
such date) (the "First Option Tranche") and the remaining 50% vesting two years
from the Commencement Date (provided that the Executive remains employed as of
                            -------- ----
such date to the extent his employment continues notwithstanding the termination
of this Agreement) (the "Second Option

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Tranche"). The Options shall consist of qualified "Incentive Stock Options" to
the maximum extent permitted by law, with the remainder consisting of non-
qualified stock options.

          (g) If the Executive's employment is terminated pursuant to a
termination for Cause or if the Executive resigns without Good Reason, all of
the then unvested Options shall immediately be canceled and any vested and
unexercised options shall expire immediately upon the Executive's termination or
resignation.  If the Executive is terminated by the Company without Cause, or
resigns for Good Reason (as defined below), the Options shall be dealt with as
provided for in Section 5 below.  In any case, and notwithstanding any provision
of this Agreement to the contrary, (i) the terms and conditions of any Incentive
Stock Options shall be governed in full by the relevant provision of the
Internal Revenue Code and related law and (ii) the terms of the other Options
shall be governed by the relevant provisions of the Option Plan (including,
without limitation, in the event of the Executive's termination of employment
due to his death or Disability).

     4.  Termination of Employment.  (a) Death or Disability. The Executive's
         -------------------------       -------------------
employment shall terminate automatically upon the Executive's death during the
Employment Period. The Company shall, to the full extent permitted by law, be
entitled to terminate the Executive's employment because of the Executive's
"Disability" (as herein defined) during the Employment Period. "Disability"
means that the Executive has been unable, for a period of four months, or for a
total of 120 days in any given period of twelve months, to perform the
Executive's duties under this Agreement, as a result of physical or mental
illness or injury.

          (b) By the Company.  (i) The Company may terminate the Executive's
              --------------
employment during the Employment Period for Cause or without Cause.  For
purposes of this Agreement, the term "Cause" shall be defined as: (A) disloyalty
or dishonesty which results or is intended to result in personal enrichment to
Executive at the expense of the Company and/or Devnet (including, without
limitation, fraud, embezzlement or dishonesty or breach of business ethics); (B)
acts of moral turpitude or illegal or unprofessional conduct which may adversely
affect the reputation of the Company and/or Devnet and/or their relationship
with their clients, investors, employees and/or shareholders; (C) fraudulent
conduct in connection with the business or affairs of the Company and/or Devnet;
(D) the failure of the Executive to perform his duties and obligations pursuant
to this Agreement; (E) conviction of a felony or crime involving moral turpitude
(or entering into a plea of nolo contendere with respect to such crime); (F)
gross misconduct; (G) failure to perform at the level associated with
satisfactory senior executive performance as determined in good faith by the
Company and/or Devnet; (H) any breach or intended breach by the Executive of the
confidentiality provisions of Section 6 hereof; (I) any breach or intended
breach by the executive of any Company and/or Devnet policies or procedures as
in effect from time to time; (J) or failure by the Executive to provide 90 days
advance written notice of resignation (other than in the case of Executive's
resignation for Good reason); provided that in the case of subsections (D), (G),
                              -------- ----
(H) (but solely with respect to any intended breach) and/or (I) of this Section
4(b), the Company shall give written notice to the Executive at least fifteen
days prior to such termination of the Company's intent to terminate, which
notice shall set out in detail the ways in which Executive has failed to

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perform, and Executive shall have failed to cure such failure prior to the
expiration of such fifteen day period.

               (c) By the Executive for Good Reason.  (i) For purposes of this
                   --------------------------------
Agreement, "Good Reason" means:

               A.  any change in the Executive's title to one of lesser status;

               B.  any failure by the Company to comply with any provision of
Section 3 of this Agreement, other than failures that are not taken in bad faith
and are remedied by the Company within 20 business days after receipt of written
notice thereof from the Executive; or

               C.   any relocation of Devnet's headquarters outside of
Connecticut, without Executive's consent.

               (ii) A termination of employment by the Executive for Good Reason
shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination, setting forth the conduct of
the Company that constitutes Good Reason. A termination of employment by the
Executive for Good Reason shall be effective on the next business day following
the date when the Notice of Termination for Good Reason is given.

          (d) Date of Termination.  The "Date of Termination" means the date of
              -------------------
the Executive's death, Disability, or the date on which the termination of the
Executive's employment by the Company for Cause or by the Executive for Good
Reason is effective, or the date on which the Company gives the Executive notice
of a termination of employment without Cause or the Executive gives the Company
notice of a termination of employment without Good Reason, as the case may be.

     5.  Obligations of the Company upon Termination.  (a) Other Than for Cause,
         -------------------------------------------       ---------------------
Death or Disability; Good Reason. If, during the Employment Period, the Company
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terminates the Executive's employment, other than for Cause or Disability, or
the Executive terminates his employment for Good Reason, the Company shall pay
the amounts, continue the benefits described and take the action with respect to
the Options, in each case as set forth subparagraph (i) below.  The payments and
other provisions provided pursuant to this Section 5(a) are intended as
liquidated damages for the termination of the Executive's employment by the
Company other than for Cause or Disability or for the actions of the Company
leading to a termination of the Executive's employment by the Executive for Good
Reason and shall be the sole and exclusive remedy therefor; provided further
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that as a condition precedent for such payments the Executive shall execute and
deliver a general release (in the form attached hereto as Exhibit A) of all
claims against the Company.

          (i) The amounts to be paid as described above are:

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          A.  The Executive's earned and accrued but unpaid cash compensation,
in the form of a lump-sum payment, to be paid within 30 days after the Date of
Termination, which shall equal the sum of (1) any portion of the Executive's
Annual Base Salary earned through the Date of Termination that has not yet been
paid, (2) any unpaid Annual Bonus that was earned by the Executive and declared
due and owing by the Company; and (3) any accrued but unpaid vacation time (but
without giving effect to any carry-over of unused time from prior years), in
each case subject to applicable taxes and withholding (the amounts set forth in
subclauses (1)-(3) constitute the "Accrued Obligation").

          B.  A payment, payable in accordance with the Company's standard
monthly payroll practices and subject to withholding and taxes, of an amount
equal the Executive's Annual Base Salary, determined on a monthly basis, for a
period equal to the lesser of (1) six months from the Date of Termination or (2)
the remaining portion of the Employment Period.

          C.  The benefits to be continued for up to six months from the Date of
Termination are group medical benefits to the Executive and/or the Executive's
family comparable to those provided to the Executive under this Agreement;
provided, however, that during any period when the Executive is eligible to
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receive such benefits under another employer-provided plan, the benefits
provided hereunder shall terminate.

          D.  All the then unvested Options shall vest and Executive shall
have 12 months from the Date of Termination (unless any applicable Option Plan
provision shall require a shorter period) to exercise such options; provided
that during such 12 month period the Executive otherwise complies with the
----
provisions of the Agreement applicable to his post-termination conduct.

          (b) Death or Disability.  If the Executive's employment is terminated
              -------------------
by reason of the Executive's death or Disability during the Employment Period,
the Company shall pay the Accrued Obligations to the Executive or the
Executive's estate or legal representative, as applicable, in a lump-sum payment
(subject to applicable taxes and withholding) within 30 days after the Date of
Termination, and the Company shall have no further obligations under this
Agreement.  In the event of the Executive's death, all of the unvested Options
relating solely to the First Option Tranche shall vest and shall be governed by
the terms of the Option Plan and relevant stock option agreement.  In the event
of the Executive's disability, the Options shall be governed by the terms of the
Option Plan and relevant stock option agreements.

          (c) Cause; Other than for Good Reason.  If the Executive's employment
              ---------------------------------
is terminated by the Company for Cause during the Employment Period, or if the
Executive terminates his employment during the Employment Period other than for
Good Reason, the Company shall pay the Executive, in a lump-sum payment (subject
to applicable taxes and withholding) within 30 days of the Date of Termination,
any earned and unpaid Annual Base Salary through the Date of Termination, and
any Options held by the Executive shall be

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immediately canceled as provided for in Section 3(g) hereof, and the Company
shall have no further obligations under this Agreement.

     6.  Confidential Information; Noncompetition; Work Product.  The Executive
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acknowledges that as a key shareholder, and senior executive of Devnet he is
familiar with a range of confidential proprietary information regarding Devnet
and that he is receiving consideration in connection with the sale of Devnet and
the acquisition by the Company of the goodwill of the business.  The Executive
further acknowledges and agrees that his employment by the Company will,
throughout the Employment Period bring him into close contact with the
confidential affairs of the Company and Devnet, including information about
customers, costs, profits, real estate, markets, sales, products, key personnel,
pricing policies, operational methods, technical processes and other business
affairs and methods and other information not readily available to the public,
and plans for future development.  The Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character.  The Executive further acknowledges
that the business of the Company and its subsidiaries is international in scope,
that its products are marketed throughout the world, that the Company competes
in nearly all of its business activities with other entities that are or could
be located in nearly any part of the world and that the nature of the
Executive's services, position and expertise are such that he is capable of
competing with the Company from nearly any location in the world.  In
recognition of the foregoing, the Executive covenants and agrees:

          (a) The Executive, at all times during the Employment Period and
thereafter, shall hold in a fiduciary capacity for the benefit of the Company
all secret, trade, proprietary or confidential information, knowledge or data
relating to the Company or any of its affiliated companies (including Devnet)
and shareholders, and their respective businesses, that the Executive obtains
during the Executive's employment by the Company or any of its affiliated
companies and that is not public knowledge (other than as a result of the
Executive's violation of this Section 6(a)) ("Confidential Information").  The
Executive shall not communicate, divulge or disseminate Confidential Information
at any time during or after the Executive's employment with the Company, except
with the prior written consent of the Company or as otherwise required by law or
legal process.  The Executive shall deliver promptly to the Company on
termination of the Executive's employment by the Company, or at any other time
the Company may so request, at the Company's expense, all memoranda, notes,
records, reports and other documents (and all copies thereof) relating to the
Company's business, which the Executive obtained while employed by, or otherwise
serving or acting on behalf of, the Company and which the Executive may then
posses or have under the Executive's control. The Executive shall execute and
deliver any confidentiality policy or agreement used by the Company for its
senior executives and agrees that in the event of any conflicts, the provisions
of either of this Agreement or any other agreement (as the case may be) which
the Company, in its sole discretion, determines more fully protects the Company
shall govern.

          (b) In consideration of (a) the Company agreeing to enter into this
Agreement, and (b) consideration paid by the Company to Executive in connection
the

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Company's acquisition of Devnet, the Executive acknowledges and agrees that
during the "Noncompetition Period," the Executive shall not, without the prior
written consent of the Board, engage in or become associated with a "Competitive
Activity."  For purposes of this Section 6: (i) the "Noncompetition Period"
means the period commencing on the Commencement Date and ending on the twelve
(12) month anniversary of the date upon which Executive's employment with the
Company is terminated for any reason; (ii) a "Competitive Activity" means (a)
the business of Devnet as conducted as of the date of this Agreement and during
the Employment Period, and (b) any business or other endeavor that engages in
any geographic location primarily in the construction, installation, servicing
or operation of in-building communications and/or transmission networks or, to
the knowledge of the Executive, has definitive plans to engage in such conduct;
and (iii) the Executive shall be considered to have become "associated with a
Competitive Activity" if the Executive becomes directly or indirectly involved
as an owner, investor, employee, officer, director, consultant, independent
contractor, agent, partner, advisor, or in any other capacity calling for the
rendition of the Executive's personal services, with any individual,
partnership, corporation or other organization that is engaged directly or
indirectly in a Competitive Activity (other than in connection with an equity
investment in 5% or less of the common stock of a publicly traded company).

          (c) During the Noncompetition Period, the Executive shall not, on his
or her own behalf or on behalf of any other person, firm or entity (x) directly
or indirectly solicit, induce or attempt to solicit or induce any employee of
the Company to terminate his or her employment with the Company, or to provide
any assistance whatsoever to any person, firm or entity engaged in a Competitive
Activity, (y) employ, or cause any business or entity with which Executive is
affiliated to employ, any person who was a full-time executive employee of the
Company at the Executive's Date of Termination or six months prior to such date
or (z) directly or indirectly induce any business, 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.

          (d) In addition to such other rights and remedies as the Company may
have at equity or in law with respect to any breach of this Agreement, if the
Executive commits a material breach of any of the provisions of Section 6, the
Company shall have the right and remedy to have such provisions specifically
enforced by any court having equity jurisdiction (without any obligation to post
a bond or other security); it being acknowledged and agreed that any such breach
or threatened breach will cause irreparable injury to the Company and that money
damages alone will not provide an adequate remedy to the Company.

          (e) The Executive acknowledges that during the Employment Period, the
Executive may conceive of, discover, invent or create inventions, improvements,
new contributions, literary property, computer programs and software material,
ideas and discoveries, whether patentable or copyrightable or not (all of the
foregoing being collectively referred to herein as "Work Product"), and that
various business opportunities shall be presented to the Executive by reason of
the Executive's employment by the Company.  The Executive acknowledges that all
of the foregoing shall be owned by and belong exclusively to

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the Company and that the Executive shall have no personal interest therein,
provided that they are either related in any manner to the business (commercial
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or experimental) of the Company, or are, in the case of Work Product, conceived
or made on the Company's time or with the use of the Company's facilities or
materials, or, in the case of business opportunities, are presented to the
Executive for the possible interest or participation of the Company. The
Executive shall (i) promptly disclose any such Work Product and business
opportunities to the Company; (ii) assign to the Company, upon request and
without additional compensation, the entire rights to such Work Product and
business opportunities; (iii) sign all papers necessary to carry out the
foregoing; and (iv) give testimony in support of the Executive's inventorship or
creation in any appropriate case. The Executive agrees that the Executive will
not assert any rights to any Work Product or business opportunity as having been
made or acquired by the Executive prior to the date of this Agreement except for
Work Product or business opportunities, if any, disclosed to and acknowledge by
the Company in writing prior to the date hereof.

          (f) The Executive acknowledges and agrees that the provisions of this
Section 6 are necessary to protect the business operations and affairs of the
Company.  The Executive understands that the restrictions set forth in this
Agreement 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.

     7.  Successors.  (a) This Agreement is personal to the Executive and,
         ----------
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns, and may be assigned by Company in
connection with any sale, transfer or other disposition of all or substantially
all of its business and assets.

     8.  Indemnification.  The Executive shall be entitled throughout the
         ---------------
Employment Period in the capacity as an officer or director of the Company or
any of its subsidiaries, or as a member of any other governing body or any
partnership or joint venture in which the Company has an equity interest (and
after the term of employment, to the extent relating to any continued service as
such officer, director or member) to the benefit of the indemnification
provisions contained on the date hereof in the Certificate of Incorporation and
By-Laws of the Company (not including any amendments or additions after the date
of execution hereof that limit or narrow, but including any that add to or
broaden, the protection afforded to the Executive by those provisions), to the
extent not prohibited by applicable law at the time of the assertion of any
liability against the Executive.

     9.  Post-Termination Assistance.  For so long as the Executive is receiving
         ---------------------------
any payments pursuant to this Agreement, the Executive shall cooperate, at the
reasonable request of the Company (i) in the transition of any matter for which
the Executive had authority or

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responsibility during the Employment Period, or (ii) with respect to any other
matter involving the Company for which the Executive may be of assistance.

     10.  Miscellaneous.  (a) This Agreement shall be governed by, and construed
          -------------
in accordance with, the laws of the State of New York, applicable to agreements
made and to be performed entirely within such state. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.

          (b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

          If to the Executive, to the Executive's address
          as maintained by the Company.

          If to the Company:
          FiberNet Telecom Group, Inc,
          570 Lexington Avenue, Third Floor
          New York, NY 109022
          Telephone: 212-405-6200
          Facsimile: 212-421-4920
          Attention: President

or to such other address as either party furnishes to the other in writing in
accordance with this Section 10.  Notices and communications shall be effective
when actually received by the addressee.

          (c)  The parties agree that absent the prior termination of the
Executive's employment as provided hereunder, then upon the expiration of the
Employment Period, the Executive (upon the mutual consent of the Company and the
Executive) may continue to employed by the Company as an "at-will" employee.  To
the extent that the Executive remains an employee "at-will" following the
expiration of Employment Term, then in the event that the Executive is
subsequently terminated without cause (as determined pursuant to Section 4(b)
hereof) prior to the second anniversary of the date of this Agreement, then the
Second Option Tranche shall vest and Executive shall have 12 months from the
Date of Termination (unless any applicable Option Plan provision shall require a
shorter period) to exercise such options.

          (d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.  If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law, and
the invalid or unenforceable provision shall be deemed to have been redrafted as
if in

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the original, so as to be valid and enforceable to the maximum extent
permissible under applicable law.

          (e) Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.

          (f) The failure of the Executive or the Company to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.

          (g) The Executive and the Company acknowledge that this Agreement
represents the complete agreement between the parties and supersedes any other
agreement between them concerning the subject matter hereof.  This Agreement may
not be modified except by express written agreement between the parties.

          (h) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, and which together shall constitute one
instrument.

          (i) Whenever this Agreement provides for any payment to the
Executive's estate, such payment may be made instead to such beneficiary or
beneficiaries as the Executive may designate by written notice to the Company.
The Executive shall have the right to revoke any such designation and to
redesignate a beneficiary or beneficiaries by written notice to the Company (and
to any applicable insurance company) to such effect.

          (j) The Executive represents and warrants to the Company that this
Agreement is legal, valid and binding upon the Executive and the execution of
this Agreement and the performance of the Executive's obligations hereunder does
not and will not constitute a breach of, or conflict with the terms or
provisions of, any agreement or understanding to which the Executive is a party
(including, without limitation, any other employment agreement).  The Company
represents and warrants to the Executive that this Agreement is legal, valid and
binding upon the Company and the execution of this Agreement and the performance
of the Company's obligations hereunder does not and will not constitute a breach
of, or conflict with the terms or provisions of, any agreement or understanding
to which the Company is a party.

          (k) Neither the Executive, his legal representative nor any
beneficiary designated by the Executive shall have any right, without the prior
written consent of the Company, to assign, transfer, pledge, hypothecate,
anticipate or commute to any person or entity any payment due in the future
pursuant to any provision of this Agreement, and any attempt to do so shall be
void and shall not be recognized by the Company.

          (l) Each party (a) hereby irrevocably submits itself to and
acknowledges and recognizes the jurisdiction of the courts of the State of New
York in the Borough of Manhattan

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or in the United States District Court for the Southern District of New York
(which courts, together with all applicable appellant courts, for purposes of
this Agreement, are the only "courts of competent jurisdiction"), for the
purpose of any suit, action or other proceeding arising out of, under, or in
connection with, relating to, or based upon this Agreement (b) agrees that any
service of process in connection with any such suit, action or other proceeding
may be made upon it by means of the United States mail or such other service as
may be authorized by any such court, (c) agrees that the courts of competent
jurisdiction shall be the sole and exclusive courts and forums for the purpose
of any such suit, action or proceeding (d) waives and agrees not to assert, by
way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject to the jurisdiction of courts of
competent jurisdiction, that such suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court and (e) irrevocably waives any right to a trial before a jury. Each
party agrees that its submission to jurisdiction and its consent to service of
process by mail is made for the express benefit of the other party.

          (m) Each of the parties has been represented by counsel (or has had
the opportunity to be so represented) (Consultant has been advised by counsel to
Devnet) in the negotiation and preparation of this Agreement.  The parties agree
that this Agreement is to be construed as jointly drafted.  Accordingly, this
Agreement will be construed according to the fair meaning of its language, and
the rule of construction that ambiguities are to be resolved against the
drafting party will not be employed in the interpretation of this Agreement.

          (n) Notwithstanding the expiration, non-renewal or termination of this
Agreement, the provisions of Sections (6), (9) and (10) of the Agreement shall
continue in full force and effect and remain fully binding upon the parties to
the extent provided for therein.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board of Directors, the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.

_____________________________
Phillip DiGennaro

FiberNet Telecom Group, Inc.

By: __________________________

By:  Michael S. Liss
Title:  President

                                       11
<PAGE>

                                   EXHIBIT A
                                   ---------

                                GENERAL RELEASE
                                ---------------

1.          General Release.  Philip DiGennaro ("DiGenarro") for himself and on
            ---------------
     behalf of his attorneys, heirs, assigns, successors, executors, and
     administrators, IRREVOCABLY AND UNCONDITIONALLY RELEASES, ACQUITS, AND
     FOREVER DISCHARGES FiberNet Telecom Group, Inc. ("FiberNet") and Devnet,
     LLC ("Devnet") (collectively FiberNet and Devnet shall be hereinafter
     referred to as the "Company"), its current and former parents subsidiaries,
     affiliates and related corporations, firms, associations, partnerships, and
     entities, their shareholders, successors and assigns, and the current and
     former owners, shareholders, directors, officers, employees, agents,
     attorneys, representatives, and insurers of said corporations, firms,
     associations, partnerships, and entities, and their guardians, successors,
     assigns, heirs, executors, and administrators (hereinafter collectively
     referred to as the "Releasees"), from any and all claims (including, but
     not limited to, claims of or relating to accrued vacation pay, sick pay,
     bonus, commissions, equity or other stock plan or incentive compensation),
     complaints, grievances, liabilities, obligations, promises, agreements,
     damages, causes of action, rights, debts, demands, controversies, costs,
     losses, damages, and expenses (including attorneys' fees and expenses)
     whatsoever, arising out of any acts or omissions, whether known or unknown
     or suspected or unsuspected, and whether connected with the employment of
     DiGennaro by the Company, or the termination thereof, including, but in no
     way limited to, claims arising under the Age Discrimination in Employment
     Act of 1967, 29 U.S.C. (S) 621, et seq., as amended, Title VII of the
                                     -- ---
     Civil Rights Act of 1964, as amended, the Civil Rights Act of 1966, the
     Civil Rights Act of 1991, the American with Disabilities Act, the Worker
     Adjustment and Retraining Notification Act, The Older Workers' Benefit
     Protection Act of 1990, the Equal Pay Act, the Fair Labor Standards Act,
     the Employee Retirement Income Security Act of 1967 (ERISA), as amended, or
     any other municipal, local, state, or federal law, common or statutory,
     whether arising in contract or tort or otherwise, which may have arisen, or
     which may arise, prior to, or at the time of, the execution of this
     Release; provided that the foregoing release shall not apply to (i)
              -------- ----
     payments the Company is obligated to make pursuant to that certain
     employment letter, dated as of May , 2000, between DiGennaro, and the
     Company, (ii) COBRA rights to which DiGennaro may be entitled, or (iii)
     DiGennaro's vested rights pursuant to any compensation or benefits plans of
     the Company.

2.          Covenant Not to Sue.  DiGennaro, for himself and on behalf of his
            -------------------
     attorneys, heirs, assigns, successors, executors and administrators,
     covenants that he has not sued and in the future shall not sue, or
     otherwise consent to participate in any action against, and shall not
     assist in the instigation, commencement, maintenance, or prosecution of

                                       12
<PAGE>

     any action, suit, proceeding, or charge against, any of the Releasees based
     upon any of the claims released in paragraph 1 of this Release, nor shall
     DiGennaro testify, assist, or participate (except in response to subpoena
     or judicial order) in such action, suit, proceeding or charge, or claim
     entitlement to any relief, whether monetary or otherwise in connection
     therewith.

3.   Rights After Breach.  The Parties acknowledge and agree that in the event
     -------------------
     DiGennaro materially breaches any provision of this Release, (a) he will
     indemnify and hold the Company harmless from and against any and all
     resulting damages or loss incurred by the Company (including attorneys'
     fees and expenses) and (b) the Company shall be entitled to file
     counterclaims against DiGennaro in the event of his breach of the covenant
     not to sue (paragraph 2 hereof) and may recover from him any and all actual
     or consequential damages.

     EXECUTED in the State of ________________, County of ____________________
on this ___th day of ____________, 200_.

                              __________________________
                              Philip DiGennaro

                              FiberNet Telecom Group, Inc.

                              By:  ____________________________
                                    Michael S. Liss

                              Its:  President

                                       13<PAGE>

                                                                    EXHIBIT 10.2

SECURITIES PURCHASE AGREEMENT dated as of July 28, 2000 (the "Agreement") by and
among FIBERNET TELECOM GROUP, INC., a Delaware corporation (the "Company"), and
Nortel Networks Inc., a Delaware corporation, and any successors or assigns
thereto (the "Purchaser").

                                    PREAMBLE

          The Company wishes to sell and issue to the Purchaser shares of its
Series H Preferred Stock (as defined below), and the Purchaser desires to
purchase and accept such Preferred Stock, all upon and subject to the terms and
conditions hereof.

          NOW THEREFORE, the parties to this Agreement hereby agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

1.1    Defined Terms.  Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings assigned thereto in the
Certificate of Designation.  As used in this Agreement, the following terms
shall have the following respective meanings:

          "Act" shall mean the Securities Act of 1933, together with any
           ---
applicable regulations, as the same may be amended from time to time.

          "Affiliate", as applied to any Person, means any other Person directly
           ---------
or indirectly controlling, controlled by, or under direct or indirect common
control with, that Person.  For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.

          "Agreement" shall have the meaning given to such term in the caption.
           ---------

          "Applicable Law" shall mean, with respect to any Person, property,
           --------------
transaction or event, all present and future applicable laws, statutes,
regulations, treaties, judgments and decrees and all applicable official
directives, rules, consents, approvals, authorizations, orders, guidelines and
policies of any Governmental Authority or Persons having authority over or
applicable to such Person or any of its assets or properties.

          "Business Day" shall mean any day other than a Saturday, Sunday or a
           ------------
day on which banks are authorized or required to be closed in New York, New
York.

          "Certificate of Designation" shall mean the Certificate of Designation
           --------------------------
of the Preferred Stock of the Company.

          "Closing Date" shall mean July 28, 2000, or such other date as the
           ------------
Purchaser and the Company shall agree.
<PAGE>

          "Code" shall mean the Internal Revenue Service Code of 1986, as
           ----
amended, and the rules and regulations thereunder, as from time to time in
effect, or any successor thereto.

          "Common Stock" means the common stock, par value $.001 per share, of
           ------------
the Company.

          "Company" shall have the meaning given to such term in the caption.
           -------

          "Control" shall mean, with respect to any Person, the possession,
           -------
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

  "Environmental Claim" means any investigation, notice, notice of violation,
   -------------------
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any Governmental Authority or any other
Person, arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law, (ii) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or (iii) in
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.

  "Environmental Laws" means any and all current or future statutes, ordinances,
   ------------------
orders, rules, regulations, guidance documents, judgments, Governmental Actions,
or any other requirements of governmental authorities relating to (i)
environmental matters, including those relating to any Hazardous Materials
Activity, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to the Company or any of its Subsidiaries or any
Facility, including the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. (S) 9601 et seq.), the Hazardous Materials
                                  -- ----
Transportation Act (49 U.S.C. (S) 1801 et seq.), the Resource Conservation and
                                       -- ----
Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal Water Pollution Control
                                 -- ----
Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42 U.S.C. (S) 7401 et
                        -- ----                                         --
seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601 et seq.), the
----                                                        -- ----
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S)136 et seq.),
                                                                    -- ----
the Occupational Safety and Health Act (29 U.S.C. (S) 651 et seq.), the Oil
                                                          -- ----
Pollution Act (33 U.S.C. (S) 2701 et seq.) and the Emergency Planning and
                                  -- ----
Community Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), each as amended or
                                                 -- ----
supplemented, any analogous present or future state or local statutes or laws,
and any regulations promulgated pursuant to any of the foregoing.

  "ERISA" means the Employee Retirement Income Security Act of 1974, 29 U.S.C.
   -----
(S)(S) 1000 et seq., amendments thereto, successor statutes, and regulations or
            -- ---
guidance promulgated thereunder.

  "ERISA Affiliate" means, as applied to any Person, (i) any corporation which
   ---------------
is a member of a controlled group of corporations within the meaning of Section
414(b) of the Code of which that Person is a member; (ii) any trade or business
(whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
of which that Person is a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Code of which that

                                       2
<PAGE>

Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.  Any former ERISA Affiliate of the
Company or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of the Company or such Subsidiary within the meaning of this
definition with respect to the period such entity was an ERISA Affiliate of the
Company or such Subsidiary and with respect to liabilities arising after such
period for which the Company or such Subsidiary could be liable under the Code
or ERISA.

          "Exchange Act" shall mean the Securities Exchange of 1934, together
           ------------
with any applicable regulations, as the same may be amended from time to time.

          "Facilities" means any and all real property (including all buildings,
           ----------
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by the Company or any of its Subsidiaries or any
of their respective predecessors or Affiliates.

          "Financial Officer" of any Person shall mean its chief financial
           -----------------
officer or principal accounting officer.

          "Fiscal Year" shall mean, with respect to the Company, the one-year
           -----------
period ending on December 31 of any year.

          "Governmental Action" means all permits, authorizations,
           -------------------
registrations, consents, approvals, determinations, decrees, waivers,
privileges, certifications, environmental clearances, notices and licenses of
any Governmental Authority.

          "Governmental Authority" shall mean Congress, any legislature,
           ----------------------
assembly, council or other legislative body and any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court or any judicial or quasi-judicial body or
authority, in each case whether of or involving the United States of America or
any political subdivision thereof.

  "Hazardous Materials" means (i) any chemical, material or substance at any
   -------------------
time defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste," "acutely
hazardous waste," "radioactive waste," "biohazardous waste," "pollutant," "toxic
pollutant," "contaminant," "restricted hazardous waste," "infectious waste,"
"toxic substances," or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or which
may or could pose a

                                       3
<PAGE>

hazard to the health and safety of the owners, occupants or any Persons in the
vicinity of any Facility or to the indoor or outdoor environment.

          "Hazardous Materials Activity" means any past, current, proposed or
           ----------------------------
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect thereto.

          "Intellectual Property" means all patents, trademarks, tradenames,
           ---------------------
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of the Company or any of its Subsidiaries that are
material to the condition (financial or otherwise), business or operations of
the Company or any of its Subsidiaries.

          "Intellectual Property Rights" means all industrial and intellectual
           -----------------------------
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trade names, service marks,
service mark applications, copyright, copyright applications, know how, trade
secrets, proprietary processes and formulae, confidential information,
franchises, licenses, inventions, instructions, marketing materials, trade
dress, logos and designs, and all documentation and media constituting,
describing or relating to the foregoing, including, without limitation, manuals,
memoranda and records.

          "Judgments" shall mean all judgments, injunctions, orders and decrees
           ---------
of all courts and arbitrators in proceedings or actions in which the Person in
question is a party or by which any of its assets or properties is bound.

          "Legal Requirements" means all laws, statutes, orders, decrees,
           ------------------
injunctions, licenses, permits, approvals, authorizations, agreements and
regulations of any Governmental Authority having jurisdiction over the matter in
question.

          "Lien" shall mean any security interest, pledge, bailment, mortgage,
           ----
deed of trust, the grant of a power to confess judgment, conditional sale or
title retention agreement, charge, encumbrance, easement, reservation,
preemptive right, restriction, cloud, right of first refusal or first offer,
option, or other similar arrangement or interest in real or personal property,
other than (i) liens arising by operation of law in the ordinary course of
business that, individually and in the aggregate, do not in any material respect
interfere with the use of any of the assets subject thereto, (ii) minor
imperfections of title which do not materially detract from the value of the
property affected or materially impair the operations of the Company and (iii)
liens for taxes not yet due and payable.

          "Material Adverse Effect" shall mean (i) a material adverse effect on
           -----------------------
the business, assets, liabilities, operations, results of operations or
condition (financial or otherwise) of the Company or (ii) any impairment of the
ability of the Company to perform any of its material obligations under any
Transaction Document to which it is a party.

                                       4
<PAGE>

          "Material Contract" means any contract, lease or other agreement or
           -----------------
arrangement to which the Company or any Subsidiary is a party (other than the
Transaction Documents) (i) involving aggregate consideration payable to or by
the Company or any Subsidiary in excess of $5,000,000, or (ii) which is
otherwise material to the business, assets, operations, results of operations or
condition (financial or otherwise) of the Company or any of its Subsidiaries,
and without limiting the foregoing, shall be deemed to include each of the
agreements or arrangements set forth in Schedule 3.12(b) to this Agreement.
                                        ----------------

          "Multiemployer Plan" means a "multiemployer plan" (as defined in
           ------------------
Section 4001(a)(3) of ERISA) to which the Company or any of its Subsidiaries or
any ERISA Affiliate has contributed within the past six years or with respect to
which the Company or any of its Subsidiaries may incur any liability.

          "Organizational Document" shall mean, with respect to any Person, each
           -----------------------
instrument or other document that (i) defines the existence of such Person,
including its articles or certificate of incorporation or organization, as filed
or recorded with an applicable Governmental Authority, or (ii) governs the
internal affairs of such Person, including its by-laws, in each case as amended,
supplemented or restated.

  "Permitted Liens" means the following types of Liens, excluding (a) any such
   ---------------
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by ERISA,
and (b) any such Lien relating to or imposed in connection with any
Environmental Claim:

(i) Liens for taxes, assessments or governmental charges or claims not yet due
or payable;

(ii) Liens deemed to exist in connection with repurchase agreements;

(iii) Liens of sellers of goods to the Company or any Subsidiary arising under
Article 2 of the UCC or similar provisions of applicable law in the ordinary
course of business, covering only goods sold and securing only the unpaid
purchase price for such goods and related expenses;

(iv) statutory Liens of landlords, statutory Liens of banks and rights of set-
off, statutory Liens of carriers, warehousemen, mechanics, repairmen, workmen
and materialmen, and other Liens imposed by law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or (b) for amounts
that are overdue and that (in the case of any such amounts overdue for a period
in excess of five days) are being contested in good faith by appropriate
proceedings, so long as the Company maintains cash reserves sufficient to
discharge any such Lien;

(v) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security (exclusive of obligations for the payment of borrowed money),
incurred in the ordinary course of business (a) for amounts not yet overdue or
(b) for amounts that are overdue and that (in the case of any such amounts
overdue for a period in excess of five days) are being contested in good faith
by appropriate proceedings, so long as the Company maintains cash reserves
sufficient to discharge any such Lien;

                                       5
<PAGE>

(vi) leases or subleases granted to third parties, provided, that each such
lease or sublease (a) is in the ordinary course of business and is in connection
with the provision of co-location services by the Company or any of its
Subsidiaries and (b) does not interfere in any material respect with the
ordinary conduct of the business of the Company or any of its Subsidiaries;

(vii) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
the Company or any of its Subsidiaries;

(viii) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property; and

(ix) interests of landlords or any of their respective lenders in leases or co-
location agreements entered into by the Company or any of its Subsidiaries.

          "Person" shall be construed broadly and shall include any natural
           ------
person, company, partnership, joint venture, corporation, business trust,
unincorporated organization or Governmental Authority.

          "Qualified Public Offering"  shall mean a fully underwritten public
           -------------------------
offering (underwritten by an underwriter of national reputation) of shares of
Common Stock registered pursuant to the Securities Act with proceeds to the
Company of at least $75,000,000 (net of underwriting discounts and expenses).

          "Release" means any release, spill, emission, leaking, pumping,
           -------
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), including the
movement of any Hazardous Materials through the air, soil, surface water or
groundwater.

          "Responsible Officer" of any Person shall mean the Chief Executive
           -------------------
Officer or a Financial Officer of such Person.

          "SEC" means the Securities and Exchange Commission.
           ---

          "Solvent" or "Solvency" means, with respect to any Person as of a
           -------      --------
particular date, that on such date (i) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (ii) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature in their ordinary course, (iii) such Person is not engaged in a business
or a transaction, and is not about to engage in a business or a transaction, for
which such Person's property or assets would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (iv) the fair value of
the property or assets of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person and (v) the
present fair salable value of the assets of such Person, as a

                                       6
<PAGE>

going concern, is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which, in light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.

          "Stockholders Agreement" shall mean the Stockholders Agreement dated
           ----------------------
as of  May 7, 1999, as amended on June 30, 2000, by and among the Company and
the stockholders named therein, as amended from time to time.

          "Subsidiary" shall mean any corporation, partnership, joint venture or
           -----------
other legal entity in which the Company owns, directly or indirectly, a majority
equity interest.

          "Transaction Documents" shall mean this Agreement and the Certificate
           ---------------------
of Designation.

          "UCC" means the Uniform Commercial Code (or any similar or equivalent
           ---
legislation) as in effect in any applicable jurisdiction.

1.2  Terms Generally.

     The definitions in Section 1.1 shall apply equally to the singular and
plural forms of the terms defined.  Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation".

1.3  Cross-References.

     Unless otherwise specified, references in this Agreement or any Transaction
Document to any Article or Section are references to such Article or Section of
this Agreement or such Transaction Document, as the case may be, and references
in any Article, Section or definition to any clause are references to such
clause of such Section, Article or definition.

1.4  Accounting Terms; GAAP.

     Except as otherwise expressly provided herein, all terms of an accounting
or financial nature shall be construed in accordance with generally accepted
accounting principles ("GAAP"), consistently applied, and all financial
statements or accounting determinations required herein to be prepared or made
in accordance with GAAP shall be prepared or made in accordance with GAAP
applied on a consistent basis.

                                  ARTICLE II
                        ISSUANCE OF THE PREFERRED STOCK

2.1  Issuance of Preferred Stock.

     Subject to the terms and conditions contained herein, at the Closing (as
hereinafter defined), the Company has authorized the issuance of 426,333 shares
of Series H Preferred

                                       7
<PAGE>

Stock, $.001 par value (the "Preferred Stock"), of the Company for a purchase
                             ---------------
price of $100.00 per share (the "Purchase Price Per Share") or $42,633,333 in
                                 ------------------------
the aggregate (the "Preferred Stock Purchase Price"). The Preferred Stock
                    ------------------------------
Purchase Price shall consist of: (i) $22,500,000 to be delivered by the
Purchaser to the Company by wire transfer of immediately available funds; and
(ii) the transfer by the Purchaser of Stock Certificate No. G-1 dated June 30,
2000 (the "Series G Certificate"), representing 2,000,000 shares of Series G
           --------------------
Preferred Stock of the Company ("Series G Preferred Stock"). The transfer of the
                                 ------------------------
Series G Preferred Stock includes $133,333 of accrued dividends as of July 28,
2000 on such shares.

2.2  Agreement to Sell Preferred Stock.

     At the Closing, the Company shall sell to the Purchaser, and the Purchaser
shall purchase from the Company 426,333 shares of Preferred Stock for the
Preferred Stock Purchase Price.

2.3  Delivery of Preferred Stock.

(a)  At the Closing, the Company shall deliver to the Purchaser the stock
     certificate for the Preferred Stock to be purchased by the Purchaser (with
     such certificate registered in the name of the Purchaser), duly executed by
     the Company.

(b)  Delivery shall be made against receipt by the Company of: (i) $22,500,000
     of the Preferred Stock Purchase Price by wire transfer of immediately
     available funds; and (ii) the Series G Certificate, together with a stock
     power duly executed by Purchaser transferring the Series G Preferred Stock
     to the Company.

2.4  The Closing.

     The closing hereunder with respect to the issuance, sale and delivery of
426,333 shares of Preferred Stock (the "Closing") will take place at the offices
of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Chrysler Center, 666
Third Avenue, 25th Floor, New York, New York  10017, simultaneously with the
execution and delivery of this Agreement.

2.5  Series G Elimination and Cancellation.

     Promptly following the Closing, the Company shall take all steps necessary
to cancel all of the Series G Preferred Stock and to eliminate and cancel the
Certificate of Designation for the Series G Preferred Stock.

                                  ARTICLE III
                   REPRESENTATIONS AND WARRANTIES OF COMPANY

          The Company represents and warrants to the Purchaser as of the date
hereof as set forth below.

3.1  Organization, Etc.

     The Company and its Subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company and its Subsidiaries

                                       8
<PAGE>

have all requisite power and authority and have all governmental licenses,
approvals, consents and authorizations necessary to own or lease their
respective property and assets and to carry on their business as currently
conducted and are qualified to do business in each jurisdiction in which the
failure to so qualify or be in good standing would have a Material Adverse
Effect on the Company and its Subsidiaries.

3.2  Corporate Power and Authority; No Required Consents or Approvals.

(a)  The Company has the power to execute, deliver and perform its obligations
     under each Transaction Document to which it is a party and to issue and
     sell the Preferred Stock hereunder and to deliver the Preferred Stock to
     the Purchaser.

(b)  The execution, delivery and performance by the Company of each Transaction
     Document to which it is a party, including the issuance of Preferred Stock
     by the Company, have been duly authorized by all required corporate and
     stockholder action of the Company and will not (i) violate any provision of
     Applicable Law, any Judgment or any Organizational Document of the Company
     or any of its Subsidiaries, (ii) conflict with, result in a breach of or
     constitute (alone or with notice or lapse of time or both) a default (or
     give rise to any right of termination, modification, cancellation or
     acceleration) under any contract to which the Company or any of its
     Subsidiaries are party or (iii) result in the creation or imposition of any
     Lien upon any property of the Company or any of its Subsidiaries.

(c)  Except as set forth on Schedule 3.2, no filing with or consent or approval
                            ------------
     of, or other action by, any Governmental Authority or other Person is or
     will be required by any Applicable Law or agreement in connection with the
     execution, delivery and performance by the Company of any Transaction
     Document to which it is a party.

3.3  Enforceability.

     Each Transaction Document to which the Company is a party has been duly
executed and delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other Applicable Law affecting creditors' rights
generally or by general principles of equity.

3.4  Reports.

     The Company has timely filed the reports and schedules set forth in
Schedule 3.4 with the SEC pursuant to the Exchange Act and the regulations
------------
promulgated thereunder.  Such reports (collectively, the "SEC Reports") were
prepared in accordance, and complied as of their respective dates in all
material respects, with the requirements of the Exchange Act and the regulations
promulgated thereunder and did not as of their respective filing dates (or if
amended by a filing prior to the date hereof, then as of the date of such
amendment) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except to the extent superseded by a SEC Report filed
subsequently and prior to the date hereof.  The financial statements (including
any related notes) of the Company included in the SEC Reports complied in all
material respects with applicable

                                       9
<PAGE>

accounting requirements and all applicable laws, were prepared in conformity
with GAAP applied on a consistent basis (except as otherwise stated in the
financial statements) and present fairly the consolidated financial position,
results of operations, stockholders' equity, liabilities (contingent or
otherwise) and cash flows, as the case may be, of the Company and its
Subsidiaries as of the dates and for the period indicated, subject, in the case
of unaudited interim financial statements to: (i) the absence of certain notes
thereto; and (ii) normal year-end audit adjustments.

3.5  Securities Laws.

     The offering, sale and purchase of the Preferred Stock contemplated hereby
are exempt from registration under the Securities Act.  The issuance of all
other shares of capital stock of the Company on or before the date hereto has
been made in compliance with the Securities Act and all applicable state
securities or blue sky laws.

3.6  Capitalization and Issuance.

          (a)  The authorized capital stock of the Company as of the date hereof
is 170,000,000 shares, consisting of (i) 150,000,000 shares of Common Stock; and
(ii) 20,000,000 shares of Preferred Stock, of which (A) 133,333 shares have been
designated Series C Preferred Stock, (B) 500,000 shares have been designated
Series D Preferred Stock; (C) 750,000 shares have been designated Series E
Preferred Stock; (D) 500,000 shares have been designated Series F Preferred
Stock; and (E) 2,000,000 shares have been designated Series G Preferred Stock.
As of July 28, 2000, there were (i) 28,519,795 shares of Common Stock issued and
outstanding; (ii) (A) 83,688 shares of Series C Preferred Stock issued and
outstanding; (B) 316,376 shares of Series D Preferred Stock issued and
outstanding; (C) 305,627 shares of Series E Preferred Stock issued and
outstanding; (D) 361,731 shares of Series F Preferred Stock issued and
outstanding; and (E) 2,000,000 shares of Series G Preferred Stock outstanding;
(iii) 10,000,000 shares of Common Stock reserved for issuance upon exercise of
stock options of the Company outstanding or which may be granted pursuant to
employee stock option and similar plans; (iv) 11,921,028 shares of Common Stock
reserved for issuance upon the conversion of Preferred Stock; and (v) 10,229,591
shares of Common Stock reserved for issuance upon the exercise of warrants
outstanding. Except as set forth on Schedule 3.6, all issued and outstanding
                                    ------------
shares of capital stock of the Company are duly authorized and validly issued,
fully paid, nonassessable, free and clear of all Liens, and such shares were
issued in compliance with all applicable state, provincial and federal laws
concerning the issuance of securities. Schedule 3.6 contains a list of all
                                       ------------
management stockholders and all stockholders who, to the Company's knowledge,
own (i) preferred stock of the Company or (ii) in excess of five percent (5%) of
the Common Stock of the Company on a fully diluted basis. No shares of the
capital stock of the Company other than those described above, are issued and
outstanding. Except as set forth on Schedule 3.6, there are no preemptive or
                                    ------------
other outstanding rights, options, warrants, conversion rights or similar
agreements or understandings for the purchase or acquisition from the Company of
any shares of capital stock or other securities of the Company.

          (b) When the shares of Preferred Stock are issued and delivered to the
Purchaser against payment therefor as provided in this Agreement, the Preferred
Stock will be duly and validly issued, fully paid and nonassessable.  Upon any
conversion of a share of

                                       10
<PAGE>

Preferred Stock in accordance with the terms thereof, the shares of Common Stock
into which such share of Preferred Stock is converted will be duly and validly
issued, fully paid and nonassessable. The form of certificate evidencing the
Preferred Stock complies with all applicable requirements of Delaware law.

3.7  Solvency.

     Both before and after giving effect to the transactions contemplated by
this Agreement, the Company is and will be Solvent.

3.8  No Material Adverse Effect.

     Since December 31, 1999, no development, event or change in respect of the
Company or any of its Subsidiaries and no development, event or change in
respect of the telecommunications market in which the Company or any of its
Subsidiaries is or will be conducting its business, has occurred that has caused
or evidences, either in any case or in the aggregate, a Material Adverse Effect.

3.9  Title to Properties; Liens; Real Property; Condition; Use.

            (a)  Title to Properties; Liens.  The Company and each of its
Subsidiaries have (i) good marketable and insurable fee simple title to (in the
case of fee interests in real property), (ii) valid leasehold interests in (in
the case of leasehold interests in real or personal property), or (iii) good
title to (in the case of all other personal property), all of their respective
material properties and assets reflected in the most recent financial statements
delivered pursuant to this Agreement, except for assets disposed of since the
date of such financial statements in the ordinary course of business.  Except as
permitted by this Agreement and set forth on Schedule 3.9(a), all such
                                             ---------------
properties and assets are held free and clear of Liens (other than Permitted
Liens).

          (b)  Real Property.  As of the Closing Date, Schedule 3.9(b) contains
                                                       ---------------
an accurate and complete list of (i) all material properties owned by the
Company or any of its Subsidiaries and (ii) all material leases, subleases or
assignments of leases (together with all amendments, modifications, supplements,
renewals or extensions of any thereof) affecting real estate or properties owned
or leased by the Company or any of its Subsidiaries regardless of whether the
Company or such Subsidiary is the landlord or tenant (whether directly or as an
assignee or successor in interest) under such lease, sublease or assignment.

          (c)  Condition; Use.  All of the material tangible properties and
assets of the Company and its Subsidiaries are in good operating condition an
repair, normal wear and tear excepted, and reasonably fit for their intended
use.  The Company and its subsidiaries enjoy peaceful and undisturbed possession
and use of its leasehold interests in any tangible properties or tangible
assets.

3.10  Litigation; Adverse Facts.

                                       11
<PAGE>

     Except as set forth in Schedule 3.10, there are no actions, suits,
                            -------------
proceedings, arbitrations or governmental investigations at law or in equity, or
before or by any arbitrator or Governmental Instrumentality, domestic or foreign
(including any Environmental Claims) that are pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any property of the Company or any of its Subsidiaries, which,
if adversely determined, could reasonably be expected to have a Material Adverse
Effect.  Neither the Company nor any of its Subsidiaries (i) is in violation of
any applicable Legal Requirement (including Environmental Laws) or (ii) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which, with respect to any such violations
or defaults occurring after the Closing Date, could reasonably be expected to
have a Material Adverse Effect.

3.11  Payment of Taxes.

     All tax returns and reports of the Company and each Subsidiary of the
Company required to be filed by any such Person have been timely filed, and all
taxes required to be paid with respect to such tax returns to be due and payable
and all material assessments, fees and other governmental charges upon the
Company and each Subsidiary of the Company and upon their respective properties,
assets, employees, income, businesses and franchises which are due and payable
have been paid when due and payable.  The Company knows of no proposed tax
assessment against the Company or any of its Subsidiaries which could reasonably
be expected to have a Material Adverse Effect that is not being actively
contested by the Company or such Subsidiary in good faith and by appropriate
proceedings and for which reserves or other appropriate provisions, if any, as
shall be required in conformity with GAAP shall not have been made or provided
therefor.

3.12  Performance of Agreements; Material Contracts.

            (a) Neither the Company nor any of its Subsidiaries is in default in
the performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any of its Material Contracts and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, or that would permit the counterparty to any
Material Contract to terminate the Material Contract to which it is a party.

            (b) Schedule 3.12(b) contains an accurate and complete list of all
            --------------------
the Material Contracts in effect on the Closing Date.  Except as described on
Schedule 4.9.B, to the knowledge of the Company, all such Material Contracts are
in full force and effect and no defaults currently exist thereunder.  Any
description of the Material Contracts in the SEC Reports are accurate.

3.13  Governmental Regulation.

     Neither the Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, or
the Interstate Commerce Act, nor is an "investment company" as defined in the
Investment Company Act of 1940, or subject

                                       12
<PAGE>

to regulation under the Investment Company Act of 1940, or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Transaction
Documents unenforceable.

3.14  Labor Matters.

     Except as disclosed and described in Schedule 3.14, there are no collective
                                          -------------
bargaining agreements or Multiemployer Plans covering the employees of the
Company as of the Closing Date. The Company is not engaged in any unfair labor
practice that could reasonably be expected to have a Material Adverse Effect.
There is no strike, labor dispute, union organizing activity, slowdown or
stoppage pending or, to the best knowledge of the Company, threatened against
the Company which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

3.15  Environmental Protection.

     Except as set forth in Schedule 3.15 annexed hereto:
                            -------------

     (i) neither the Company nor any of its Subsidiaries nor any of their
respective Facilities are subject to any outstanding written order, consent
decree or settlement agreement with any Person relating to (a) any Environmental
Law, (b) any Environmental Claim, or (c) any Hazardous Materials Activity;

     (ii) neither the Company nor any of its Subsidiaries has received any
letter or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9604) or
any comparable state law;

     (iii) there are and, to the Company's knowledge, have been, no conditions,
occurrences, or Hazardous Materials Activities on any Facility which could
reasonably be expected to form the basis of an Environmental Claim against the
Company or any of its Subsidiaries;

     (iv) neither the Company nor any of its Subsidiaries nor, to the Company's
knowledge, any predecessor of the Company or any of its Subsidiaries has filed
any notice under any Environmental Law indicating past or present treatment of
Hazardous Materials at any Facility, and none of the Company's or any of its
Subsidiaries' operations involves the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent; and

     (v) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws could not, individually or
in the aggregate, reasonably be expected to give rise to a Material Adverse
Effect.

Notwithstanding anything in this Section 4.14. to the contrary, no event or
condition has occurred or is occurring with respect to the Company or any of its
Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 3.15 annexed hereto, which individually or in the aggregate has had
   -------------
or could reasonably be expected to have a Material Adverse Effect.

                                       13
<PAGE>

3.16   Immunity.

     Neither the Company nor any of its Subsidiaries is entitled to claim for
itself or any of its assets immunity from suit, execution, attachment or other
legal process in any proceeding in any jurisdiction in connection with any of
the Transaction Documents to which it is a party.

3.17  Additional Matters.

            (a) Disclosure.  The written factual information furnished by (or
based on written information furnished by) the Company to the Purchaser in
connection with the negotiation of the Transaction Documents (excluding any
financial projections and other estimates or views of future circumstances),
taken as a whole, does not contain, as of the Closing Date, any untrue
statements of material fact and does not omit to state, as of the Closing Date,
any material fact necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not materially
misleading (unless superseded or corrected and disclosed in writing to the
Purchaser prior to the Closing Date).

          (b) Licenses and Permits.  The Company has obtained and holds in full
force and effect, free from burdensome restrictions, all Governmental Actions,
franchises, leases, qualifications, easements, rights of way and other rights
and approvals which are necessary for the operation of its business as presently
conducted, except where the failure to obtain such rights and approvals,
individually and in the aggregate, could not be reasonably expected to have a
Material Adverse Effect.  The Company is not in violation of the terms or
conditions of any such Governmental Action, franchise, lease, qualification,
easement, right of way, right or approval, which violation could reasonably be
expected to have a Material Adverse Effect.

          (c) Intellectual Property.  The Company has obtained and holds in full
force and effect the Intellectual Property, free from burdensome restrictions,
which is necessary for the operation of its business as presently conducted
except for that Intellectual Property which the failure to own or license could
not reasonably expected to have a Material Adverse Effect.  No product, process,
method, substance, part or other material presently sold or employed by the
Company in connection with such business infringes any Intellectual Property
owned by any other Person, except as could not, individually and in the
aggregate, reasonably be expected to have a Material Adverse Effect.  All of the
material Intellectual Property owned or used by the Company as of the Closing
Date is set forth in Schedule 3.17.
                     -------------

          (d) Year 2000.  Any reprogramming required to permit the proper
functioning, in and following the year 2000, of the Company's and each of its
Subsidiaries' computer systems and equipment containing embedded microchips
(including systems and equipment supplied by others or with which the Company's
or any of its Subsidiaries' systems interface) which the Company or any of its
Subsidiaries possesses as of the date this representation is made or deemed made
and the testing of all such systems and equipment, as so reprogrammed, was
completed by January 1, 2000.  The computer and management information systems
of the Company and each of its Subsidiaries are, and, with ordinary course
upgrading and maintenance, will continue to be, sufficient to permit the Company
and each of its Subsidiaries to conduct its business without causing a Material
Adverse Effect.

                                       14
<PAGE>

3.18  Subsidiaries.

          All of the Subsidiaries of the Company are identified in Schedule 3.18
                                                                   -------------
annexed hereto.  The equity interests of each of the Subsidiaries of the Company
are identified in Schedule 3.18 annexed hereto and such equity interests are
                  -------------
duly authorized, validly issued and fully paid and nonassessable.  Each of the
Subsidiaries of the Company identified in Schedule 3.18 annexed hereto is (i) a
                                          -------------
corporation or limited liability company duly organized or formed, validly
existing and in good standing under the laws of its respective jurisdiction of
organization set forth therein, has all requisite corporate or limited liability
company power and authority to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted, and (ii) is
qualified to do business and is in good standing in the State of New York and in
every other jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, except where the failure to be so
qualified and in good standing could not reasonably be expected to have a
Material Adverse Effect.  Schedule 3.18 annexed hereto completely and correctly
                          -------------
sets forth the ownership of each Subsidiary of the Company.

                                   ARTICLE IV
                  REPRESENTATIONS AND WARRANTIES OF PURCHASER

4.1  Purchaser Representations and Warranties.

     The Purchaser represents and warrants to the Company as follows:

        (a)   Such Purchaser is acquiring the Preferred Stock to be purchased by
it and the Common Stock  issuable upon conversion or exercise of such Preferred
Stock, for its own account, for investment and not with a view to the
distribution thereof, nor with any present intention of distributing the same.

        (b)  Such Purchaser understands that the Preferred Stock have not been,
and any other securities of the Company issuable upon conversion or exercise of
any Preferred Stock, will not be, registered under the Act, by reason of their
issuance in a transaction exempt from the registration requirements of the Act,
and that they must be held indefinitely unless a subsequent disposition thereof
is registered under the Act or is exempt from registration.

        (c)  Such Purchaser is an "accredited investor," as defined in Rule 501
(the provisions of which are known to such Purchaser) 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 in the Company, has the ability to bear the economic
risks of its investment for an indefinite period of time, has been furnished
with and has had access to such information as reasonably requested and has had
the opportunity to ask, and has received satisfactory answers for, questions of
the Company.

4.2  Authority.

     Such Purchaser has all requisite power and authority to enter into the
Transaction Documents to which it is a party, to perform its obligations
thereunder, and to consummate the

                                       15
<PAGE>

transactions contemplated thereby. Such Purchaser has not been organized,
reorganized or recapitalized specifically for the purpose of investing in the
Company.

4.3  Enforceability.

     Such Purchaser has taken all requisite action necessary to authorize its
execution and delivery of the Transaction Documents to which it is a party, its
performance of its obligations thereunder, and its consummation of the
transactions contemplated thereby.  Each Transaction Document has been executed
and delivered by an officer or duly authorized representative of Purchaser in
accordance with such authorization.  This Agreement constitutes and, upon their
execution and delivery, the other Transaction Documents to which it is a party
will constitute, valid and binding obligations of such Purchaser, enforceable in
accordance with their terms, subject to applicable bankruptcy, reorganization,
insolvency, and similar laws affecting creditors' rights generally and to
general principles of equity.

4.4  Brokers and Finders.

     No person or entity acting on behalf or under the authority of such
Purchaser is or will be entitled to any broker's, finder's, or similar fee or
commission in connection with the transactions contemplated hereby which would
become an obligation of the Company.

                                   ARTICLE V
                             DELIVERIES AT CLOSING

5.1  Deliveries on the Closing Date.

     The Company and the Purchaser, as applicable, shall make the following
deliveries on the Closing Date:

        (a) Preferred Stock.  Purchaser shall receive a certificate for its
            ---------------
respective shares of Preferred Stock from the Company in accordance with the
provisions of Section 2.3.

        (b) Charter Amendment.  The Company shall file and the Secretary of
            -----------------
State of Delaware shall accept a Certificate of Designation setting forth the
preferences, privileges, rights and powers of the Preferred Stock substantially
in the form of Exhibit A attached hereto.
               ---------

        (c) Corporate Documents.  The Purchaser shall receive:
            -------------------

        (i) a copy of the certificate of incorporation of the Company, including
all amendments thereto, certified as of a recent date by an appropriate public
official of the State of Delaware and a certificate as to the good standing or
existence of the Company in the State of Delaware;

       (ii) a certificate of a Responsible Officer of the Company dated the
Closing Date and certifying (A) a correct and complete copy of each
Organizational Document of the Company as in effect on the Closing Date, (B) a
correct and complete copy of resolutions duly adopted by the board of directors
of the Company, authorizing the execution, delivery and performance of the
Transaction Documents, the sale of the

                                       16
<PAGE>

Preferred Stock hereunder and the other transactions contemplated hereby and
thereby, (C) that the certificate of incorporation of the Company has not been
amended since the date of the last amendment thereto shown on the certificate of
good standing or existence furnished pursuant to clause (i) above, and (D) as to
the incumbency and specimen signature of each officer of the Company who shall
execute any Transaction Document or any other document delivered in connection
herewith;

        (iii) a certificate of a Responsible Officer of the Company as to the
incumbency and specimen signature of the Responsible Officer executing the
certificate pursuant to clause (ii) above;

         (iv) a certificate from the Secretary of State of each state in the
United States of America in which the Company is required to be qualified to do
business as a foreign corporation, certifying as to such qualification and the
Company's good standing in such state.

         (d) Officer's Certificate.  Purchaser shall also receive an officer's
             ---------------------
certificate from a Responsible Officer stating the following in substantially
similar form:

            (i) the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date;

            (ii) each and all of the agreements and covenants of the Company to
be performed on or before the Closing Date pursuant to the terms hereof,
including all deliveries and obligations at Closing, shall have been duly
performed in all material respects; and

            (iii)  all governmental and third party consents and approvals
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received.

        (e) Expenses.  Purchaser shall receive its expenses pursuant to Section
            --------                                                    -------
7.4 of this Agreement.
---

        (f) Legal Opinion.  Purchaser shall receive a legal opinion from Mintz,
            -------------
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Company, covering
the matters set forth on Exhibit B attached hereto.
                         ---------

        (g) Waivers and Consents.  Purchaser shall receive, in the form of
            --------------------
Exhibit C attached hereto, a copy of the waiver of certain rights by the
---------
stockholders of the Company.

        (h) Second Amendment to Stockholders Agreement.  The Company, Purchaser
            ------------------------------------------
and Signal Equity Partners, L.P. (formerly known as Signal Capital Partners,
L.P.) shall duly execute and deliver the Second Amendment to the Stockholders
Agreement substantially in the

                                       17
<PAGE>

form of Exhibit D attached hereto, and the Company and the Purchaser shall have
        ---------
received a duly executed counterpart thereof.

                                   ARTICLE VI
                                   COVENANTS

     So long as (i) at least twenty-five (25%) percent of the shares of
Preferred Stock shall be issued and outstanding; and (ii) a Qualified IPO has
not occurred, the Company covenants as follows in this Article VI.

6.1     Transfer of Preferred Stock.  Each certificate representing Preferred
Stock shall be stamped or otherwise imprinted with a legend in substantially the
following form:

          "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
          INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933 OR THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES MAY NOT BE
          SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
          REGISTRATION OR AN EXEMPTION THEREFROM.  IN ADDITION, THE TRANSFER OF
          THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE
          STOCKHOLDERS AGREEMENT DATED AS OF MAY 7, 1999, AS AMENDED, BY AND
          AMONG FIBERNET TELECOM GROUP, INC. AND THE STOCKHOLDERS LISTED
          THEREIN.  SUCH AGREEMENT, AS AMENDED, RESTRICTS THE TRANSFER OF THESE
          SECURITIES FOR A PERIOD OF ONE YEAR FROM THEIR ORIGINAL DATE OF
          ISSUANCE.  NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE
          UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED."

6.2     Conduct of Business and Maintenance of Existence.  The Company and its
Subsidiaries will continue to engage in business of the same general type as
conducted or contemplated to be conducted by the Company and its Subsidiaries on
the Closing Date, and use their reasonable commercial efforts to preserve, renew
and keep in full force and effect their respective corporate existences and take
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of the business of the Company and
its Subsidiaries.

6.3     Financial and Other Information.  The Company and its Subsidiaries will
maintain a system of accounts in accordance with sound accounting principles and
procedures, keep full and complete financial records and at the request of the
Purchaser, the Company shall promptly deliver to the Purchaser information
regarding the securityholders, officers and directors of the Company and any of
its Subsidiaries, including, without limitation, names, addresses, types of
securities held and terms of securities held.

6.4     Access to Information.  The Company and its Subsidiaries will permit
Purchaser to inspect, at Purchaser's expense, any of the properties or books and
records of the Company and

                                       18
<PAGE>

any of the Subsidiaries, to make copies of extracts from such books and records
and to discuss the affairs and condition of the Company and the Subsidiaries
with representatives of the Company and such Subsidiaries, all to such
reasonable extent and at such reasonable times and intervals as Purchaser may
reasonably request. The Company and its Subsidiaries will furnish Purchaser
copies of all correspondence and mailings to the stockholders of the Company and
its Subsidiaries at the same time such is given or mailed to such Stockholders.

6.5     No Impairment.  The Company and the Subsidiaries will observe and
honor in good faith all rights of Purchaser under the terms of this Agreement or
any other documents executed in connection herewith, and will take no action
that would impair or otherwise prejudice such rights.

6.6     Compliance.  The Company shall comply, and cause each Subsidiary to
comply, with all applicable laws, rules, regulations and orders, noncompliance
with which could materially and adversely affect the business or condition,
financial or otherwise of the Company and the Subsidiaries, taken as a whole.

6.7  Brokerage.     The Company and its Subsidiaries agree to indemnify and hold
harmless Purchaser for any brokerage commissions, finder's fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by the Company or any Subsidiary.

6.8  Exchange Listing.  The Company will promptly apply to have listed, on a
when issued basis, on NASDAQ or any other exchange on which the Common Stock of
the Company is traded, any shares of Common Stock issuable to the Purchaser upon
the conversion of the Preferred Stock by the Purchaser.

6.9  Hart-Scott-Rodino Filings.

  The  Company will make any filings required to be made by the Company under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, following
receipt of notice from the Purchaser that it intends to convert its Preferred
Stock and advice from counsel that such filing is required.  The Company shall
notify the Purchaser at least 60 days in advance of when the Company plans to
complete a Qualified Public Offering so that the Purchaser shall have adequate
time for it to determine whether filings are required under such Act and for the
Purchaser and the Company to make any required filings so that the mandatory
waiting period under that Act has expired or been terminated prior to the
mandatory conversion of the Purchaser's Preferred Stock.

6.10  Series C Preferred Stock.

  The Company will not issue any additional shares of its Series C Preferred
Stock.

6.11  Conduct of Operations.

     Except as otherwise permitted or contemplated by this Agreement or with the
written consent of Purchaser, the Company shall not (i) be merged with or into
any other corporation or entity; (ii) sell all or substantially all of its
assets to any third party; (iii) authorize, designate or

                                       19
<PAGE>

issue any shares of a new class or series of equity securities senior to the
Preferred Stock as to liquidation preference, redemption or dividends; (iv)
change in any material respect the principal business of the Company as such
business is currently conducted or as it has been proposed by the Company to the
Purchaser to be conducted; (v) repurchase any Common Stock or Preferred Stock,
other than the purchase of Common Stock from employees pursuant to agreements
with the Company as of the Closing Date to repurchase such stock; provided that
                                                                  --------
the purchase price shall not exceed the price paid by such employee for such
stock; (vi) declare or pay any dividend (other than a stock dividend) on the
Common Stock; (vii) except to the extent necessary to comply with foreign laws,
create any subsidiary in which the Company owns less than one hundred percent
(100%) of the equity securities, or permit any Subsidiary to issue any equity
securities to anyone other than the Company or a wholly-owned Subsidiary of the
Company or merge with or into any Subsidiary (other than in connection with the
transactions contemplated by the Agreement and Plan of Reorganization dated as
of June 2, 2000, by and among the Company, FiberNet Holdco, Inc., FiberNet
Merger Sub, Inc., Devnet Merger Sub, LLC, Devnet L.L.C. and F.P. Enterprises
L.L.C.); (viii) make any loans to any officers, directors or affiliates (other
than Subsidiaries) of the Company, other than (a) commission advances and travel
or miscellaneous cash advances in the ordinary course of business and (b) in
connection with the hiring and/or retention of senior executives; (ix) enter
into any business arrangement or agreement with any officer, director or
affiliate of the Company (other than (a) employment agreements, (b) stock option
agreements in accordance with the Company's Employee Equity Participation
Program or 1999 Stock Option Plan, each as amended through the date hereof or as
contemplated to be amended in the latest proxy statement filed by the Company
with the SEC and (c) transactions with Metromedia Fiber Network, Inc. ("MFN"),
Tishman Speyer Properties, LP ("TSP"), or any affiliates of MFN or TSP, which
transactions do not, in the aggregate, involve the issuance of securities
accounting for in excess of five percent (5%) of the fully diluted outstanding
Common Stock of the Company; provided, however, that agreements in effect as of
the date hereof shall not be counted against such five percent (5%) limit); (x)
enter into any arrangement or agreement which (a) conflicts with the rights of
the Purchaser with respect to its Preferred Stock, (b) restricts the Company's
performance under this Agreement or any of the other Transaction Documents or
(c) could result in the repurchase or redemption of any shares of Common Stock,
Preferred Stock or any securities convertible or exchangeable for shares of
Common Stock or Preferred Stock (other than pursuant to (a) agreements with
employees giving the Company the right to repurchase shares upon the termination
of services and (b) the terms of any redeemable preferred stock of the Company
outstanding on the date hereof); (xi) amend the Certificate of Incorporation or
Bylaws of the Company in any manner adverse to the Purchaser or the rights of
the holders of the Preferred Stock (it being understood and agreed that the
amendment of the Certificate of Incorporation for the purpose of authorizing or
issuing securities with rights and preferences junior or pari passu with the
rights and preferences of the Preferred Stock shall not be deemed to be adverse
to the Purchaser); and (xii) authorize a new stock option plan or grant plan or
amend its existing stock option plan (other than as such plan is contemplated to
be amended in the latest proxy statement filed by the Company with the SEC).

6.12  Board Observer

                                       20
<PAGE>

     Purchaser may designate an observer (an "Observer"), who will have the
right  to attend scheduled meetings of the Company's Board of Directors.  The
Observer shall be entitled (i) to receive the same notice in respect of
scheduled meetings of the Board of Directors as required to be furnished to
members of the Board of Directors by law or the Bylaws of the Company, (ii) to
receive all information and reports which are furnished to members of the Board
of Directors at the time so furnished, and (iii) to participate in all
discussions conducted at scheduled meetings of the Board of Directors.  In the
event that the directors are discussing or voting on matters that

directly relate to any business dealings between the Company and (i) Purchaser
or (ii) any other vendor that competes with Purchaser, the Board may recuse the
Observer until such matters have been concluded.  The Observer may share any
information gained from presence at such meetings with the Purchaser and such
Purchaser's employees, officers, directors, attorneys and advisors
(collectively, the "Purchaser's Representatives") only on an "as needed" basis,
but such information shall otherwise be kept confidential by the Observer,
Purchaser and Purchaser's Representatives.

                                  ARTICLE VII

                             COVENANTS OF PURCHASER

7.1  Conversion.

     If the holder of a Majority in Interest (as defined in the Stockholders
Agreement) has irrevocably elected to have the stockholders bound by the
Stockholders Agreement (other than the Purchaser) convert all of their shares of
preferred stock of the Company into shares of Common Stock, that the Purchaser
may refuse, if requested, to convert its shares of Preferred Stock into shares
of Common Stock, except that the Purchaser may not refuse to do so if such
refusal is based primarily on Purchaser's desire or intent to cause the Company
to agree to purchase more equipment and/or software from the Purchaser or to
prevent the Company from purchasing equipment and/or software from another
vendor.

                                  ARTICLE VIII
                                 MISCELLANEOUS

8.1  Communication.

     Subject to the express provisions of this Agreement, all communications
provided for or permitted hereunder shall be in writing, personally delivered to
an officer or other responsible employee of the addressee or sent by registered
mail, charges prepaid, or by telecopy with confirmed receipt (with hard copy to
follow), telegram or other means of recorded telecommunication, charges prepaid,
to the applicable address set forth below or to such other address as either
party hereto may from time to time designate to the other in such manner,
provided that no communication shall be sent by mail pending any threatened or
during any actual postal strike or other disruption of postal service in the
United States.  Any communication so personally delivered shall be deemed to
have been validly and effectively given on the date of such delivery.  Any
communication so sent by registered mail shall be

                                       21
<PAGE>

deemed to have been validly and effectively given on the tenth Business Day next
following the day on which it is sent. Any communication so sent by telecopy,
telegram or other means of recorded telecommunication shall be deemed to have
been validly and effectively given on the Business Day next following the day on
which it is sent.

     Communications sent to the Company shall be addressed to:

     FiberNet Telecom Group, Inc.
     570 Lexington Avenue
     New York, New York 10022
     Attention: President
     Telephone: (212) 405-6200
     Telecopier: (212) 421-8860

     With a copy  to:

     Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
     Chrysler Center
     666 Third Avenue, 25th Floor
     New York, New York 10017
     Attention:  Gordon Caplan, Esq.
     Telephone: (212) 986-7200
     Telecopier: (212) 983-3115

     Communications sent to the Purchaser shall be addressed to:

     Nortel Networks Inc.
     GMS 991 15 A40
     2221 Lakeside Blvd.
     Richardson, Texas 75082-4399
     Attention: Paul D. Day, Vice President Customer Finance North America
     Telephone:
     Telecopier: (972) 684-3679

     With a copy to:

     Jenkens & Gilchrist, a Professional Corporation
     1445 Ross Avenue
     Suite 3200
     Dallas, Texas 75202
     Attention: Daryl Robertson, Esq.
     Telephone: (214) 855-4165
     Telecopier: (214) 855-4300

8.2  Reliance Upon and Survival of Representations, Warranties and Covenants.

                                       22
<PAGE>

     The Company acknowledges and agrees that the representations, warranties,
covenants, acknowledgements and agreements made herein are made with the
intention that they may be relied upon by Purchaser.  The Company further agrees
that by accepting the purchase of the Preferred Stock hereunder that it shall be
representing and warranting that the foregoing representations, warranties,
covenants, acknowledgements and agreements apply with the same force and effect
as if they had been made at the time of Closing and without regard to any
investigation made by Purchaser.  The Company hereby undertakes to notify
Purchaser of any change in any representation, warranty, covenant or other
information relating to such parties set forth herein that take place prior to
the Closing.  The representations and warranties of the Company contained herein
shall survive the Closing of the transactions contemplated hereby and will
continue in full force and effect for a period of two (2) years thereafter;
provided, however, that the representations and warranties contained in Section
3.6 shall survive indefinitely.

8.3  Successors and Assigns.

     This Agreement shall inure to the benefit of and be binding on the parties
hereto, their respective successors and any assignees or transferees of some or
all of the parties' rights or obligations hereunder; provided that, except as
provided in the following sentence, neither this Agreement, nor the benefit
hereof, may be assigned by the Company without the prior written consent of the
Purchaser.

8.4  Expenses of the Purchaser.

     The Company shall be responsible for and promptly pay (i) its own fees and
expenses and (ii) the reasonable fees and out-of-pocket expenses of Purchaser,
including reasonable fees and out-of-pocket expenses of Purchaser's counsel
incurred in connection with the preparation, execution and delivery of this
Agreement and the other Transaction Documents and the purchase of the Preferred
Stock hereunder; provided, however, that the Company's obligation to pay the
fees and expenses of Purchaser shall in no event exceed $35,000.

8.5  GOVERNING LAW.

     (a)  ALL QUESTIONS CONCERNING THE CONSTRUCTION, INTERPRETATION AND VALIDITY
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.

     (b)  DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE
MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON.
THEREFORE, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR

                                       23
<PAGE>

REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO.

8.6  Rights and Waivers.

     (a)  The rights and remedies of Purchaser under the Transaction Documents
and in connection therewith: (i) are cumulative, (ii) may be exercised as often
and in such order as Purchaser consider appropriate, (iii) are in addition to
the rights and remedies of Purchaser under the general law, and (iv) shall not
be capable of being waived or varied except by virtue of an express waiver or
variation in writing signed by an officer of the Purchaser; and in particular
any failure to exercise or any delay in exercising any of such rights and
remedies shall, to the extent permitted by law, not operate as a waiver or
variation of that or any other such right or remedy; any defective or partial
exercise of any of such rights shall, to the extent permitted by law, not
preclude any other or future exercise of that or any other such right or remedy;
and no act or course of conduct or negotiation on the part of the Purchaser or
on its behalf shall, to the extent permitted by law, in any way preclude the
Purchaser from exercising any such right or remedy or constitute a suspension or
variation of any such right or remedy.

     (b)  No Transaction Document nor any provision thereof, may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the parties thereto.

8.7  Amendments.

     No amendments to, or modification of, this Agreement shall be made without
the written consent of the Purchaser.

8.8  Construction.

     The Company and the Purchaser acknowledge that each of them has had the
benefit of legal counsel of its own choice and has been afforded an opportunity
to review this Agreement and the other Transaction Documents with its legal
counsel and that this Agreement and the other Transaction Documents shall be
construed as if jointly drafted by the Purchaser and the Company.

8.9  Severability.

     Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, and such invalid, void or otherwise unenforceable
provisions shall be null and void.  It is the intent of the parties, however,
that any invalid, void or otherwise unenforceable provisions be automatically
replaced by other provisions which are as similar as possible in terms to such
invalid, void or otherwise unenforceable provisions but are valid and
enforceable to the fullest extent permitted by law.

8.10  Counterparts.

                                       24
<PAGE>

     This Agreement may be executed in two or more counterparts, each of which
when executed and delivered shall 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.

8.11 Headings.

     Article and Section headings used herein are for convenience of reference
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

8.12 Entire Agreement.

     This Agreement, together with the other Transaction Documents, constitutes
the entire agreement between the parties relating to the subject matter hereof
and, except as stated herein or in the instruments and documents to be executed
and delivered pursuant hereto, contains all the representations and warranties
of the respective parties relating to the subject matter hereof.

8.13 Confidentiality.

     Unless required by law, the Company will not, without the prior written
consent of the Purchaser, such consent not to be unreasonably withheld or
delayed, make reference to the Purchaser in the Company's marketing,
advertising, press releases or other information available to the public.

                                       25
<PAGE>

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

                              FIBERNET TELECOM GROUP, INC.

                              By:
                                 --------------------------------
                                  Name:
                                  Title:

                              NORTEL NETWORKS INC.

                              By:
                                 --------------------------------
                               Name:
                               Title:

                                       26

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