Document:

Exhibit
      10.1

     

    Arbinet-thexchange,
      Inc.

     

    Non-Qualified
      Stock Option Agreement

    Granted
      Under 2004 Stock Incentive Plan

     

    1. Grant
      of Option.

     

    This
      Non-Qualified Stock Option Agreement (the “Agreement”) evidences the grant by
      Arbinet-thexchange, Inc., a Delaware corporation (the “Company”), on September
      2, 2008 (the
      “Grant Date”) to Shawn
      F.
      O’Donnell, an employee of the Company (the “Participant”), of an option to
      purchase, in whole or in part, on the terms provided herein and in the Company’s
      2004 Stock Incentive Plan, as amended (the “Plan”), a total of 375,000 shares
      (the “Shares”) of common stock, $0.001 par value per share, of the Company
      (“Common Stock”) at $3.71 per Share. Unless earlier terminated, this option
      shall expire at 5:00 p.m., Eastern time, on September 2, 2018 (the “Final
      Exercise Date”).

     

    It
      is
      intended that the option evidenced by this Agreement shall not be an incentive
      stock option as defined in Section 422 of the Internal Revenue Code of 1986,
      as
      amended, and any regulations promulgated thereunder (the “Code”). Except as
      otherwise indicated by the context, the term “Participant”, as used in this
      option, shall be deemed to include any person who acquires the right to exercise
      this option validly under its terms.

     

    2. Vesting
      Schedule.

     

    (a) Subject
      to the terms of Section 2(b) and Section 2(c) hereof below, this option will
      become exercisable (“vest”) as to 25% of the original number of Shares on the
      first anniversary of the Grant Date and pro-rata thereafter on a monthly basis
      at the end of each successive month following the first anniversary of the
      Grant
      Date until the fourth anniversary of the Grant Date.

     

    (b) Prior
      to
      first anniversary of the Grant Date, if the Participant is discharged by the
      Company without “Cause” (as defined below) this option will vest as to that
      percentage of the original number of Shares equal to the product of (i) 2.0833
      and (ii) the number of full calendar months served by the Participant pursuant
      to the Employment Agreement dated as of the date hereof by and between the
      Participant and the Company (the “Employment Agreement”). “Cause” shall have the
      meaning, and be subject to the terms, set forth in the Employment
      Agreement.

     

    (c) Except
      as
      set forth below, in the case of a Change of Control (as defined below) of the
      Company, this option shall terminate on the effective date of such transaction,
      unless provision is made in connection with such transaction for the assumption
      of this option or the substitution for this option of a new option of the
      successor corporation or parent thereof, with appropriate adjustment as to
      the
      number and kind of shares and the per share exercise price, as provided in
      the
      Plan. In the event of a Change of Control, the Company shall give written notice
      thereof to the Participant at least twenty (20) days prior to the effective
      date
      of any such transaction or the record date on which stockholders of the Company
      entitled to participate in such transaction shall be determined, whichever
      shall
      first occur. In the event of such Change of Control, (i) the Company shall
      have
      the option (in its sole discretion) to make or provide for a cash payment to
      the
      Participant, in exchange for the cancellation thereof, in an amount equal to
      the
      difference between (A) the consideration payable, or otherwise to be received
      by
      stockholders, per share of Common Stock pursuant to a Change of Control (the
      “Sale Price”), multiplied by the number of Shares subject to this option (to the
      extent then exercisable (after taking into account any acceleration hereunder)
      at prices not in excess of the Sale Price) and (B) the aggregate exercise price
      of this option; and (ii) any unexercised portion of this option, whether or
      not
      then vested and exercisable, shall be exercisable in full for at least fifteen
      (15) days prior to the date of such termination whether or not otherwise
      exercisable during such period; provided,
      however,
      that in
      no event shall this option be exercisable after the Final Exercise
      Date.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    For
      purposes of this Agreement, a “Change of Control” shall mean:

     

    (i) a
      merger,
      consolidation or other reorganization approved by the Company’s stockholders,
      unless securities representing more than fifty percent (50%) of the total
      combined voting power of the voting securities of the successor corporation
      are
      immediately thereafter beneficially owned, directly or indirectly and in
      substantially the same proportion, by the persons who beneficially owned the
      Company’s outstanding voting securities immediately prior to such transaction;
      or

     

    (ii) a
      stockholder-approved liquidation, dissolution, sale, transfer or other
      disposition of all or substantially all of the Company’s assets; or

     

    (iii) the
      closing of any transaction or series of related transactions pursuant to which
      any person or any group of persons comprising a “group” within the meaning of
      Rule 13d-5(b)(1) of the Securities Exchange Act of 1934 Act, as amended (the
      “Exchange Act”) (other than the Company or a person that, prior to such
      transaction or series of related transactions, directly or indirectly controls,
      is controlled by or is under common control with, the Company) becomes directly
      or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the
      Exchange Act) of securities possessing (or convertible into or exercisable
      for
      securities possessing) more than fifty percent (50%) of the total combined
      voting power of the Company’s securities (as measured in terms of the power to
      vote with respect to the election of Board members) outstanding immediately
      after the consummation of such transaction or series of related transactions,
      whether such transaction involves a direct issuance from the Company or the
      acquisition of outstanding securities held by one or more of the Company’s
      existing stockholders.

     

    (d) The
      right
      of exercise shall be cumulative so that to the extent this option is not
      exercised in any period to the maximum extent permissible it shall continue
      to
      be exercisable, in whole or in part, with respect to all Shares for which it
      is
      vested until the earlier of the Final Exercise Date or the termination of this
      option under Section 2(c) hereof, Section 3 hereof or the Plan.

     

    3. Exercise
      of Option.

     

    (a) The
      Participant may exercise this option only in the following manner: from time
      to
      time on or prior to the Final Exercise Date of this option, the Participant
      may
      give written notice to the Company of his or her election to purchase some
      or
      all of the Shares purchasable at the time of such notice. This notice shall
      specify the number of Shares to be purchased.

     

    Payment
      of the purchase price for the Shares may be made by one or more of the following
      methods: (i) in cash or by check payable to the order of the Company;
      (ii) by the Participant delivering to the Company a properly executed
      exercise notice together with irrevocable instructions to a broker to promptly
      deliver to the Company cash or a check payable and acceptable to the Company
      to
      pay the option purchase price and any required tax withholding;
      (iii) through the delivery of shares of Common Stock that have been
      purchased by the Participant on the open market or that are beneficially owned
      by the Participant and are not then subject to any restrictions under any
      Company plan and that otherwise satisfy any holding periods as may be required
      by the Board; or (iv)  a combination of (i), (ii) and (iii) above. Payment
      instruments will be received subject to collection.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Termination
      of Relationship with the Company.
      If the
      Participant ceases to be an employee, officer or director of, or consultant
      or
      advisor to, the Company or any other entity the employees, officers, directors,
      consultants, or advisors of which are eligible to receive option grants under
      the Plan (an “Eligible Participant”) for any reason, then, except as provided in
      Sections 3(c) and (d) below, the right to exercise this option shall terminate
      three months after such cessation (but in no event after the Final Exercise
      Date), provided that
      this
      option shall be exercisable only to the extent that the Participant was entitled
      to exercise this option on the date of such cessation. 

     

    Notwithstanding
      the foregoing, if the Participant, prior to the Final Exercise Date, violates
      the non-competition or confidentiality provisions of any employment contract,
      confidentiality and nondisclosure agreement or other agreement between the
      Participant and the Company, the right to exercise this option shall terminate
      immediately upon written notice to the Participant from the Company describing
      such violation.

    

    (c) Exercise
      Period Upon Death or Disability.
      If the
      Participant dies or becomes disabled (within the meaning of
      Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or
      she is an Eligible Participant and the Company has not terminated such
      relationship for “cause” as specified in Section 3(d) below, this option shall
      be exercisable, within the period of one year following the date of death or
      disability of the Participant, by the Participant (or in the case of death
      by an
      authorized transferee), provided that
      this
      option shall be exercisable only to the extent that this option was exercisable
      by the Participant on the date of his or her death or disability, and further
      provided that this option shall not be exercisable after the Final Exercise
      Date.

     

    (d) Discharge
      for Cause.
      If the
      Participant, prior to the Final Exercise Date, is discharged by the Company
      for
“Cause” (as defined in Section 2(b)), the right to exercise this option shall
      terminate immediately upon the effective date of such discharge.

     

    4. Withholding.

     

    No
      Shares
      will be issued pursuant to the exercise of this option unless and until the
      Participant pays to the Company, or makes provision satisfactory to the Company
      for payment of, any federal, state or local withholding taxes required by law
      to
      be withheld in respect of this option.

     

    5. Nontransferability
      of Option.

     

    This
      option may not be sold, assigned, transferred, pledged or otherwise encumbered
      by the Participant, either voluntarily or by operation of law, except by will
      or
      the laws of descent and distribution, and, during the lifetime of the
      Participant, this option shall be exercisable only by the
      Participant.

     

    6. Provisions
      of the Plan.

     

    This
      option is subject to the provisions of the Plan, a copy of which is furnished
      to
      the Participant with this option.

     

    Remainder
      of Page Intentionally Left Blank

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this option to be executed under its
      corporate seal by its duly authorized officer. This option shall take effect
      as
      a sealed instrument.

    

    
      	 	 	 	
              ARBINET-THEXCHANGE,
                INC. 

            
	 	 	 	 	 
	
              Dated:

            	September
              2, 2008	 	
              By:

            	
              /s/
                W. Terrell Wingfield, Jr.

            
	 	 	 	 	
              Name:
                W. Terrell Wingfield, Jr.

            
	 	 	 	 	
              Title:
                General Counsel and Secretary

            

    

     

    PARTICIPANT’S
      ACCEPTANCE

     

    The
      undersigned hereby accepts the foregoing option and agrees to the terms and
      conditions thereof. The undersigned hereby acknowledges receipt of a copy of
      the
      Company’s 2004 Stock Incentive Plan, as amended.

     

    
      	
              PARTICIPANT:

            
	 
	
              /s/
                Shawn F. O’Donnell

            
	
              Shawn
                F. O’Donnell

            

    

    

    Address:Exhibit
      10.2

     

    Execution
      Copy

    

     

    EMPLOYMENT
      AGREEMENT

     

    This
      EMPLOYMENT AGREEMENT (the “Agreement”) is made as of September 2, 2008
      (the “Effective Date”), by and between Arbinet-thexchange, Inc. a Delaware
      corporation with its headquarters located in New Brunswick, New Jersey (the
      “Employer”), and Shawn F. O’Donnell (the “Executive”). In consideration of the
      mutual covenants contained in this Agreement, the Employer and the Executive
      agree as follows:

     

    1. Employment.
      The
      Employer agrees to employ the Executive and the Executive agrees to be employed
      by the Employer on the terms and conditions set forth in this
      Agreement.

     

    2. Capacity.
      Subject
      to the terms and conditions of this Agreement, the Executive shall serve the
      Employer as Chief Executive Officer and President and shall have the duties,
      responsibilities and authority customary for such positions. The Executive
      shall
      report directly to the Board of Directors of Employer (the “Board of Directors”)
      and shall also serve the Employer in such additional offices incidental to
      such
      position as the Executive may be requested by the Board of Directors. In such
      capacity or capacities, the Executive shall perform such services and duties
      in
      connection with the business, affairs and operations of the Employer as may
      be
      assigned or delegated to the Executive from time to time by or under the
      authority of the Board of Directors. During the term of this Agreement, the
      Board of Directors shall nominate the Executive for reelection as a member
      of
      the Board of Directors at the annual meeting of stockholders of the Employer
      following which the Executive's term as a director expires; provided that the
      Executive shall be, at the time of such nomination, the Chief Executive Officer
      and President of the Employer; provided further that the Executive agrees to
      resign as a director of the Employer upon termination of the Executive's
      employment in accordance with Section 6 hereof. During the Transition Period
      (as
      defined below) Executive shall be permitted to devote up to ten (10) hours
      per
      week performing duties for his former employer. 

     

    3. Relocation.
      

     

    (a) The
      Executive understands and agrees that this position is a full-time based at
      the
      Employer’s headquarters in New Brunswick, New Jersey. 

     

    (b) From
      the
      date hereof until September 30, 2008 (the “Transition Period”) the
      Executive agrees to be available during the regular workweek, excluding
      Employer-wide holidays and business travel as necessitated in connection with
      the Executive’s responsibilities hereunder. During the Transition Period, the
      Executive may perform his duties either remotely or in any of the Employer’s
      offices, at the Executive’s sole discretion.

     

    (c) From
      October 1, 2008 until June 30, 2009, the Executive agrees to perform his duties
      from, and be present at, any of the Employer’s offices during the regular
      workweek, excluding Employer-wide holidays and business travel as necessitated
      in connection with the Executive’s responsibilities hereunder.

     

    (d) The
      Executive shall maintain a permanent residence in the New Jersey area no later
      than July 1, 2009.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e) Any
      failure to meet the requirements of this Section 3 due to (i) vacation time
      taken pursuant to this Agreement or the Employer’s vacation policy, or (ii)
      travel incidental to the Executive performing his obligations under this
      Agreement, shall not be deemed a breach of Section 3(b) or Section
      3(c).

     

    4. Compensation
      and Benefits.
      The
      regular compensation and benefits payable to the Executive under this Agreement
      shall be as follows:

     

    (a) Salary.
      For all
      services rendered by the Executive under this Agreement, the Employer shall
      pay
      the Executive an initial annual salary (the “Salary”) of not less than Three
      Hundred Forty Thousand Dollars ($340,000), during the initial twelve (12) months
      of employment, subject to annual merit increases based upon annual formal
      reviews by the Board of Directors or the Compensation Committee of the Board
      of
      Directors (the “Compensation Committee”), provided,
      that
      the Salary is at all time subject to increase from time to time in the
      discretion of the Board of Directors or the Compensation Committee. The Salary
      shall be payable in periodic installments in accordance with the Employer’s
      usual practice for its senior executives. 

     

    (b) Bonus.
      The
      Executive shall be entitled to participate in an annual incentive program
      established by the Board of Directors or the Compensation Committee with such
      terms as may be established by the Board of Directors or the Compensation
      Committee and mutually and reasonably agreed by the Executive;
      provided,
      that,
      (i) for the fiscal year ending December 31, 2008, Executive will have the
      opportunity to earn up to One Hundred Thirteen Thousand Dollars ($113,000)
      based
      upon the achievement of the performance objectives as mutually and reasonably
      agreed by the Executive and the Board of Directors or the Compensation
      Committee; and (ii) beginning with the fiscal year ending December 31, 2009,
      the
      Executive will have the opportunity to earn up to One Hundred Percent (100%)
      (the “Target Percentage”) of his Salary then in effect in bonus compensation
      annually based upon the achievement of both corporate performance and individual
      performance objectives, as determined by the Board of Directors or the
      Compensation Committee and mutually and reasonably agreed by the
      Executive.

     

    (c) Regular
      Benefits.
      The
      Executive shall also be entitled to participate in any qualified retirement
      plans, deferred compensation plans, supplemental retirement plans, stock option
      and incentive plans, stock purchase plans, medical insurance plans, life
      insurance plans, disability income plans, retirement plans, vacation plans,
      expense reimbursement plans and other benefit plans which the Employer may
      from
      time to time have in effect for all or most of its senior executives. Such
      participation shall be subject to the terms of the applicable plan documents,
      generally applicable policies of the Employer, applicable law and the discretion
      of the Board of Directors, the Compensation Committee or any administrative
      or
      other committee provided for in or contemplated by any such plan. Nothing
      contained in this Agreement shall be construed to create any obligation on
      the
      part of the Employer to establish any such plan or to maintain the effectiveness
      of any such plan that may be in effect from time to time.

     

    
      
        
        

      

      
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    (d) Equity
      Grant:
      Executive is currently a participant in the Employer’s 2004 Stock Option Plan,
      as amended (the “2004 Plan”) and has existing stock options which were
      previously granted to him as a member of the Board of Directors (“Director
      Grant”). The stock options issued pursuant to the Director Grant shall continue
      to vest in accordance with the terms of the 2004 Plan. Concurrent with the
      execution of this Agreement, and subject to the approval of the Board of
      Directors or the Compensation Committee, the Employer shall also grant the
      Executive an option to purchase 375,000 shares of the Employer’s common stock
      (the “2008 Grant”). In the event of a Change of Control (as defined below), the
      Executive shall become fully vested in the 2008 Grant in accordance with the
      terms of the Option Agreement (as defined below). Concurrent with the execution
      of this Agreement, the Employer and the Executive shall enter into a
      Non-Qualified Stock Option Agreement which is attached hereto as Exhibit
      A
      (the
“Option Agreement”). The vesting terms to be included in the Option Agreement
      shall provide that if the Executive’s employment is terminated by the Employer
      without Cause (as defined below) during the first twelve (12) months following
      the date of this Agreement, the 2008 Grant shall become vested as to that
      percentage of shares equal to the product of (i) 2.0833 and (ii) the number
      of
      full calendar months served by the Executive pursuant to this
      Agreement.

     

    (e) Additional
      Benefits.
      The
      Employer shall provide the following additional benefits to the
      Executive:

     

    (i) Vacation.

     

    (A) For
      fiscal year 2008, the Executive shall be entitled, as of the date hereof, to
      eight (8) working days’ paid vacation to be taken at such time or times as may
      be agreed with the Board of Directors. Following the Transition Period, it
      is
      further agreed that the Executive shall be entitled to work remotely for five
      (5) days during fiscal year 2008.

     

    (B) Beginning
      with fiscal year 2009, the Executive shall be entitled to 20 working days’ paid
      vacation during each calendar year to be taken at such time or times as may
      be
      agreed with the Board of Directors. The Executive shall accrue five (5) vacation
      days as of the first day of each calendar quarter.

     

    (C) The
      Executive may not, without the prior consent of the Board of Directors, carry
      forward any unused part of his vacation entitlement to a subsequent calendar
      year. Any vacation entitlement that has not been used by the end of the calendar
      year or carried forward to the next calendar year shall be forfeited without
      pay.

     

    (D) Upon
      termination of his employment for whatever reason the Executive shall be
      compensated for any accrued, but unused, vacation. For the purposes of
      calculating such payment in lieu or such repayment, a day’s paid vacation shall
      be taken to be the Executive’s Salary divided by 260.

     

    (E) It
      is
      agreed that the Executive shall be entitled to, at his option, take either
      a
      working day paid vacation or a working day unpaid to attend board of directors
      meetings of the companies listed on Exhibit
      B.

     

    (ii) Reimbursement
      of Business Expenses.
      The
      Employer shall reimburse the Executive for all reasonable expenses incurred
      by
      him in performing services during the term of this Agreement, in accordance
      with
      the Employer’s policies and procedures for its senior executive officers, as in
      effect from time to time.

     

    
      
        
        

      

      
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    (iii) Commuting,
      Living and Relocation Expenses.
      

     

    (A) During
      the Transition Period, the Executive shall be entitled to reimbursement by
      the
      Employer for reasonable and documented out-of-pocket expenses incurred by him
      for living expenses in the New Jersey area and weekly travel to and from the
      Executive’s residence in the Dallas, Texas area.

     

    (B) After
      the
      Transition Period and until the earlier of July 1, 2009 or the
      Executive’s relocation to the New Jersey area, the Executive shall be entitled
      to reimbursement by the Employer for up to Twelve Thousand Dollars ($12,000)
      per
      month of the Executive’s reasonable and documented out-of-pocket expenses
      incurred by him for living expenses in the New Jersey area and travel to and
      from the Executive’s residence in the Dallas, Texas area.

     

    (C) The
      Executive shall be entitled to reimbursement for up to Seventy-Five Thousand
      Dollars ($75,000) of the Executive’s documented relocation and moving expenses
      related to his relocation to the New Jersey area.

     

    (iv) Indemnification.
      From
      and after the date hereof, Executive will be included under the Employer’s
      directors and officers liability insurance policy, with the same coverage as
      is
      provided to other directors or officers of the Employer in respect of their
      service to the Employer, and such coverage will continue without interruption
      for so long as the Employer, or its successors and assigns, maintains such
      coverage for its officers and directors.

     

    (v) Legal
      Fees.
      The
      Employer shall reimburse the Executive for all reasonable and documented
      attorney and professional fees incurred by the Executive in connection with
      the
      negotiation and review of the terms of employment and this
      Agreement.

     

    (f) Exclusivity
      of Salary and Benefits.
      The
      Executive shall not be entitled to any payments or benefits other than those
      provided under this Agreement. 

     

    5. Extent
      of Service.
      During
      the Executive’s employment under this Agreement, the Executive shall, subject to
      the direction and supervision of the Board of Directors, devote the Executive’s
      full business time, best efforts and business judgment, skill and knowledge
      to
      the advancement of the Employer’s interests and to the discharge of the
      Executive’s duties and responsibilities under this Agreement. The Executive
      shall not engage in any other business activity, except as may be approved
      by
      the Board of Directors; provided
      that
      nothing in this Agreement shall be construed as preventing the Executive
      from:

     

    (a) investing
      the Executive’s assets in any company or other entity in a manner not prohibited
      by Section 8(d) and in such form or manner as shall not require any material
      activities on the Executive’s part in connection with the operations or affairs
      of the companies or other entities in which such investments are
      made;

     

    
      
        
        

      

      
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    (b) engaging
      in religious, charitable or other community or non-profit activities that do
      not
      impair the Executive’s ability to fulfill the Executive’s duties and
      responsibilities under this Agreement; or

     

    (c) serving
      as a member of the board of directors of one public and one private company,
      including the company listed on Exhibit
      B
      attached
      hereto; provided
      that at
      no time during the term of this Agreement may the Executive serve as a member
      of
      the board of directors for more than one (1) private company and one (1) other
      public company, excluding the Employer.

     

    6. Termination.
      The
      Executive’s employment under this Agreement shall terminate under the following
      circumstances set forth in this Section 6.

     

    (a) Termination
      by the Employer for Cause.
      The
      Executive’s employment under this Agreement may be terminated by the Employer
      for Cause (as defined below) without further liability on the part of the
      Employer effective immediately upon a vote of the Board of Directors and written
      notice to the Executive. Only the following shall constitute “Cause” for such
      termination:

     

    (i) the
      Executive’s willful misconduct in the performance of his duties to the
      Employer;

     

    (ii) the
      Executive’s conviction of or plea of guilty or any plea other than “not guilty”
to a felony;

     

    (iii) the
      violation by the Executive of any material provision of this Agreement, which
      is
      not cured within thirty (30) days after written notice is given to the Executive
      by the Employer specifying the events or circumstances allegedly giving rise
      to
      such breach; 

     

    (iv) the
      Executive’s failure to maintain a permanent residence in the New Jersey area by
      no later than July 1, 2009; or

     

    (v) the
      Executive’s dishonesty, misappropriation or fraud with regard to the property of
      the Employer or its affiliates.

     

    (b) Termination
      by the Executive for Good Reason.
      The
      Executive’s employment under this Agreement may be terminated by the Executive
      for Good Reason (as defined below). For purposes of this Agreement, “Good
      Reason” shall mean that that the Executive has complied with the Good Reason
      Process (as defined below) following the occurrence of any of the following
      events: 

     

    (i) a
      material diminution or other substantive adverse change, not consented to by
      the
      Executive, in the nature or scope of the Executive’s responsibilities,
      authorities, powers, functions or duties; 

     

    
      
        
        

      

      
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    (ii) an
      involuntary reduction in the Executive’s Salary or target bonus except for
      across-the-board reductions similarly affecting all or substantially all senior
      management employees; 

     

    (iii) a
      breach
      by the Employer of any of its other material obligations under this Agreement;
      

     

    (iv) a
      material change in the geographic location at which the Executive must perform
      his services; or

     

    (v) any
      requirement that Executive report to someone other than the Board of Directors.
      

     

    “Good
      Reason Process” shall mean that: (A) the Executive reasonably determines that a
“Good Reason” event has occurred; (B) the Executive notifies the Employer in
      writing of the occurrence of the Good Reason event within 90 days of the
      occurrence of such event; (C) the Executive cooperates with the Employer’s
      efforts, for a period not less than 30 days following such notice, to modify
      the
      Executive’s employment situation in a manner acceptable to the Executive and the
      Employer; and (D) notwithstanding such efforts, one or more of the Good Reason
      events continues to exist and has not been modified in a manner acceptable
      to
      the Executive. If the Employer cures the Good Reason event in a manner
      acceptable to the Executive during the thirty (30) day period, Good Reason
      shall
      be deemed not to have occurred.

     

    (c) Termination
      by the Employer without Cause.
      Subject
      to the payment of Termination Benefits (as defined below), the Executive’s
      employment under this Agreement may be terminated by the Employer without Cause
      upon written notice to the Executive.

     

    (d) Death.
      The
      Executive’s employment with the Employer shall terminate upon his
      death.

     

    (e) Disability.
      If the
      Executive shall be disabled so as to be unable to perform the essential
      functions of the Executive’s then existing position or positions under this
      Agreement with or without reasonable accommodation for a period of 30
      nonconsecutive days or more within any six (6) month period, the Board of
      Directors may, upon ten (10) days prior written notice, terminate the
      Executive’s employment hereunder. Notwithstanding any such termination, the
      Executive shall continue to receive the Executive’s full Salary (less any
      disability pay or sick pay benefits to which the Executive may be entitled
      under
      the Employer’s policies) and benefits under Section 4 of this Agreement (except
      to the extent that the Executive may be ineligible for one or more such benefits
      under applicable plan terms) for a period of time equal to six (6) months,
      and
      the Executive’s employment may be terminated by the Employer at any time
      thereafter. If any question shall arise as to whether during any period the
      Executive is disabled so as to be unable to perform the essential functions
      of
      the Executive’s then existing position or positions with or without reasonable
      accommodation, the Executive may, and at the request of the Employer shall,
      submit to the Employer a certification in reasonable detail by a physician
      selected by the Employer to whom the Executive or the Executive’s guardian has
      no reasonable objection as to whether the Executive is so disabled or how long
      such disability is expected to continue, and such certification shall for the
      purposes of this Agreement be conclusive of the issue. The Executive shall
      cooperate with any reasonable request of the physician in connection with such
      certification. If such question shall arise and the Executive shall fail to
      submit such certification, the Employer’s determination of such issue shall be
      binding on the Executive. Nothing in this Section 6(e) shall be construed to
      waive the Executive’s rights, if any, under existing law including, without
      limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601
et
      seq.
      and the
      Americans with Disabilities Act, 42 U.S.C. §12101 et
      seq. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    7. Compensation
      Upon Termination.

     

    (a) Termination
      Generally.
      If the
      Executive’s employment with the Employer is terminated for any reason during the
      term of this Agreement, the Employer shall pay or provide to the Executive
      (or
      to his authorized representative or estate) any earned but unpaid Salary, unpaid
      expense reimbursements, accrued but unused vacation and any vested benefits
      the
      Executive may have under any employee benefit plan of the Employer (the “Accrued
      Benefit”).

     

    (b) Termination
      by the Employer Without Cause Before a Change of Control.
      In the
      event of termination of the Executive’s employment with the Employer before a
      Change of Control pursuant to Section 6(c) above and subject to the Executive’s
      agreement to a release of any and all legal claims in a form satisfactory to
      the
      Employer (excluding any indemnification or other obligations hereunder which
      survive termination of this Agreement), the Employer shall provide to the
      Executive the following termination benefits (“Termination Benefits”):

     

    (i) a
      lump
      sum payment equal to one (1) times the Executive’s Salary at the rate then in
      effect pursuant to Section 4(a) within twenty (20) days following termination
      of
      the Executives employment;

     

    (ii) an
      amount
      equal to any employer contribution that would have been made by the Employer
      pursuant to any retirement plan of the Employer on the Executive’s behalf had
      the Executive remained employed by the Employer during the twelve-month period
      following the date of termination, assuming the Executive contributed the
      maximum amount to the plan; and

     

    (iii) continuation
      of group health plan benefits to the extent authorized by and consistent with
      29
      U.S.C. § 1161 et seq. (commonly known as “COBRA”) for twelve (12) months or
      until the Executive commences employment, if earlier, subject to payment of
      premiums by the Executive at the active employees’ rate.

     

    Notwithstanding
      the foregoing, the amounts paid to the Executive under Section 7(b)(ii) and
      Section 7(b)(iii) shall not exceed Twenty-Five Thousand Dollars ($25,000) in
      the
      aggregate. Notwithstanding the foregoing, nothing in this Section 7(b) shall
      be
      construed to affect the Executive’s right to receive COBRA continuation entirely
      at the Executive’s own cost to the extent that the Executive may continue to be
      entitled to COBRA continuation after the Executive’s right to cost sharing under
      Section 7(b)(iii) ceases. The Executive shall be obligated to give prompt notice
      of the date of commencement of any employment during the benefits continuation
      period and shall respond promptly to any reasonable inquiries concerning any
      employment in which the Executive engages during the benefits continuation
      period.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    The
      Executive shall not be obligated or required to mitigate the amount of any
      payment provided for in this Agreement either by seeking employment or
      otherwise, and such amounts shall not be reduced by any remuneration the
      Executive may earn from other employment following his termination from the
      Employer.

     

    (c) Termination
      by the Employer with Cause.
      If the
      Executive’s employment is terminated by the Employer with Cause under Section
      6(a), the Employer shall have no further obligation to the Executive other
      than
      payment of his Accrued Benefit.

     

    (d) Termination
      by the Employer Without Cause or by the Executive for Good Reason following
      a
      Change of Control.
      In the
      event of termination of the Executive’s employment with the Employer pursuant to
      either Section 6(b) or Section 6(c) above within twelve (12) months
      following a Change of Control and subject to the Executive’s agreement to a
      release of any and all legal claims in a form satisfactory to the Employer
      (excluding any indemnification or other obligations hereunder which survive
      termination of this Agreement), the Employer shall provide to the Executive
      the
      following termination benefits (“Termination Benefits”): 

     

    (i) a
      lump
      sum payment equal to one (1) times the Executive’s Salary at the rate then in
      effect pursuant to Section 4(a) within twenty (20) days following termination
      of
      the Executive’s employment;

     

    (ii) a
      lump
      sum payment equal to the bonus compensation paid to the Executive in the
      immediately preceding fiscal year;

     

    (iii) an
      amount
      equal to any employer contribution that would have been made by the Employer
      pursuant to any retirement plan of the Employer on the Executive’s behalf had
      the Executive remained employed by the Employer during the twelve-month period
      following the date of termination, assuming the Executive contributed the
      maximum amount to the plan; and

     

    (iv) continuation
      of group health plan benefits to the extent authorized by and consistent with
      29
      U.S.C. § 1161 et seq. (commonly known as “COBRA”) for twelve (12) months or
      until the Executive commences employment, if earlier, subject to payment of
      premiums by the Executive at the active employees’ rate.

     

    Notwithstanding
      the foregoing, the amounts paid to the Executive under Section 7(d)(iii) and
      Section 7(d)(iv) shall not exceed Twenty-Five Thousand Dollars ($25,000) in
      the
      aggregate. Notwithstanding the foregoing, nothing in this Section 7(d) shall
      be
      construed to affect the Executive’s right to receive COBRA continuation entirely
      at the Executive’s own cost to the extent that the Executive may continue to be
      entitled to COBRA continuation after the Executive’s right to cost sharing under
      Section 7(d)(iv) ceases. The Executive shall be obligated to give prompt notice
      of the date of commencement of any employment during the benefits continuation
      period and shall respond promptly to any reasonable inquiries concerning any
      employment in which the Executive engages during the benefits continuation
      period.

     

    The
      Executive shall not be obligated or required to mitigate the amount of any
      payment provided for in this Agreement either by seeking employment or
      otherwise, and such amounts shall not be reduced by any remuneration the
      Executive may earn from other employment following his termination from the
      Employer.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (e) Definition
      of Change of Control.
      For
      purposes of this Agreement, a “Change of Control” shall mean:

     

    (i) a
      merger,
      consolidation or other reorganization approved by the Employer’s stockholders,
      unless securities representing more than fifty percent (50%) of the total
      combined voting power of the voting securities of the successor corporation
      are
      immediately thereafter beneficially owned, directly or indirectly and in
      substantially the same proportion, by the persons who beneficially owned the
      Employer’s outstanding voting securities immediately prior to such transaction;
      or

     

    (ii) a
      stockholder-approved liquidation, dissolution, sale, transfer or other
      disposition of all or substantially all of the Employer’s assets;
      or

     

    (iii) the
      closing of any transaction or series of related transactions pursuant to which
      any person or any group of persons comprising a “group” within the meaning of
      Rule 13d-5(b)(1) of the Securities Exchange Act of 1934 Act, as amended (the
      “Exchange Act”) (other than the Employer or a person that, prior to such
      transaction or series of related transactions, directly or indirectly controls,
      is controlled by or is under common control with, the Employer) becomes directly
      or indirectly the beneficial owner (within the meaning of Rule 13d-3 of the
      Exchange Act) of securities possessing (or convertible into or exercisable
      for
      securities possessing) more than fifty percent (50%) of the total combined
      voting power of the Employer’s securities (as measured in terms of the power to
      vote with respect to the election of Board members) outstanding immediately
      after the consummation of such transaction or series of related transactions,
      whether such transaction involves a direct issuance from the Employer or the
      acquisition of outstanding securities held by one or more of the Employer’s
      existing stockholders.

     

    (f) Payment
      of Termination Benefits.
      Anything in this Agreement to the contrary notwithstanding, if at the time
      of
      the Executive’s termination of employment, the Executive is considered a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the
      Internal Revenue Code of 1986, as amended (the “Code”), and if any payment that
      the Executive becomes entitled to under this Agreement is considered deferred
      compensation subject to interest and additional tax imposed pursuant to Section
      409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i)
      of the Code, then no such payment shall be payable prior to the date that is
      the
      earlier of (i) six (6) months after the Executive’s separation from service, or
      (ii) the Executive’s death, and the initial payment shall include a catch-up
      amount covering amounts that would otherwise have been paid during the first
      six-month period but for the application of this Section 7(f). Any such deferred
      payment shall earn simple interest calculated at the short-term applicable
      federal rate in effect on the date of the Executive’s separation from service.
      The parties intend that this Agreement will be administered in accordance with
      Section 409A of the Code. The parties agree that this Agreement may be amended,
      as reasonably requested by either party, and as may be necessary to fully comply
      with Section 409A of the Code and all related rules and regulations in order
      to
      preserve the payments and benefits provided hereunder without additional cost
      to
      either party.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    8. Confidential
      Information, Noncompetition and Cooperation.

     

    (a) Confidential
      Information.
      As used
      in this Agreement, “Confidential Information” means information belonging to the
      Employer which is of value to the Employer in the course of conducting its
      business and the disclosure of which could result in a competitive or other
      disadvantage to the Employer. Confidential Information includes, without
      limitation, financial information, reports, and forecasts; inventions,
      improvements and other intellectual property; trade secrets; know-how; designs,
      processes or formulae; software; market or sales information or plans; customer
      lists; and business plans, prospects and opportunities (such as possible
      acquisitions or dispositions of businesses or facilities) which have been
      discussed or considered by the management of the Employer. Confidential
      Information includes information developed by the Executive in the course of
      the
      Executive’s employment by the Employer, as well as other information to which
      the Executive may have access in connection with the Executive’s employment.
      Confidential Information also includes the confidential information of others
      with which the Employer has a business relationship. Notwithstanding the
      foregoing, Confidential Information does not include (i) information in the
      public domain, unless due to breach of the Executive’s duties under Section 8(b)
      or (ii) otherwise known by the Executive other than by reason of his employment
      hereunder; provided
      that the
      source of such information is not known by the Executive to have disclosed
      such
      information in violation of an obligation of confidentiality owed to the
      Employer.

     

    (b) Confidentiality.
      The
      Executive understands and agrees that the Executive’s employment creates a
      relationship of confidence and trust between the Executive and the Employer
      with
      respect to all Confidential Information. At all times, both during the
      Executive’s employment with the Employer and after its termination, the
      Executive will keep in confidence and trust all such Confidential Information,
      and will not use or disclose any such Confidential Information without the
      written consent of the Employer, except as may be necessary in the ordinary
      course of performing the Executive’s duties to the Employer.

     

    (c) Documents,
      Records, etc.
      All
      documents, records, data, apparatus, equipment and other physical property,
      whether or not pertaining to Confidential Information, which are furnished
      to
      the Executive by the Employer or are produced by the Executive in connection
      with the Executive’s employment will be and remain the sole property of the
      Employer. The Executive will return to the Employer all such materials and
      property as and when requested by the Employer. In any event, the Executive
      will
      return all such materials and property immediately upon termination of the
      Executive’s employment for any reason. The Executive will not retain any such
      material or property or any copies thereof after such termination.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (d) Noncompetition
      and Nonsolicitation.
      During
      the term of this Agreement and for one (1) year thereafter, the Executive (i)
      will not, directly or indirectly, whether as owner, partner, shareholder,
      consultant, agent, employee, co-venturer or otherwise, engage, participate,
      assist or invest in any Competing Business (as defined below); (ii) will refrain
      from directly or indirectly employing, attempting to employ, recruiting or
      otherwise soliciting, inducing or influencing any person to leave employment
      with the Employer (other than terminations of employment of subordinate
      employees undertaken in the course of the Executive’s employment with the
      Employer); and (iii) will refrain from soliciting or encouraging any customer
      or
      supplier to terminate or otherwise modify adversely its business relationship
      with the Employer. The Executive understands that the restrictions set forth
      in
      this Section 8(d) are intended to protect the Employer’s interest in its
      Confidential Information and established employee, customer and supplier
      relationships and goodwill, and agrees that such restrictions are reasonable
      and
      appropriate for this purpose. For purposes of this Agreement, the term
“Competing Business” shall mean a business conducted anywhere in any
      jurisdiction where the Employer and/or its affiliates conduct such business
      as
      of the date Executive’s employment terminates, and shall be deemed to include,
      without limitation, any business activity or jurisdiction which is covered
      by or
      included in a written proposal or business plan existing on the date of the
      termination of the Executive’s employment with the Employer, which is directly
      competitive with any business which the Employer or any of its affiliates
      conducted at any time during the employment of the Executive. Notwithstanding
      the foregoing, (i) the Executive may own up to one percent (1%) of the
      outstanding stock of a publicly held corporation which constitutes or is
      affiliated with a Competing Business, and (ii) the companies listed on
Exhibit
      B
      hereto
      shall not be deemed to be a Competing Business.

     

    (e) Third-Party
      Agreements and Rights.
      The
      Executive hereby confirms that the Executive is not bound by the terms of any
      agreement with any previous employer or other party which restricts in any
      way
      the Executive’s use or disclosure of information or the Executive’s engagement
      in any business. The Executive represents to the Employer that the Executive’s
      execution of this Agreement, the Executive’s employment with the Employer and
      the performance of the Executive’s proposed duties for the Employer will not
      violate any obligations the Executive may have to any such previous employer
      or
      other party. In the Executive’s work for the Employer, the Executive will not
      disclose or make use of any information in violation of any agreements with
      or
      rights of any such previous employer or other party, and the Executive will
      not
      bring to the premises of the Employer any copies or other tangible embodiments
      of non-public information belonging to or obtained from any such previous
      employment or other party.

     

    (f) Litigation
      and Regulatory Cooperation.
      During
      and after the Executive’s employment, the Executive shall cooperate fully with
      the Employer in the defense or prosecution of any claims or actions now in
      existence or which may be brought in the future against or on behalf of the
      Employer which relate to events or occurrences that transpired while the
      Executive was employed by the Employer. The Executive’s full cooperation in
      connection with such claims or actions shall include, but not be limited to,
      being available to meet with counsel to prepare for discovery or trial and
      to
      act as a witness on behalf of the Employer at mutually convenient times. During
      and after the Executive’s employment, the Executive also shall cooperate fully
      with the Employer in connection with any investigation or review of any federal,
      state or local regulatory authority as any such investigation or review relates
      to events or occurrences that transpired while the Executive was employed by
      the
      Employer. The Employer shall reimburse the Executive for any reasonable
      out-of-pocket expenses incurred in connection with the Executive’s performance
      of obligations pursuant to this Section 8(f).

     

    (g) Injunction.
      The
      Executive agrees that it would be difficult to measure any damages caused to
      the
      Employer which might result from any breach by the Executive of the promises
      set
      forth in this Section 8, and that in any event money damages would be an
      inadequate remedy for any such breach. Accordingly, the Executive agrees that
      if
      the Executive breaches, or proposes to breach, any portion of this Agreement,
      the Employer shall be entitled, in addition to all other remedies that it may
      have, to an injunction or other appropriate equitable relief to restrain any
      such breach without showing or proving any actual damage to the
      Employer.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    9. Consent
      to Jurisdiction.
      The
      parties hereby consent to the jurisdiction of the Superior Court of the State
      of
      New York and the United States District Court for the District of New York.
      Accordingly, with respect to any such court action, the parties: (a) submit
      to
      the personal jurisdiction of such courts; (b) consent to service of process;
      and
      (c) waive any other requirement (whether imposed by statute, rule of court,
      or
      otherwise) with respect to personal jurisdiction or service of
      process.

     

    10. Integration.
      This
      Agreement constitutes the entire agreement between the parties with respect
      to
      the subject matter hereof and supersedes all prior agreements between the
      parties with respect to any related subject matter.

     

    11. Assignment;
      Successors and Assigns, etc.
      Neither
      the Employer nor the Executive may make any assignment of this Agreement or
      any
      interest herein, by operation of law or otherwise, without the prior written
      consent of the other party; provided
      that the
      Employer may assign its rights under this Agreement without the consent of
      the
      Executive in the event that the Employer shall effect a reorganization,
      consolidate with or merge into any other corporation, partnership, organization
      or other entity, or transfer all or substantially all of its properties or
      assets to any other corporation, partnership, organization or other entity.
      This
      Agreement shall inure to the benefit of and be binding upon the Employer and
      the
      Executive, their respective successors, executors, administrators, heirs and
      permitted assigns.

     

    12. Enforceability.
      If any
      portion or provision of this Agreement (including, without limitation, any
      portion or provision of any section of this Agreement) shall to any extent
      be
      declared illegal or unenforceable by a court of competent jurisdiction, then
      the
      remainder of this Agreement, or the application of such portion or provision
      in
      circumstances other than those as to which it is so declared illegal or
      unenforceable, shall not be affected thereby, and each portion and provision
      of
      this Agreement shall be valid and enforceable to the fullest extent permitted
      by
      law.

     

    13. Waiver.
      No
      waiver of any provision hereof shall be effective unless made in writing and
      signed by the waiving party. The failure of any party to require the performance
      of any term or obligation of this Agreement, or the waiver by any party of
      any
      breach of this Agreement, shall not prevent any subsequent enforcement of such
      term or obligation or be deemed a waiver of any subsequent breach.

     

    14. Notices.
      Any
      notices, requests, demands and other communications provided for by this
      Agreement shall be sufficient if in writing and delivered in person or sent
      by a
      nationally recognized overnight courier service or by registered or certified
      mail, postage prepaid, return receipt requested, to the Executive at the last
      address the Executive has filed in writing with the Employer or, in the case
      of
      the Employer, at its main offices, attention of the Chairman of the Board of
      Directors, and shall be effective on the date of delivery in person or by
      courier or three (3) days after the date mailed.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    15. Amendment.
      This
      Agreement may be amended or modified only by a written instrument signed by
      the
      Executive and by a duly authorized representative of the Employer.

     

    16. Governing
      Law.
      This is
      a New York contract and shall be construed under and be governed in all respects
      by the laws of the State of New York, without giving effect to the conflict
      of
      laws principles of such State. With respect to any disputes concerning federal
      law, such disputes shall be determined in accordance with the law as it would
      be
      interpreted and applied by the United States Court of Appeals for the Second
      Circuit.

     

    17. Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed and delivered shall be taken to be an original; but such counterparts
      shall together constitute one and the same document.

     

    *remainder
      of page has intentionally been left blank*

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, this Employment Agreement has been executed as a sealed
      instrument by the Employer, by its duly authorized officer, and by the
      Executive, as of the Effective Date.

    

    
      	
              ARBINET-THEXCHANGE,
                INC.

            
	 	 
	
              By:

            	/s/
              John B. Penney
	
              Name:
                John B. Penney

            
	
              Title:
                Director

            

    

     

    
      	
              /s/
Shawn
                F. O’Donnell

            
	
              Shawn
                F. O’Donnell

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    

    Please
      See Attached

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    Board
      of Directors 

    

    1. Shared
      Technologies

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